Monthly Archives: February 2018

Resilient and the 65-day EMA


The tactic employed by overseas short-sellers to take a short position in a well-traded share, publish a damning report and then close out the short position for a substantial profit is not exclusive to Viceroy. Our own 36ONE Asset Managers have done the same with the Resilient group of companies (including NEPI, Greenbay and Fortress), claiming that the company only achieved its impressive market rating by buying and selling shares between members of the group to enhance both volume and price. Read More

Capitec’s PEG


The badly researched report on Capitec by Viceroy has left the share trading at a significant discount. Following its immensely successful criticism of Steinhof, Viceroy’s report on Capitec was underwhelming to say the least.

Capitec’s CEO and many analysts have come out in strong support of the share – saying there is nothing wrong with its business model or its management of its delinquent loan book. It is also supported by both PSG and the Reserve bank. Nonetheless, the share price continues to wallow at a 25% discount to its peak of R1097 per share made on 29-12-17. Read More

Wall Street’s Correction


The correction which is taking place on Wall Street has now reached 10% – and it may go further. The JSE Overall index is down and will fall further to bring it into line with Wall Street. Other world markets are following suit. For the private investor, the key consideration is whether this is the start of a new bear trend or simply a correction and a buying opportunity.

When thinking about this, you should consider that prior to this, the S&P500 index had been rising at a rate which was clearly unsustainable. It rose by 100 points in just ten trading days – as we indicated in our article “The Bigger Fool” on 29-1-18. So now the correction is happening, what will it look like? Read More

The Confidential Report – February 2018


Political

The election of Cyril Ramaphosa as head of the ANC in December signals a sea-change in South African politics. Ramaphosa is not yet in a strong position and he will have to manage the recall of Zuma extremely carefully, but it is apparent that some Zuma supporters (like speaker of the house, Baleka Mbete) have seen the writing on the wall and changed sides. The Zuma/Gupta camp will not give up easily, however, and we can expect them to fight back. They have everything to lose. Ramaphosa also has the sensitive matter of selecting Shaun Abraham’s replacement as head of the National Prosecuting Authority. This choice will be critical since ideally that person’s first function will be to finally pursue the charges against Zuma. Zuma still has some effective control of parliament and the NEC, but many of his paid supporters are now beginning to think that their salaries will be more secure by moving to the Ramaphosa camp. This shift in the direction of the political wind is best seen in the strength of the rand which ended to the year at its strongest level since July 2015 and looks set to continue strengthening. Extricating South Africa from the clutches of state capture will be a difficult and delicate process which will require all of Ramaphosa’s skill, especially considering that there is an election to be fought in 18 months’ time. Read More

Viceroy and Capitec


The second Viceroy report on Capitec Bank may be a miscalculation. It is difficult to tell. On the face of it, there is nothing wrong with Capitec. It is extremely well-managed, strongly capitalised and has its parent company, PSG, and the South African Reserve Bank to support it. But can you be certain?

The extraordinary events of 26th, 29th and 30th January are typical of the type of difficulty that private investors occasionally experience in the market – a high quality share which is not behaving as it should. Of course, following the Viceroy revelations about Steinhof, investors are feeling very skittish about anything that Viceroy does and so when their report on Capitec came out, investors ran for the hills. Read More