Northcape Capital’s Global Emerging Markets fund, managed by Ross Cameron, exemplifies a contrarian investment philosophy, notably with its early bet on Malaysian glove manufacturer Top Glove. In early 2020, as the coronavirus emerged, Cameron, studying past plagues, aggressively invested in glove companies, leading to a tenfold surge in Top Glove shares within a year. Sydney-based Northcape Capital, established in 2004, is an investment manager overseeing $19 billion in total assets. The firm specialises in Australian shares and emerging markets, adopting a focused approach.
Despite consistently outperforming the MSCI Global Emerging Markets benchmark since 2008, Northcape’s fund recently delivered 11.4 per cent in the 12 months to August, lagging the benchmark’s 27.2 per cent. Cameron attributes this underperformance to an index driven by “speculative behaviour” and extreme tech concentration from a few semiconductor giants. He cautions that such concentration is unsustainable for active managers, highlighting how retail investors are distorting valuations.
Cameron forecasts the current hardware tech euphoria will subside within 12 months, urging caution over broader AI hype. While acknowledging AI’s transformative potential, he believes investors are “too excited, too soon,” contrasting AI’s high computing demands and lack of network effects with established tech giants’ scalable, user-locked core businesses. Northcape successfully navigated the memory chip market, building a long-term position in SK Hynix and trimming holdings as valuations stretched, securing significant returns.
The fund’s current focus lies outside the AI craze, targeting well-managed companies enhancing efficiency without direct AI dependency. Cameron highlights Brazil’s Rede D’Or, a hospital operator identified as “probably the cheapest listed hospital company in the world” despite consistent earnings growth. Another promising opportunity is South Korea’s Coway, a global leader in air and water purifiers with a stable subscription model. Northcape remains Coway’s largest international shareholder, valuing its stability and market upside.
