XML Feeds

What is RSS?


Top Rated

    Capital protection in volatile markets

    The indicative total negative return for the JSE All Share for September is 13,24%. This has been a dramatically volatile few months. From the JSE market peak to the end of September the decline is 28%. Essentially a third of the market from the recent peak. These are big moves in anyone’s book.

    For investors in pure index tracking products, such as the Satrix 40, this is the type of decline that your funds would have experienced.

    But investors with an active investment strategy should have fared slightly better.

    Let’s consider a few aspects regarding protection of capital:

    Sector rotation

    Many advisors and fund managers would be saying right now – don’t panic, stay for the long haul. And largely they would be right. With the benefit of hindsight the time to have sold would have been in May of this year.

    However many portfolios with a lower concentration to Top 40 shares and especially resources, were already down sharply as at May of this year. When considering the overall market breadth – i.e. the total number of shares moving up in price relative to the total number of shares declining, the market actually peaked in March April 2007.

    A few examples would have included Truworths, Lewis, Massmart, Woolies, Standard Bank, Nedbank etc which mostly peaked in May 2007 and then fell sharply.

    So again with hindsight, for many shares the optimum selling point was around April 2007.

    Many of the fund managers that we positioned clients into were indeed rotating their portfolios. Not necessarily selling out of the market and increasing cash, but selling what they believed to be more expensive resources and buying into industrials and financial shares that had already pulled back sharply in price.


    Secondly just as it’s important not to let greed overtake one in a bull market, it’s important that fear does not set AFTER prices have fallen. We have discussed diversification as one of the only “free” lunches in investing. I.e. with diversification you give up more on the risk budget than on the potential return budget.

    Diversification is not perfect and often in times of panic, correlations across various asset classes increase. But not putting your faith in one company or one asset class, is a proven method of a) sleeping better at night and b) protecting capital to take advantage of lower prices.

    3 examples of asset classes that have worked well in a portfolio include:

    o Hedge funds – many local funds are active in their management of market exposure, which all helps in protecting downside.

    o Offshore asset exposure. The rand declined around 7% for September.

    o Property lost 3,26% in September.

    Don’t hesitate to contact me to discuss your portfolio and investment planning. I will be in Durban on the 16th October and starting to set up meetings – please contact me if you would like to set up a time to meet.

    Kind regards

    Ian de Lange
    021 9144966

    Permalink2008-09-30, 18:34:17, by ian Email , Leave a comment

    Does history provide some clues

    The JSE tumbled sharply today across all sectors as sellers simply outnumbered buyers. There is a massive dose of panic sentiment. As foreigners sell the rand weakened to R8,21/USD. The JSE shed 1400 points or 5,76%. All sectors fell in sympathy. Gold shares shed 4,4%

    In the US, Congress is preparing to vote on the $700 billion US Treasury rescue package.

    As prices fall sharply across the market, the only advantage is that it brings back reasonable value. At this time, it may be cold comfort for many investors, but the reality is that for prospective annual returns have increased sharply.

    But when the news flow is negative, the rand is weakening, politics are in turmoil, interest rates are high, and prices are falling in a heap, most investors want to join the panic queue.

    Time and time again we have seen this and with the benefit of hindsight, times of panic prove to be excellent opportunities. Perhaps not tomorrow, but the point of maximum pessimism will coincide with a low point.

    I went back to some Financial Mail articles post the 1998 market crash and the 2003 market lows to highlight some of the general pervasive comments that were definitely influencing most investors and their decision making.

    9 times out of 10 decision making is influenced by recent past price action as opposed to valuation.

    I specifically recall discussing with one local asset manager post the 1998 price panic and his comment was along the lines of, “Ian, this is the big one, we have been waiting for. “

    The emerging market crisis that started a world market crisis was being compared to the 1929 crisis.

    This is what the Financial Mail had to say:

    4 September 1998
    “ Ghosts of 1929 flit out of history's crypt
    Even as this article was being written on Tuesday, the JSE Overall index fell a further 4% in sympathy with Wall Street's plummet the previous day, when the Dow Jones industrial average fell more than 500 points. Wall Street could go lower; it's not immune to investor panic or other countries' economic problems.

    The JSE almost certainly will fall further. It's a victim of two serious ailments: global economic ills and investor panic. Sounds familiar?

    The market decline here has been staggering. On April 20 this year, the JSE Overall index peaked at 8362. On Monday, it closed at 4923, more than 40% off that peak. And this would have been worse if gold shares hadn't shown some strength. The glamour sector, electronics, has fallen more than 50% since July 22 and the adventurous sector, venture capital, has more than halved.”

    So, if this is not a repeat of 1969 or 1987, have we been here before?

    The answer, unfortunately, has to be yes - in 1929. The stock market crash then preceded the Great Depression, which really only ended after the outbreak of World War 2 in 1939
    Now we have very high interest rates. This makes equity investment unattractive by comparison with interest-bearing investments. This will tend to slow stock market recovery. Worse still, it could encourage even more sell offs.

    The bottom of this market may not yet be in sight. Reaching the peak again will probably take years”

    With hindsight September 1998 after the market had fallen proved to be an excellent entry point.

    Again in 2002/2003 market prices slid down to the point where the sentiment was very negative. Prices were down, but value was up.

    Some comments near the point of maximum pessimism in the Financial Mail.

    “7 March 2003

    Share prices, the pattern of corporate earnings and even some of the predictions for equity returns have deteriorated sharply in the first two months of this year.

    With the resources sector now accounting for about 45% of the all share index's total market capitalisation, the retreat among mining and other commodity stocks almost inevitably drags down the main market index.

    Bearish financial markets elsewhere are also having a greater impact. For some companies, notably the life assurers and short-term insurers, slumping markets are hitting their investment returns and earnings directly.

    Overall, however, the broad trend in SA equities is looking bleak. That could continue until the gloom over global financial markets lifts. With the prop of a weak currency no longer in place, the JSE has joined the rest of the world. “

    4 April 2003
    There seems to be a concern among asset managers that investors will abandon high-fee equity products in favour of generic, low-fee money market products.
    The disillusionment with equities is understandable, and there is no doubt that many people's investments were too skewed towards the stock market.

    2 May 2003
    Based only on the capital appreciation - or the lack of it - returns from equities in recent months have been poor. The JSE all share index (Alsi) has fallen almost 20% since the start of this year and is down more than a third since it peaked last May.

    These are severe declines, which may not be over yet. But dividend yields have been rising sharply, on the back of lower or stagnating prices, strong earnings growth and, in many cases, robust corporate balance sheets.

    Since early 2000 the average yield on the Alsi has risen from just more than 1,8% to about 4,2% this week. “

    With hindsight April 2003 after the market had fallen proved to be an excellent entry point.

    As investment advisors we will be looking for the opportunities.

    For investors with discretionary funds, or living annuities or preservation funds etc, don't hesitate to contact me.

    Kind regards

    Ian de Lange
    021 9144 966

    Permalink2008-09-29, 18:03:43, by ian Email , Leave a comment

    Philip Fisher on When to Buy

    Philip Fisher (1907-2004) was an outstanding investment manager. He also authored Common Stocks and Uncommon Profits. His money management company, Fisher and Co was founded in 1931. He is considered a pioneer in the field of growth investing and has been called one of the great investors of all time.

    His son Ken Fisher followed him into the fund management industry and his US firm manages around $45 billion.

    In the book, the Money Masters by John Train, he notes a few valuable hints for timing stock purchases, which indeed is valuable for today’s type of market.

    Firstly, “buy when the start up period of a substantial new plant has depressed earnings and discouraged investors.”

    I.e. buy when current earnings are depressed, but there is a strong possibility of an uptick in future earnings because of investment.

    This may appear superficial logic, but I think its surprising how much emphasis analysts place on current earnings and when they are depressed, tend to downplay the upside potential.

    Secondly “buy on bad corporate news, a strike, a marketing error, or some type of temporary misfortune.”

    This also extends to war and his view was that because war is always bearish on money, because the debt levels are increased, one should not hesitate to buy because of war scare.

    Thirdly buy when the crowd is bearish. “The investor who holds off until there’s a wave of optimism among the [economic] prophets, is buying with the crowd and thus paying higher prices. Further bull markets end and bear markets begin in good times, when everyone’s optimistic. The bottom comes in bad times, when everyone’s desperate. The [1929] Crash, after all, started amid universal euphoria in 1929, and the greatest buying point in history was when the banks closed in 1932: the markets doubled in two months.”

    Despite a probably US government led bank bailout, we could still see more failures. The investors that benefit will be those that have active management, a diversified portfolio, which at some point is looking to take advantage of depressed assets.

    Have a great weekend


    Ian de Lange
    021 9144 966

    Permalink2008-09-26, 17:41:38, by ian Email , Leave a comment

    US bank bailout looks imminent

    In the past, the US has been disparaging of many other country’s attempts to bail out their own financial institutions. Now with a deep crisis back home, the bastion of capitalism has turned socialist and coming to the rescue. While many disagree that the government should come to the rescue the consequences of not cannot be quantified, and it now looks like a rescue plan will be passed.

    In the past the US has urged Asian banks to let unviable banks fail. They were also not in agreement with the way that Japanese government essentially supported uneconomic bank loans throughout the 1990’s.

    But now it’s their turn. Over the last year they have been supporting specific names, but the problem is widespread. There is systemic risk and this is what is concerning Paulson and Bernanke.

    Some investors such as Buffett have termed the crisis, an economic Pearl Harbour, and support Treasury in assisting banks.

    Other investors, such as Jim Rogers, who was partner to well known hedge fund manager, George Soros, are against a bailout in what is supposed to be a capitalistic system.

    Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, have been before US Congress and finance committees, answering questions on the proposed bail out plan.

    There are valid concerns that government is putting taxpayers at risk in an attempt to buy back bad debts made through reckless lending practice. i.e. raising government debt levels, which must ultimately be paid through the raising of taxes.

    Two of the biggest concerns voiced by Congress are that :

    o Taxpayers are being asked to foot the bill, but have not nor are likely to receive upside, while the shareholders get the advantage of a bailout, plus upside.
    o Executive pay and bonuses should be restricted or capped where banks are forced to borrow from the Treasury.

    There is a lot of political posturing ahead of important US elections.

    Watching both Paulson and Bernanke answer questions last night, it was apparent that there was no doubt that a bailout in some form, despite the lack of a convincing process, would ultimately be passed by Congress.

    So what are the implications:

    I think just like the US government has essentially bailed out the economy in the past 10 years by for example reducing interest rates to below zero in real terms, they will now do everything at their disposal to ensure minimal bank failures.

    Warren Buffett’s likely purchase of $5 billion in Goldman Sachs preferred shares, starts to give some comfort. The last time he came to the rescue of an investment bank - Salomon Brothers – it turned out to be a poor investment. He would not have done this without some considerable thought.

    But despite it being a big number at $700 billion, there is a risk that banks still fail, causing more nervousness.

    Or more likely for many of the rescued institutions, they struggle for many years to earn a decent return on capital, given their highly geared state and sub economic assets. This is what happened to many of the Japanese banks in the 1990’s as government intervention merely delayed the inevitable.

    But today global markets looked positive. The JSE had a late run and ended up 13 points with Financials up 1,75%.

    Kind regards

    021 9144966

    Permalink2008-09-25, 18:15:30, by ian Email , Leave a comment

    Political risk and inflation

    Another volatile day on the JSE driven at lunch time by announcements of Trevor Manuel’s resignation, followed up by the announcement of his continuation as Finance Minister. The rand fell sharply, as did the equity markets. While gaining back some ground, local prices still ended down sharply on the day, with the JSE All Share down 3,75%.

    Inflation data was released today. The consensus for CPI-X was in the region of 13,2% to 13,4%.

    The actual came in higher at 13,7%.

    Once again food price inflation was higher than generally anticipated.

    Besides fuel declining, which helped bring down inflation, other declines were noted in non alcoholic beverages, furniture, other household equipment and textiles and vehicles.

    The decline in fuel in September plus a further likely decline in October will assist with the inflation number for September and October.

    Source: Vunani Securities

    Inflation numbers will remain high until the end of the year, still looking to dip back into single digit figures into January 2009.

    The big swing factors will be the rand and price of oil. Monday saw a massive spike up in the price of oil on the New York Mercantile Exchange – its biggest one day price gain ever. Now light crude is trading at $107,30 – Brent crude at $104,69.

    The rand weakened today due to political risk. Its now at R8,16/USD and R12/euro.

    That’s all for now.

    Have a super day off. Don’t hesitate to contact me if you want to discuss any aspect on your investment portfolio.

    Kind regards

    Ian de Lange
    021 9144 966

    Permalink2008-09-23, 18:01:27, by ian Email , Leave a comment

    US Debt levels

    The US Republican Party has typically stood for smaller government, but the events of the last year have “forced” the government to step in to mop up bad debt and so save provide liquidity and resources to the banking system. This means government has to create and or borrow the funds, which essentially raises a debt obligation to all its taxpayers.

    In financial markets, there are few free lunches, and government’s assumption of debt, will at some point start to put pressure on its finances.

    Over time the US’s outstanding debt obligations have grown steadily. Going into WWII, the United States public debt was around USD50 billion. After the war it had moved up to USD260billion.

    It then increased in line with inflation until the 1980’s, when over the next 10 years it tripled to USD3,2 trillion.

    In 2000 it stood at USD 5,6 trillion and then began to increase more dramatically.

    Going into war with Iraq, following 9/11 was expensive and the government debt ceiling levels were raised. Treasury is allowed to issue debt up to the ceiling, which can only be raised by congress. But the ceiling is routinely raised. This was done in September 2007 when the debt ceiling was raised to USD9,815 trillion. Then again in July 2008 to USD10,6 trillion, to allow US Treasury to bail out Freddie Mac and Fannie Mae.

    Now with the Treasury Secretary’s bailout plan, this debt ceiling is likely to be raised by a further USD700 billion to USD11,315 trillion. As part of the plan, officials may also provide USD400 billion in guarantees to money market funds.

    With the US GDP last officially at USD13,8 trillion and possibly set to contract slightly, the official public debt will soon reach a parity. In South Africa in the 1990’s there was concern of a debt trap as official government debt reached very high levels of GDP. With the US government having to service higher and higher levels of debt, compounded with a slowing economy, its remains a mystery as to why the yield on the US 10 year Treasury note is at a low 3,7%.

    Because this is considered the world's risk free rate, we watch it very carefully for a possible change in directio. The fundamentals are not good.

    Kind regards

    Ian de Lange
    021 9144 966

    Permalink2008-09-22, 17:47:46, by ian Email , Leave a comment

    Looking for Opportunities

    This week has seen incredible volatility on the global markets and by definition global markets. Yesterday the JSE recorded its biggest volume of trades on the 3rd quarter futures close out. Last week the JSE All Share index closed at 26155. By Thursday it was down 8% to a low of 23989.

    Today global markets bounced up as positive sentiment came back into the market. At the close the JSE All Share index was up a massive 1300 points to 25402 – an unusually large up day.

    In theory large price swings like we have seen, should not occur, but it’s an indication of the nervousness of most of the market participants.

    For astute investors, participant nervousness and extreme pessimism means that opportunities are opening up.

    I mentioned in an article a while back that I think many property investors understand asset price valuation far better than many equity fund managers. One of the best property investors I know, will first want to understand the cash flow and security of the leases in place. Then discounting this back at a discount rate that factors in a margin of safety for the risk being taken, he will arrive at what he considers a fair price.

    He will then make an offer at that the fair price or even lower – naturally he wants to buy at the lowest price possible. At least 9 times out of 10, the seller will reject the price. I.e. higher prices does not mean that he will pay up, but rather continue to source properties and make offers. This is until such times as prices come back down to his level and a seller agrees to his price.

    He understands that buying at the right price is critical and in a more opaque market, this can only be done one offer at a time. The more exuberant the participants, the fewer offers will be accepted.

    When he finds a weak seller that agrees to his lower price, he is excited – not worried.

    For longer term investors buying a piece of a business is no different. Even if the shares are listed.

    Firstly investors will concentrate on the nature of the business. Perhaps a Shoprite or MTN with a strong franchise, growth prospects and cash flow generation.

    The difference is that while you can make offers, because the bid offer spread is so much tighter, you will need to wait until prices come down sharply, either as a whole or for the specific business that you want. Therefore for buyers of listed companies to really buy a bargain, the ideal time to buy is at times of maximum pessimism.

    Naturally this is not easy, no one rings a bell at the exact bottom and a great deal of fortitude is required to go against natural instinct.


    I am not saying that this is the bottom of the market. The risks remain high, despite the fact, or perhaps given the fact that the US government continues to bail out reckless lending.

    A net long term saver will do well to appreciate times of high pessimism and look to take advantage.

    A net spender will want to have his shorter term (0 - 2 years) assets in near cash, generating an income stream. On his longer term asset component, he will also want to take advantage.

    If you have assets in a living annuity or discretionary assets and would like to know that they are managed in a dynamic ongoing basis, please don’t hesitate to contact me.

    Have a wonderful weekend


    Ian de Lange
    021 9144 966

    Permalink2008-09-19, 17:57:46, by ian Email , Leave a comment

    Counterparty Risk

    The financial news if full of global risk issues as major banks fold and or have to be bailed out by central governments. A key risk that up until now had largely been assumed to be very low, as to almost negligible is so called counterparty risk. For all transactions and investments, there is counterparty involved and when assets reside at a counterparty, this risk is an ongoing one.

    Investing has a lot to do with managing risks as best as possible. As investment advisors and managers we need to try and understand these risks, highlight them to clients and try and find ways of mitigating them.

    When large counterparties, such as AIG in the US, come under pressure, this calls into questions, lesser known and much smaller counterparties.

    Counterparty risk, or the risk that an institution does not pay out on a derivative, insurance contract, or trade when it is supposed to, is a real and growing risk.

    Let’s look at two simple examples.

    Firstly an investor can hold a portfolio of shares or unit trusts directly. By this, the shares or unit trusts are registered in his name. Sure there is a stockbroker or other custodian involved, but they are not providing any guarantees.

    Perhaps the investments are shares in Anglo American, SAB Miller or Impala Platinum or perhaps units in a unit trust, or more accurately units in a collective investment scheme such as Investec Equity, OMIGA, Equity fund, or Sanlam Collective Investments Equity fund for example.

    It’s important to know that these assets so held are not held on the balance sheet of any other company. They are always reflected as third party ring fenced assets, i.e. not as part of Old Mutual’s assets.

    On the other hand, an investor can introduce a counterparty. This can be a bank or a life company for example. For some assets, such as pension funds, retirement annuity funds, living annuities etc, a life company steps in as a counterparty.

    Perhaps our investor decides to house his discretionary assets with a life company because they offer a tax saving. So instead of owning the shares and unit trusts directly in his name, he elects to move these to a life company. In return the life company will issue a contract. Now that investor has introduced an extra layer of risk – counterparty risk. Albeit small, it is a risk and needs to be understood.

    In this case the counterparty’s balance sheet comes into question. The investor has handed over ownership of his assets, in return for a contract – a guarantee – of settlement. The assets now form part of the balance sheet of the life company and the obligation to the investor, part of the liabilities. In fact the counterparty does not even need to continue holding the same assets that the investor’s contract refers to. The counterparty merely needs to give a backing to the contract.

    Again as consultants and investment managers, we have always listed counterparty as a risk, tried to understand it, and where necessary tried to understand the financial soundness and capital adequacy of counterparties that we advise our clients to use.

    We also question the tax saved, by giving up full ownership of one’s asset to a counterparty for life. 20, 30, 40 years is a long time.

    If you would like to deal with an intermediary that looks at these aspects as part of the total consulting, then please don’t hesitate to contact me.


    Ian de Lange
    021 9144966

    Permalink2008-09-18, 17:46:15, by ian Email , Leave a comment

    Turmoil in the US of A

    The past few days have seen some tumultuous financial news coming mainly out of the US. Most of the worries have been centred on 3 companies, namely Lehman Brothers, Merrill Lynch, and American International Group (AIG).

    We are now well into the credit crunch, and what we have seen happening over this period is numerous financial institutions being forced to sell assets, or recapitalise their balance sheets in order to survive.

    A company that is forced to sell assets when prices aren’t attractive, and when there’s a lack of buyers is a recipe for disaster, and furthermore, selling at fire sale prices invariably results in the remaining assets getting devalued, resulting in the company being forced into more selling. This is clearly demonstrated in AIG’s case. Ian mentioned on Monday that they required $40bn to shore up their balance sheet. This number has ballooned to $85bn, which still might not even be enough! We’ll only have a good idea when asset prices become more stable again, which could take a while.

    The US Fed announced that it will step in with $85bn as a bridge loan to assist AIG over the next two years, in return they will receive interest of LIBOR (currently 2.88%) plus 8.5% and a 79.9% stake in the company. This extremely expensive finance will be paid off as soon as possible, most probably through an orderly sale of the company’s assets. Essentially the Fed is allowing AIG an orderly liquidation, although there is the chance that it is still able to operate after the sale of most of its assets.

    Below is a graph of AIG’s share movements over the past 13 years or so:

    Source: Google Finance

    The Fed clearly doesn’t want to step in and print money to save all financial institutions, but they do need to assist companies that are crucial to the stability of the US (and global) economy, which they feel AIG is.

    Stepping in to assist with the Bear Stern takeover, the nationalisation of Fannie Mae and Freddie Mac, and providing finance to AIG will result in the Fed having to print more money, which generally has an inflationary impact. It was probably with this in mind that the Federal Reserve ignored calls to cut interest rates further (they are already down at 2%) in an attempt to help the US’s flailing economy.

    Keeping abreast of these developments is important for us not only in the context of investing offshore, but also how they impact South Africa. We will continue to keep an eye on these developments, but ultimately credit is the grease that the global economy runs on, and if it dries up even more (i.e. becomes even more prohibitive to borrow) this will have a major impact on global economies.

    As Ian mentioned earlier in the week this is the time when proper diversification is rewarded. While world equity markets have fallen, the MSCI World Index hasn’t fallen as much as the JSE (when compared across a common currency), and global bonds (JP Morgan Global Bond Index as a proxy) are even in positive territory month to date. A weakening rand would have helped those investors with offshore exposure.

    Closer to home those investors who’ve invested with hedge fund managers that have the ability to go net short would also have profited from the decline in share prices.

    If you would like assistance with getting your asset allocation correct, and ensuring that you are properly diversified please don’t hesitate to contact Ian (ian@seedinvestments.co.za) or Vincent (vincent@seedinvestments.co.za) on 021 914 4966.

    Take care,

    Mike Browne

    Permalink2008-09-17, 17:08:03, by Mike Email , Leave a comment

    The broader theme in global turmoil

    I was on record this morning as saying that the US government, in the form of the US Federal Reserve and the US Treasury, took a calculated gamble by not providing an implicit guarantee to any taker for Lehman Brothers. Short term it sent markets down, but longer term it’s the correct medicine.

    A brief history on the credit induced rise in asset prices

    The cost of capital gets VERY cheap – 2000 - 2004

    Few will remember back to then Fed Chairman, Alan Greenspans’ famous remarks in December 1996 as he commented on the irrational exuberance of financial assets. At that stage asset prices had extended beyond reasonable valuations

    However US and global markets, led by IT shares, continued to run up to extraordinary prices until March 2000.

    From the beginning of 2001, the US started dropping interest rates. Then came 9/11 2001 and global markets went down sharply. The US Federal Reserve continued to create liquidity by dropping rates until June 2003, when the US Fed funds rate was at 1%.

    The cumulative effect of a relaxed monetary policy led to a global acceleration in house prices. The appreciation of this asset class allowed for greater and greater leverage, especially in the US, but also around the globe.

    Risk was transferred through the use of securitisation and derivatives, but as mentioned yesterday risk does not disappear, it can only transferred. In a low interest rate world, where generating any meaningful rate of return became difficult, investors took on greater and greater risk, for lower and lower compensation.

    Again as the US lowered interest rates to support the US housing and debt markets, large doses of global capital pushed into risky assets such as commodities, pushing them to extreme levels.

    The cost of capital gets expensive 2007 – 2008

    The global banking crisis has already been a year in the making. Monetary authorities, led by the US Federal Reserve have reduced the cost of capital for primary lenders, but this has not been working through the system and in fact the inter bank cost of capital has escalated up sharply to more realistically reflect the risks involved.

    Cost of capital has and will continue to rise around the world. It’s also not that easily accessible as it has been. This is not ideal for risky assets, especially those funded by hitherto cheap money.

    Risky assets include emerging markets and commodities.

    In themselves commodities cannot really be considered an asset class, because they don’t generate an income yield. But up until recently cheap money was pouring into commodity funds on the basis of their price appreciation.

    Going Forward

    Investors will have to selectively seek out real assets that generate solid cash flows with reasonable levels of gearing.

    There will always be opportunities, but our thinking is that from here out, these will have to be more selectively sought out. No more rising tide lifting all boats. Careful stockpicking and proper diversification will be what is required.

    Don't hesitate to contact me, if you would like to discuss your investment planning.


    Ian de Lange
    021 9144 966

    Permalink2008-09-16, 16:16:42, by ian Email , Leave a comment

    Lehman's demise puts pressure on global financial markets

    The US financial crisis continued over the weekend as one of the US largest investment banks, Lehman Brothers failed to secure a buyer, leaving it no alternative but to file for bankruptcy protection. A history extending back to 1850 could not secure a reprieve in one of the world’s largest financial crises.

    This together with the announcement that the Bank of America would acquire Merrill Lynch for USD50 billion and AIG is needing USD40 billion to shore up its liquidity strains, due to its underwriting of credit default swaps

    Lehman started taking action a year ago when the US sub prime started blowing up, but still it succumbed. In August 2007 it closed its subprime lender, BNC Mortgage and at that stage took a $25m charge.

    Lehman listed debt of more than USD613 billion, making it the single biggest bankruptcy filing in history. It was the one of the biggest underwriters of mortgage backed securities.

    This bank has a long history, founded in 1850 by Henry Lehman from Germany. He was joined by his two brothers and his original H Lehman soon became Lehman Brothers.

    Clearly this was not easy for the various lawmakers and regulators to let slide, but while Lehman is large, they cannot afford to put a general underpin under all private bank ownership, which will only serve to extend the credit crisis.

    The bank shareholders are but one interested party, but the real risk was and is the potential for a domino effect on the US and global banking. While global markets fell sharply on Monday, the US markets are only down around 2% and hour into trading.

    Lehman was one of the bigger counterparties to the $62 trillion credit derivatives market.

    By all accounts, Monday’s global financial markets could have been far worse.

    US regulators are working hard to try and facilitate a normalisation and lower contagion. On Sunday the International Swaps and Derivatives Association offered an exceptional trading session to allow market participants to offset positions in various derivatives on condition of a Lehman bankruptcy later that day.

    Risk elimination or risk transfer

    A hedge fund manager commented to us in a meeting last week that risk can be transferred but not eliminated.

    Over a long period of time investment banks were all too satisfied taking in premiums for risk that was not all too apparent or which they believed they could pass on.

    An important investment tenet is to only take on risk, where the potential for reward justifies the level of risk assumed.

    Local markets

    The local market came under selling pressure, with financials down 2,97%, but off its peak of over 5% at one stage in the day.

    The JSE All Share index lost 1,96% to 25642 - a decline of 23% from its peak.

    Looking back one year now, all three major indices are down around the same percentage.

    Kind regards

    Ian de Lange

    Permalink2008-09-15, 17:55:56, by ian Email , Leave a comment

    Wonderful Businesses

    There is no doubt that the opportunity for wealth creation that private business provides is a driver for owners of small to large businesses. A businessman will invest into a business by either starting one, or buying into an established entity. He will want to derive an income stream from the business and if successful, reinvest excess earnings and so drive up the value over time.

    When it comes to listed businesses, the source of return is no different from that of a private owner. It comes from two main components:

    o The intrinsic growth of returns that the company generates over the years; and
    o The escalation in the price paid for the business, versus the exit value realised.

    When it comes to listed businesses, many investors only focus on the second component, the daily quoted price. The true long term wealth is generated by being exposed to growing companies.

    Warren Buffett understands that private and listed businesses are the same. In early years he bought listed businesses, but now mostly private. He spends his time first looking for wonderful businesses, and only then negotiates the price he is prepared to pay. Naturally paying the cheapest price possible for an excellent business makes for a good investment.

    Some characteristics that he looks for in good businesses:

    o They have a good return on capital without accounting gimmicks or lots of leverage.
    o They are understandable.
    o They see their profits in cash.
    o They have strong franchises and thus freedom to price.
    o They don’t take a genius to run.
    o Their earnings are predictable.
    o They are not natural targets of regulation.
    o They have low inventories and high turnover of assets.
    o The management is owner orientated.
    o There is a high rate of return on the total of inventories plus fixed assets.

    Locally and globally there are many businesses that fit these criteria. The trick is to find them, and then not to be lulled into overpaying.

    Have a wonderful weekend


    Ian de Lange

    Permalink2008-09-12, 15:46:04, by Mike Email , Leave a comment

    Value in various themes

    "I see value in a few places.”. The Wall Street Journal reported these words in an interview with Warren Buffett. When this comes from one of the world’s richest men and arguably the best investment mind around, it does carry some weight. I spent the morning listening to some more global fund managers and while so many have been shell shocked with the extent of the downside and volatility, there does appear to be some light on the horizon.

    The global banking system is not out of the woods yet as the equity on geared balance sheets is written down faster than traders can shout sell orders to their stockbrokers.

    The latest scare is that US bank, Lehman Brothers Holdings won't make it. The share price has plunged already, but should this bank fail it will further undermine business confidence, in a still highly leveraged world.

    Although large multinational banks are very important components in the efficient working of markets, there are many other themes that are still attractive.

    An example is oil. The oil price has fallen dramatically from its recent peak and is now around $96/barrel. A figure quoted yesterday from a global fund manager was that the doubling of oil from $65 to $130/barrel doubled the annual transfer of wealth from oil consumers to producers to $4 trillion. This is a huge wealth transfer on an annual basis and so the gain in the USD and the decline of the oil, albeit perhaps temporary, is to be welcomed.

    Many global managers take a top down view of the world by looking at longer term investment themes.

    Some of the themes that are still attractive include:

    o Developed markets large cap growth shares at current valuations.
    o Global defence shares as an ongoing global arms race continues.
    o Agriculture food due to steady demand increase and climate changes.
    o Investment grade corporate bonds appear attractively priced relative to longer term.
    o Healthcare.

    The fact that there are always opportunities is one reason that we continue to believe in a diversified investment strategy, tilted to where the value lies.


    Ian de Lange
    021 9144 966


    17th September AM

    We still have seats available. Please reply as soon as possible

    Invitation to Baby Boomer Seminar: Don’t retire, refire

    Don't Retire – REFIRE
    Lynda Smith, Wisdom Preserver from Refirement Network will share on this topic. Refirement Network helps the Baby Boomer generation (those born between 1946 and 1964) to understand why their road to the future will be so different from their parents and grandparents. Go to www.refirementnetwork.com for more details.

    Investment pitfalls in retirement
    Ian de Lange CA(SA) from Seed Investments Consultants will discuss what the major investments pitfalls are leading up to retirement and in retirement. The discussion will particularly look at ways to invest your retirement capital in order to secure the standard of living you planned for yourself. This presentation will be interesting for those baby boomers with questions like: How much capital do I need for retirement? What investment strategy should I follow? What is the probability that my capital will outlive me?

    17th September

    Contact helena@seedinvestments.co.za for more details.

    Permalink2008-09-11, 18:12:28, by ian Email , Leave a comment

    Volatile markets and fund manager due diligence

    Over the last 2 days in meeting with a local hedge fund manager and in a conference call with a global managed fund, it’s abundantly clear just how difficult the local and global investment environment has been over the last 12 months and especially in 2008.

    The particular hedge fund produced a phenomenal return over 12 months to the end of December of over 40% after all costs. Over the same time period, the JSE All Share index gained 19,2%.

    Now ¾ of the way through 2008, the numbers don’t look as attractive, with most funds battling to produce even positive return in a market that has shown immense volatility.

    What then has changed?

    I think that investors must understand that no matter how hard fund managers pat themselves on the back when they produce excess returns elevating them to the top of the ranking tables, 9 times out of 10, there is a subsequent reversal of fortune.

    That is not to say that we dismiss the value that active management typically adds. Rather we are careful to extrapolate recent superior performance into the future. Also we don’t automatically ascribe any period of superior performance to manager skill. Many times it’s the age old case of being in the right place at the right time.

    We need to try and distinguish between lucky positioning and skill.

    As investment consultants and managers, we also have a slight bias to fund managers that have a longer term excellent track record, but who may have struggled to outperform in the more recent past.

    An example of some of the issues that we need to understand and questions that we may ask would be:

    o What did you specifically invest in to produce the excess performance in say May to July 2007?
    o In the case of a hedge fund, what is the policy on gearing and what is the maximum and typical gross and net exposures?
    o What is the policy and practice on shorting?
    o What is the portfolios concentration risk? I.e. minimum number of investment positions.
    o What is the past and current exposes across the main market sectors, and if applicable also asset classes?
    o What is the current asset allocation across sectors, themes and shares and what is the reasoning?

    It’s extremely important to go through a thorough due diligence process across each fund. We do this on behalf of clients. When constructing a portfolio, we overlay our investment view and combine various managers and asset classes so as to try and reduce correlations.

    The greater insight we have on each fund that we use for our clients, the fewer the surprises coming from the funds individually and collectively.

    Across all funds and hedge funds we collate underlying data as often as possible. Monthly and quarterly information on funds and weekly mandate data for hedge funds etc.

    Feel free to contact me if you would like to discuss any points raised here and perhaps on your specific investment portfolio and long term investment planning.

    Kind Regards

    Ian de Lange
    021 9144 966

    Permalink2008-09-10, 17:29:15, by ian Email , Leave a comment

    Aveng Financial Results

    Monday saw the continuation of companies releasing their financial results for the full year ended 30 June 2008. Listed companies are given 3 months after financial year, and half year, end to release their audited financial results, with most companies coming out with their results after around 2 months. Always be wary of those companies that fail to meet the 3 month deadline!

    Aveng, a company in the plum construction industry, released exceptional results yesterday morning, with group revenue up 34% to R29.6bn, and HEPS (headline earnings per share) up 72% from last year.

    A large portion of this growth can be attributed to an expansion in margins from 5.9% last year to 8.2%, which is above their medium term target of 8% which was set two years ago. Construction companies typically have low margins, and boost profit through increased turnover. Profit margin expansion has a large positive multiplier effect on profits, while margin contraction will harm the bottom line just as much. A closer look at the margin breakdown reveals that margins for construction and engineering were around 5%, while manufacturing and processing had a margin of 16.57%, clearly the more profitable segment!

    It makes sense that while margins are high the company should take the opportunity to expand production, and this is exactly what Aveng did, spending R924m (R435m in 2007 financial year) on expanding property, plant, and equipment, and another R865m (R556m) on replacements for the 12 months ended 30 June 2008.

    The company also used much of its excess cash to repurchase shares, repurchasing just over 59 million shares (approximately 12.3% of issued shares) in the financial year at an average price of R60.51. Another R1.2bn will be paid out to shareholders through a final dividend of 145c and a special dividend of 145c, which will eat into Aveng’s R8.9bn year end cash balance.

    While financials are typically backward looking construction companies generally give an indication of future performance through revealing what their order book looks like (contracts secured that will produce future income should everything go to plan). In this regard Aveng was able to grow its 2 year order book by 36% to R25.8bn, with Grinaker-LTA accounting for R9.5bn, and McConnell Dowell R11.5bn.

    As the various analysts pour over these numbers they will come to a ‘fair value’ price, and then compare this to the current share price. Shares priced below fair value will generally attract interest. Shares above fair value will generally result in investors selling the share, unless there deemed attractive enough on a growth basis for growth investors to take part in the company’s growth.

    The market clearly liked Aveng’s results, with the share price up 6.14% yesterday, albeit on only about 4 hours of trading. The share ended today up 1,33, which compares favourably to the ALSI, which closed down 3,5%.

    Enjoy the rest of your week.

    Kind regards,

    Mike Browne

    Permalink2008-09-09, 19:33:40, by ian Email , Leave a comment

    US action gives markets a boost

    Over the weekend, the US Treasury came out with further backing of US home loan government sponsored enterprises, Fannie Mae and Freddie Mac. The deal is essentially one of the biggest interventions by government in private financial markets. Although the 2 enterprises were initially government sponsored, they were run privately and indeed listed on the New York Stock Exchange.

    These 2 entities allowed financial institutions to continue to lend, by buying and holding mortgages, and in this way essentially greased the lines of credit to the private homeowner.

    US credit, financial and fixed property markets have been in a tailspin, for a year. One of the cogs in the system that was not working was the buying of mortgages by the 2 GSE’s as their balance sheets came under immense pressure.

    The US government in the form of the US Treasury had no choice but to step in and place the 2 entities into conservatorship in terms of the new Housing and Economic Recovery Act of 2008, in order to stabilise credit markets.

    This allows Treasury to advance funds for the purposes of stabilising the 2 entities, with a limit only to the total amount of federal government debt that the government is able to raise. This US federal government debt limit has been raised on a steady basis over the years, but was raised in one large dose of USD0,8 trillion, lifting the total US debt ceiling to USD10,7 trillion.

    The deal gave an immediate boost to the global markets, especially financial companies.

    The JSE had a torrid time with the market closed due to technical reasons for most of the day, but Financials had given it a boost. Currently the JSE All Share index is up 2,5% with Financials up 4%.

    The London Stock Exchange also broke down in their biggest technical failure in 8 years. This on the day that Europe posted their biggest gains in 5 months.

    So all in all an exciting day on global markets. Only time will tell if what the US government did was the right thing, but the sheer magnitude of the problem left them with little choice.



    Permalink2008-09-08, 18:25:51, by ian Email , Leave a comment

    Bidvest versus Nampak

    This week Bidvest announced the terms of a possible transaction which will see Bidvest acquiring a 25% stake in packaging company Nampak. Over at least the last 10 years, Nampak has been a very poor performer, but in the 1980’s it was a market blue chip. At its depressed price, Bidvest clearly sees an opportunity.

    No matter what the quality of a company, no one has a permanent monopoly on blue chip status.

    Nampak was a Barloworld company before being unbundled. It had blue chip status in the 1980’s and 1990’s. I came across these comments in mid 1995 Financial Mails.

    “There's no arguing with success. And Nampak's preliminary results for financial 1995 again confirm -- if this is necessary -- the extent and depth of this company's professional approach to its business.

    This is largely a company which goes on delivering handsomely to shareholders. The pressure is now on management's ability to make assets perform more effectively. In a country with an expanding population and the hope of steady economic growth, well-run packaging businesses must be good counters to include in a portfolio.

    Nampak's current p:e of nearly 23 is somewhat daunting, though; even assuming another 20% rise in EPS, the p:e moves down to nearly 19 a year out -- expensive in anyone's book. But quality has a habit of commanding its own premium.”

    A blue chip rating if ever there was one. The problem was that from then on until now, the highly rated, highly regarded premium company under delivered to its shareholders.

    Merger and Acquisition announcements often provide some indication of the level of valuations.

    A concentration of M and A activity in any one sector often indicates high valuations allowing companies to issue shares as currency for creating larger conglomerates.

    Sometimes however an announcement may possibly give an indication of value. Bidvest is a local trading and distribution conglomerate with interests abroad.

    Brian Joffe, chief executive of Bidvest, is known as an opportunist buyer of businesses. Their business model prefers 100% ownership of the equity of subsidiary companies, but they do also look for strategic investments of between 20% and 35% in businesses, which have an alignment to Bidvest businesses.

    Bidvest currently holds around 5% of Nampak and wishes to acquire a further 20% at a ratio of 7.5 Nampak ordinary shares for one Bidvest share. Bidvest’s market cap is R37,8 billion and that of Nampak R10 billion. Note that it was around R10 billion back in 1995.

    Bidvest has been a fairly consistent out performer since 1995, while Nampak has been one of the market’s worst performing companies over this time.

    In conclusion, a highly regarded, highly rated company afforded the so called blue chip status, often makes a poor investment. Bidvest itself was afforded this status in the late 1990’s.

    It’s a mistake made too often. Value investors will always be careful not to overpay for so called quality blue chip status.

    Each investor should have a clear indication of what percentage of their portfolio is allocated to value.

    Have a great weekend



    Permalink2008-09-05, 20:04:02, by ian Email , Leave a comment

    Real returns across varying time periods

    Most investment analysts and investors have a good indication of the level of historical real returns generated across the various asset classes. This is important information used to construct an optimal portfolio mix. But we all know that capital markets are dynamic and so it’s more useful when long run real return data is segmented across different time periods.

    Fund managers, Prescient looked at real return data across different inflation environments from rising to low. As expected the more interest rate sensitive assets such as cash, bonds and property performed exceptionally well in a falling inflationary environment, but not well when inflation was running high.

    source Prescient

    When inflation peaked and started falling sharply from the late 1990’s, property and bond performance was strong. The base however was one of high yields. I.e. an excellent buying opportunity.

    What is interesting from the work done by Prescient is that over varying periods of high and low inflation environments, equities have produced varying percentages of real returns. This does not surprise when one understands that a company generally has an ability to pass on inflationary pressures to their customers over time and still make a margin for shareholders.

    Before tax cash has given an average of 2% per annum real before tax. It’s a good temporary holding strategy for a portion of capital, but unless very low risk of volatility is required, not a strategic holding.

    With inflation likely to come back strongly from recent peaks, there may again be a case for holding longer dated bonds and property. In the last 8 weeks a lot of this upside was captured in both the bond and property markets.

    What we do on a monthly basis is look at the current valuation of the various asset classes against their longer run real return valuations in order to get a view of whether to underweight or overweight different asset classes for the medium term.

    I will be sending out our monthly report next week with asset class valuations. Mail me your details if you would like a copy of this.

    Kind regards

    021 9144 966

    Permalink2008-09-04, 17:32:12, by ian Email , Leave a comment

    Discovery Results – Please Investors

    This morning saw the release of Discovery Holdings’ results for the year ended 30 June 2008. Discovery has been a massive success story in South Africa, and has now been listed for just short of 9 years on the JSE. I’ll take a closer look at some of the results that have clearly impressed investors, and potential investors:

    The past year has been quite eventful for this financial services company. A year ago, almost to the day, FirstRand announced that they intended to unbundle their 57.1% holding in Discovery, providing FirstRand shareholders with a direct holding in Discovery. This unbundling was effective from 19 November 2007, and has not only resulted in greater liquidity in the company’s stock, but allowed it greater freedom to compete with FirstRand.

    Over the financial year Discovery announced their intention to wind down the unprofitable US health insurance subsidiary Destiny Health, the launch of PruProtect (a life assurance joint venture with Prudential Plc in the UK), and the launch of Discovery Invest – an entry into the asset management industry.

    While financial services companies have generally had a hard time of late, Discovery was able to increase operating profit from established businesses to R1.8bn, up 39%. Embedded value (EV), a valuation method generally used in the life insurance industry, rose 16% to R30.15 a share. At current market values the share is trading at a 23% discount to EV.

    Out of their major subsidiaries Discovery Health increased operating profits by 21%, Discovery Life was up 38%, and Vitality's operating profit was up 14%. The company believes that they have been able to produce such good results because of their integration strategy, whereby the more Discovery products you use, the cheaper they all become. This is crucial to remaining clients when times are tough.

    Discovery Invest was launched earlier this year, and the group spent R157m on developing, launching, and transacting on new business. This is a large sum, but they believe that it will be money well spent. As at financial year end assets under management exceeded R1.4bn.

    Other key numbers were basic EPS up 6.45% to 212.9c per share, and a final dividend of 23c per share.

    Since its listing Discovery has strongly outperformed Old Mutual and the life insurance index, and has been slightly above Sanlam. The below graph indicates the differing returns:

    On a broader level Discovery has outperformed the financial index (returned 127.4% over this period), but underperformed a resource heavy ALSI (294.86%) since its listing.

    Discovery closed the day up 3.81%, comparing favourably to the ALSI that ended down 0.81%, and the life insurance sector down 0.77%.

    Take care,

    Mike Browne

    Invitation to presentation in Johannesburg:

    17 September 2008 at 9:30 am till 12:00
    Cost: R150 pp or R250 per couple

    Don't Retire - REFIRE
    Lynda Smith, Wisdom Preserver from Refirement Network will share on topic.
    Refirement Network helps the Baby Boomer generation (those born between 1946 and 1964) to understand why their road to the future will be so different from their parents and grandparents, Go to www.refirementnetwork.com for more details.

    Investment pitfalls in retirement
    The Seed Investment Consultants will share on your strategy to ensure a great future.
    Vincent Heys (actuary) from Seed Investments Consultants will discuss what the major investments pitfalls are leading up to retirement and in retirement. This presentation will be interesting for those baby boomers with questions like: How much capital do I need for retirement? What investment strategy should I follow? What is the probability that my capital will outlive me? Go to www.seedinvestments.co.za for more details.

    Contact Helena at helena@seedinvestments.co.za for more details.

    Permalink2008-09-03, 17:26:46, by Mike Email , Leave a comment

    Global markets and local volatiltiy

    For many investors it’s always a surprise when an asset price gains ground at the same time that the news flow surrounding it is negative. Intuitively it just does not make sense, but the fact remains that in times of higher volatility, where many investors get scared out of certain assets, opportunities become more prevalent.

    At a presentation this morning, Guy Monson, the chief investment officer at global fund manager Sarasin gave some insight into where they see global markets and valuations.

    The credit crunch, which started around a year ago with the demise of 2 Bear Sterns hedge funds, extended to major global banks and then to the US home loan giants, the quasi government Fannie Mae and Freddie Mac. There is no question that it has had widespread devastation on global financial assets.

    However he made the very important comment that Ben Bernanke, the Federal Reserve chairman of the board of governors is an expert on the 1930 great depression and, looking to avoid a reoccurrence almost at all costs, has been very aggressive in dealing with the issues..

    Wikipedia quotes the following on the US Fed chairman. “Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. On Milton Friedman's ninetieth birthday, November 8, 2002, he stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve System. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.”

    According to Sarasin Bernanke has used large doses of both conventional and unconventional tools.

    The widely known conventional tool is the interest rate. These were reduced very aggressively to the current 2% level.

    Unconventional tools used to rescue the financial markets have included an effective rescue of Bear Sterns, extending the primary dealer credit facilities and moving the implicit guarantee of home loan companies Freddie and Fannie to an effective nationalisation of these two major entities. These were all seen as further aggressive moves to generally ease liquidity in global banking.

    In the last month, the large pullback in commodity prices, especially that of oil has clearly assisted Bernanke’s cause.

    The US dollar has played ball and started gaining some lost ground relative to a basket of currencies.

    From a timing perspective we may be closer to the bottom – never a definite call – but 4 points that Sarasin wants to see before giving the All Clear are:

    o Negative real rates to support asset prices
    o Explicit swap programs for mortgage assets
    o Implicit guarantees for major US financial institutions
    o Stability in US property prices (to quantify collateral levels)

    Naturally many global investors will be looking for these and other triggers as a sign of the turn in global real assets.

    Today’s further decline in the price of crude oil helped global markets. Locally the JSE came back a further 109 points, but Industrials and financials were positive.

    On the same theme of volatility versus market timing in the local market please see the chart provided by Polaris Capital below, which depicts recent spikes in volatility were actually at times when the JSE All Share index was at a shorter term low point. I.e. heightened volatility may indicate a buying opportunity.


    Ian de Lange
    082 921 0220

    Permalink2008-09-02, 17:48:31, by ian Email , Leave a comment

    Excellent results from WBHO

    Spring start on the market today was more like a continuation of winter. The JSE All Share index started off lower on the back of weak global markets and trailed off throughout the day, with the overall index ending down 844 points or 3% to 26857. The Resource 20 index fell 5,4% and the gold index just over 6%. The Financial and Industrial 30 index lost 0,94%.

    The US is closed today and this always means lighter volumes on the JSE. Today R6,8 billion traded against a more typical R11 to R15 billion on a day.

    But lower volume does not necessarily mean narrow price moves. On the contrary today, some share prices fell sharply.

    As the hurricane Gustav weakened over the mainland, so this was cause for the price of crude to come back, falling to its lowest level in more than four months.

    Oil is now trading at $108,26/barrel for Brent crude. This is now down over 25% from its peaks around $147 just 6-7 weeks back.

    The decline saw Sasol share price fall to R400,52, down 5,75% on the day.

    Clearly today was not a day for resource bulls. Anglo American fell 4,65% to R388,99 and Billiton 5,5% to 22614c.

    Wilson Bayly Holmes in the construction sector produced results for the year to 30 June. After last weeks excellent results from Murray and Roberts, there was an expectation for excellent numbers, but still the price gained a further 4,7% to go against the negative trend, closing at 14350c.

    This is just shy of the all time high of R145.

    Benefiting from operational gearing, revenue gained 34% to R10,8 billion and this translated into operating profit up 156% to almost R1 billion – R962m.

    Operating profit margin expanded dramatically from 5,1% in 2007 to 8,3% in 2008. Headline EPS improved 147% to 1263c.

    The order book at the start of the New Year is R18,3billion up from R10,6billion and management have a very positive outlook for real growth into 2009 at similar margins.

    After dipping down to R100 in July, the price is up over 40%.

    In the construction sector Aveng gained 3,6% to 6859c, Stefanutti and Bressan gained 4,5% to 1850c but Murray and Roberts fell 3,85% to R100.

    Still they have performed well after being sold down more recently.

    Kind Regards

    Ian de Lange

    Permalink2008-09-01, 18:52:16, by ian Email , Leave a comment