PDSnet Articles

Speculating on Aveng


Aveng was once the largest construction company in South Africa and in August 2008 it traded for just under R70 per share. Since then it has been hammered by a host of problems beginning with the 2008 sub-prime crisis, to the dearth of construction work following the 2010 World Cup, the heavy fines imposed on the construction shares by the Competition Commission for collusion and several big contracts that went bad. The result of all this has been that the share price has plummeted to just 5c. Read More

Naspers Value


Naspers is something of an anomaly on the JSE because it accounts for roughly 20% of the JSE Top 40 index. This is because of an inspired decision by Koos Bekker to acquire a 33% stake for $32m in what was then a small internet/social media company called “Tencent” back in 2001. This investment has performed beyond even Bekker’s wildest expectations, exploiting the Chinese penchant for social media and gaming. On the 22nd of March 2002 you could have bought Naspers “N” shares for just 1245c. Today they are trading for around R2750 – and we consider them to be highly under-valued at current levels. Read More

Mining


It would be fair to say that the South African economy has been substantially built on mining – first diamonds, then gold and then platinum and a host of base metals and minerals.

South Africa is home to two geological features which have endowed it with enormous mineral wealth. They are the Witwatersrand Basin and the Bushveld Igneous Complex.

The Witwatersrand basin is an ancient sea bed which is buried under layers of sediment. It breaks the surface just south of Johannesburg and dips towards the south at an angle of about 20 degrees. As it goes deeper, the grades of gold increase because the weight of gold naturally caused it to sink deeper than other minerals. When extracted, the reef often includes the skeletons and shells of the ancient mollusks which once occupied that sea. Read More

Exploiting October Fear


Ever since the collapse of Wall Street in October 1929, October month has been a time of fear and nervousness for investors. That fear was compounded by the single day 23% drop in the S&P500 index in October 1987. So every October, investors, especially in America, worry about a possible melt-down in the share market. And, of course, some of them decide to sell out just in case there is such a crash. Those sell-outs tend to make October a volatile and scary month.

Last night’s 3,29% fall on Wall Street was a result of just such fear-based selling. Two factors caused the sell-off. One was the fear of interest rates rising more quickly than was previously expected. This is directly attributable to the strength of the US economy. Whenever there is a spate of very positive economic news, investors get scared that the Federal Reserve Bank will raise interest rates more aggressively – and ironically this causes shares to fall. Read More

The Confidential Report – October 2018


South Africa has become a battleground between good and evil, every bit as exciting and unpredictable as Game of Thrones or Harry Potter. On the one hand the forces of populism are seeking to drag the country backwards towards racism, entitlement, maladministration, corruption, nepotism and incompetence. On the other, the “good men” of the ANC like Ramaphosa, Gordhan, Manuel, Nene and others are striving to pull the country back from the brink – eliminating corruption, installing competent people in the SOEs and adopting better laws to govern key sectors. The good guys have already won many preliminary battles and weakened the position of the bad guys quite considerably. For example, the elimination of nuclear energy from our resource plan is a major step forward – and so is the Constitutional Court judgement which allows labour brokers to continue in business. There are obviously many more battles to be fought – and much has to be delayed until after the election in May next year. But the trend is in the right direction. At the same time, as we have been conducting our own internal battles, the battles of other emerging economies (like Turkey and Argentina) and the decisions of the American president have impacted on us. This is most visible in the volatility of our currency which continues to be the best and clearest barometer of exactly where South Africa is and how it is doing. If you want to know how good or bad things really are, study the rand/US$ chart. Everything of importance in this country, both internal and external is discounted there. Go to: https://www.forexforecasts.co.za/resources/live-charts/ Read More