Peregrine Capital Sets New Record for Fund Performance in Year of Success

February 20, 2025 economy24

Peregrine Capital, the longest-running hedge fund firm in South Africa, has reported yet another year of impressive investment performance.

In 2024, its High Growth and Pure Hedge funds achieved net returns of 22% and 15.8% respectively. This represents one of the fund’s most successful years in the last decade, despite ongoing global and local economic uncertainties.

2024 Fund Performance and Long-Term Success

Over the last 15 years, the High Growth Fund has delivered an annual return of 17.2%, significantly surpassing 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 during this period has reached an astounding 1,080%, more than 2.5 times the performance of the next best multi-asset fund in South Africa.

“Our ongoing excellence over time stems from disciplined investing, comprehensive research, and a focus on long-term value creation,” remarks Jacques Conradie, CEO of Peregrine Capital.

“By identifying independent, high-quality investment opportunities and managing downside risk, we have established a track record that speaks volumes.”

Since its inception, the High Growth Fund has provided a remarkable 23.1% annual return, translating into 178 times the initial investment* – outperforming all other South African funds during the same timeframe.

Global Market Trends: The AI Boom Continues

2024 marked another robust year for global markets, with the MSCI World Index yielding a return of 17.4%. Artificial intelligence (AI) continued to be the leading theme, significantly propelling technology stocks.

The ‘Magnificent Seven’ tech giants were instrumental in market growth, with Meta, Amazon, Microsoft, and Alphabet being major contributors.

“We firmly believe that AI represents one of the defining innovations of our time,” states Conradie.

“The capacity of AI to enhance efficiency, streamline business operations, and transform industries is unparalleled. Our investments in pioneering AI-driven companies have already produced substantial returns, and we anticipate this trend will persist.”

South African Market Review: Signs of Stability and Growth

The JSE Capped SWIX All Share Index reported a 13.4% return in 2024, buoyed by retail stocks following a favorable election outcome and a rise in consumer confidence. The newly established government of national unity remained stable throughout the year, fostering increased investor optimism.

Notable improvements include:

Load Shedding Relief: South Africa enjoyed 300 consecutive days without load shedding, exceeding even the most optimistic forecasts;
Transnet Turnaround: New leadership has stabilized operations and fostered enhanced collaboration with the private sector;
Regulatory Improvements: The Department of Home Affairs initiated reforms to attract foreign talent and promote tourism, delivering a much-needed economic boost; and
Declining Government Debt Costs: Post-election fiscal stability has lowered borrowing costs for South Africa, improving long-term economic outlooks.

While challenges such as unemployment, governance issues in municipalities, and crime continue to exist, these positive shifts indicate progress in the right direction.

Key Investment Highlights for the Funds:

Fortress Real Estate: After thorough shareholder engagement and corporate restructuring, Fortress resumed dividend payments, leading to a 41% surge in share price and unlocking substantial shareholder value;
Steinhoff Preference Shares: Peregrine Capital recognized an overlooked opportunity in Steinhoff’s JSE-listed preference shares, resulting in an exceptional annual return exceeding 30% over a six-and-a-half-year holding period.

Looking Ahead to 2025

As 2025 unfolds, Peregrine Capital is adopting a cautious approach to market exposure. Global valuations remain above long-term averages, necessitating prudent positioning. The fund is particularly attentive to the economic impact of the newly created US Department of Government Efficiency (DOGE) established under the Trump administration.

“We are maintaining a balanced portfolio, providing exposure to attractive opportunities while keeping market exposure slightly below average,” Conradie explains.

“Our focus continues to be on discovering high-quality, undervalued investments that can deliver lasting value.”

He adds: “AI is seen as a potentially transformative invention of our time, with its pace and breadth of advancement remaining unprecedented yet incredibly impressive.

“Firms that have embraced AI, including Microsoft, Meta, Google, and Amazon, experienced considerable growth in 2024, thanks to their strong competitive foothold and expansive customer bases. These companies are well-poised to continue flourishing due to their resources and the involvement of their founders.”

AI has significantly improved Meta’s content creation and recommendations, enhancing advertiser engagement, while Google’s search and YouTube operations have also benefited. The ‘hyperscalers’ (Google, Amazon, and Microsoft) are pivotal in providing the infrastructure necessary for AI enterprises.

There is considerable excitement regarding AI’s potential to enhance human capabilities, equalize educational access, and transform healthcare. As AI approaches PhD-level intelligence, landmark medical research and discoveries are anticipated in the coming decade.

Human Intelligence

Peregrine Capital expanded its investment team in 2024 by adding four new analysts, thereby bolstering its talent pool. The firm continues to attract some of South Africa’s most brilliant minds, furthering its commitment to rigorous research and disciplined investing.

A crucial factor behind Peregrine Capital’s success is its strong alignment with investors.

The firm’s investment team has substantial personal stakes in the funds, making it the second-largest investor. This alignment ensures that their interests coincide with those of their clients.

“Our clients’ trust in our long-term approach enables us to excel in what we do best – identifying and acting upon high-quality investment opportunities,” Conradie states.

“By remaining disciplined and focused on core fundamentals, we aim to continue delivering robust, risk-adjusted returns.”

With a proven track record, a disciplined investment approach, and a sharp awareness of market trends, Peregrine Capital is well-equipped to navigate 2025 and beyond.