Peregrine Capital, South Africa’s longest-running hedge fund firm, has reported another year of strong investment performance.
In 2024, its High Growth and Pure Hedge funds delivered net returns of 22% and 15.8% respectively. This marks one of the fund’s strongest years in the past decade despite global and domestic economic uncertainties.
2024 fund performance and long-term success
Over the past 15 years, the High Growth Fund has returned 17.2% per annum, significantly outperforming the SA Multi-Asset High Equity Category’s 8.9% and the JSE Capped SWIX All Share Index’s 9.9%. The cumulative return of the High Growth Fund over this period has reached an impressive 1 080%, more than 2.5 times the next best-performing multi-asset fund in South Africa.
“Our consistent outperformance over time is the result of disciplined investing, thorough research and a commitment to long-term value creation,” says Jacques Conradie, CEO of Peregrine Capital.
“By finding independent, high-quality investment opportunities and managing downside risk, we have built a track record that speaks for itself.”
Since inception, the High Growth Fund has delivered a remarkable 23.1% per annum return, translating into 178 times the original investment* – outpacing all other South African funds over the same period.
Global market trends: AI boom continues
2024 was another strong year for global markets, with the MSCI World Index returning 17.4%. Artificial intelligence (AI) remained the dominant theme, driving significant gains in technology stocks.
The ‘Magnificent Seven’ tech giants played a key role in US and global market growth, with Meta, Amazon, Microsoft and Alphabet being major contributors.
“We remain convinced that AI is one of the defining innovations of our era,” says Conradie.
“The ability of AI to enhance efficiency, improve business operations, and revolutionise industries is unprecedented. Our investments in leading AI-driven firms have already yielded substantial returns, and we expect this trend to continue.”
South African market review: Signs of stability and growth
The JSE Capped SWIX All Share Index delivered a 13.4% return in 2024, with retail stocks leading the charge following a favourable election outcome and improved consumer confidence. The newly formed government of national unity held together during the year, contributing to increased investor optimism.
Notable improvements include:
- Load shedding relief: South Africa experienced 300 consecutive days without load shedding, surpassing even the most optimistic expectations;
- Transnet turnaround: New leadership has stabilised operations and increased collaboration with the private sector;
- Regulatory improvements: The Department of Home Affairs introduced reforms to attract foreign talent and boost tourism, providing a much-needed economic lift; and
- Declining government debt costs: Post-election fiscal stability has reduced South Africa’s borrowing costs, improving long-term economic prospects.
While challenges such as unemployment, municipal governance issues, and crime persist, these positive developments signal a shift in the right direction.
Key investment highlights for the funds:
- Fortress Real Estate: Following extensive shareholder engagement and corporate restructuring, Fortress resumed dividend payments, driving a 41% share price rally and unlocking significant shareholder value; and
- Steinhoff preference shares: Peregrine Capital identified an overlooked opportunity in Steinhoff’s JSE-listed preference shares, resulting in an exceptional total return of over 30% per annum over a six-and-a-half-year holding period.
Looking ahead to 2025
As 2025 umfolds, Peregrine Capital is taking a measured approach to market exposure. Global valuations remain above long-term averages, warranting cautious positioning. In particular, the fund closely monitors the economic impact of the newly established US Department of Government Efficiency (DOGE) under the Donald Trump administration.
“We are maintaining a balanced portfolio, with exposure to compelling opportunities while holding slightly lower-than-average market exposure,” Conradie explains.
“Our focus remains on identifying high-quality, underappreciated investments that can deliver long-term value.”
He adds: “AI is considered a potentially defining invention of this era, with the pace and extent of its progress still uncertain but incredibly impressive.
“Companies benefitting from AI, such as Microsoft, Meta, Google, and Amazon, saw substantial growth in 2024, driven by strong competitive positions and large customer bases. These firms are well-positioned to continue thriving due to their resources and founders’ involvement.”
AI has notably enhanced Meta’s content generation and recommendation, benefitting advertiser engagement, while Google’s search and YouTube businesses have also improved. The ‘hyperscalers’ (Google, Amazon, and Microsoft) are key players in providing infrastructure for AI companies.
Excitement surrounds AI’s potential to advance human potential, equalise education access, and revolutionise healthcare. As AI approaches PhD-level intelligence, significant medical research and discoveries are anticipated in the coming decade.
Human intelligence
Peregrine Capital expanded its investment team in 2024, adding four new analysts and strengthening its talent pool. The firm continues to attract some of the brightest minds in South Africa, reinforcing its commitment to rigorous research and disciplined investing.
A key factor behind Peregrine Capital’s success is its strong alignment with investors.
The firm’s investment team has significant personal exposure to the funds, making it the second-largest investor. This ensures that their interests remain fully aligned with those of their clients.
“Our clients’ trust in our long-term approach allows us to do what we do best – find and execute on high-quality investment opportunities,” says Conradie.
“By staying disciplined and focused on the fundamentals, we aim to continue delivering strong, risk-adjusted returns.”
With a proven track record, a disciplined investment philosophy, and a keen eye on market trends, Peregrine Capital is well-positioned to navigate 2025 and beyond.
To read the 2024 Investor Letter, click here.
* The inception date is 1 February 2000. Returns are to 31 December 2024. To view our latest disclaimers, click here.
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