The Fund has had a positive start to the year, but unsurprisingly has not participated fully in the very strong market rally, in the same way that it did not participate in much of the market declines of 2018. Market noise remains elevated, but we continue to find opportunity in areas that are neglected and uncrowded.

We were fairly active during the quarter putting cash to work in areas where we see excellent long-term value. While much of our buying was into existing holdings that experienced price weakness, we also initiated a few new positions. We have become more constructive on select domestic counters where we are able to buy sound businesses, run by strong management teams at what we deem to be exceptional valuations. While the bulk of our buying has been in the small and mid-cap area of the market, we did use price weakness to add to our position in Old Mutual during the quarter. In our view, Old Mutual is a decent business with a strong footprint that is trading at a very attractive price, supported by a dividend yield similar to the yield of cash in the bank. If we add a management team that should be a little more sensible than their predecessors and an economy that is "less bad" than in the past five years, we think the bar is set low for Old Mutual to produce long-term returns well in excess of cash in the bank.

Our small size is a key advantage and provides us with a much wider opportunity set than most. This is particularly relevant in the current market environment where smaller domestic companies trade at a significant discount to the rest of the market. While deemed as a more risky part of the market, the risk can be mitigated by being selective in what you choose to own. During the quarter we added to our holding in Master Drilling and initiated new purchases of Trellidor, Hudaco and HCI, all of which are sound businesses with solid management teams, but are trading at what we deem to be very attractive valuations.
Offshore markets have been particularly strong with money rushing back into the usual areas. Despite the market strength, we managed to find select areas of price weakness to initiate a new position in Fairfax India and added to existing holdings in Telecom Italia and Teekay Offshore. Fairfax India is an investment holding company that owns some high quality Indian assets, trades at an attractive valuation and has an exceptional capital allocator at the helm. Teekay Offshore is a leading international midstream services provider to the offshore oil production industry, focused on the ownership and operation of critical infrastructure assets in offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Despite producing a solid set of results, Teekay Offshore continued to decline in the quarter, seemingly as a result of some forced selling by an institutional shareholder. Having been recapitalised by Brookfield Business Partners, the business produces stable cash flows from long-term contracts and, in our view, provides a very asymmetrical long-term opportunity.

With local elections around the corner it promises to be an interesting period ahead. While maintaining a flexible and balanced approach, we will continue to take advantage of any stock-specific opportunities that may arise.

There has been limited activity during the quarter, besides adding to a few existing positions and introducing a small new position in Anglogold. One of the positions we added to was Yatra Online which got sold off heavily with most emerging market equities late in the year. Yatra Online is the second largest online travel agency in India with specific advantage in the corporate travel sector. Trading at less than 1 times revenue we think it offers very cheap entry into a company with an enormous growth runway ahead of it as the Indian travel industry is just getting started. Our position in Anglogold is not a large one, but we are of the view that some gold exposure is appropriate in a portfolio. The sector, and particularly the shares, are extremely unloved and underowned, and the world remains a fragile and risky place in our view. We are by no means gold bulls, but do think it has some protective characteristics, especially when sentiment towards the metal is poor and valuations attractive.

Late in the quarter Bowler Metcalf paid out a special dividend of R3, being some of the proceeds from the sale of the beverage business. After the distribution Bowler still has excess cash on its balance sheet and the remaining packaging business is still very cheap. Bowler is by no means an outstanding business, but because we bought it at the right price it has proved to be a safe investment in very tough environment.

As we enter 2019 we are encouraged by the recent increase in volatility and some of the opportunities being presented. All of the shares we own are cheap and have reasonable long-term prospects, leading us to be constructive about the long-term return potential. We maintain a full offshore weighting, not because we think that the rand will weaken, but because we are still able to find very good global companies trading at very attractive