Weekly Thoughts 20 September 2013

It was really worthwhile going to Coronation’s head office in Cape Town this week. Not only did we get to hear from some of the clever analysts with 10 letters behind their names that don’t usually do the travelling road trips around the country, but we heard a lot about the management and conviction of the business of asset management that Coronation delivers. Trading rules, fund managers putting their own money where their convictions lie, how they deal with massive single inflows or exits of money, which funds are closed now due to size and when other funds would close.

I also got a tour around the office space which was interesting to see. The call centre, the open plan spaces where the fund managers sit, the glass fish bowl that the guys who trade on the stock markets sit. Here there was two banks of six screen where the traders are watching different global stock markets at the same time. The traders execute the decisions and instructions of the fund managers. So a fund manager will have decided to buy X amount of Rands worth of a particular company. He will send this instruction through to the traders, that when this particular company’s listed price hits a certain level, buy this much. Good to see all this. In itself it does not mean that they necessarily do a good job, but just nice to see the action space. All the top brass also spoke to us, so that was good. And I met some other good, independent advisors, which was nice. These gatherings tend to only be for guys trying to think at a deeper level.