ARTICLES

Anchor Group

There are more and more signs that the South African economy is turning around, not least of which is the consistent strengthening of the rand against the dollar. Apparently, last year in September about 75% of analysts believed that South Africa would endure a ratings downgrade. This year that number has dropped to less than 20% - which shows a significant turn-around in sentiment towards this economy, especially by overseas investors.

As a private investor you should be asking yourself how you can exploit this good fortune. The key is to try to find a share which is under-valued, but which has substantial upside potential. We suggest that you consider Anchor. This is a small asset management company run by Peter Armitage which began 5 years ago in 2012. Armitage was born in a trailer park in Boksburg and spent his formative years living in a caravan. From those humble beginnings, he managed to qualify as a chartered accountant and has built a formidable reputation as an investment analyst. In our view, he has the hunger and the skills to grow this small asset management company into something that rivals Coronation. In the year to December 2016, Anchor increased headline earnings by 34% and assets under management by 35% to R45,9bn. We also like the chart which shows a classical reverse head-and-shoulders formation after a long downward trend: The beauty of asset management companies is that when they become the flavour of the month, they can increase the amount which they manage very quickly without incurring significant increases in costs. In other words, it costs about the same to manage R46bn as it does to manage R500bn but the profits on R500bn are ten times as much. We believe that Anchor could easily be the next Coronation  and this success should be compounded by rising local and overseas markets.  

DISCLAIMER

All information and data contained within the PDSnet Articles is for informational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet Articles are based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any comment or opinion for any reason.

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A BIT OF HISTORY

Many years ago, in 1982 when I started this business (which became “PDSnet”), I ran advertisements in both the Rand Daily Mail (RDM) and in the Star – which were the two most widely read newspapers in Johannesburg at the time. At that time, we were a very small business and had no credit rating at all. Despite this the RDM immediately