14 March 2021 By PDSNET

The relationship between technical analysis and fundamental analysis is the relationship between the reality and the perception of that reality in a company. The fundamentalist searches for the share’s real value by studying the company’s financials. The technician studies the impact of investors’ perceptions as they are reflected in the share’s price and volume pattern.

The share’s price and volume movement can also sometimes be a good indication of the inside information known only to a select few within the company.

The investment analyst community mostly relies on a detailed evaluation of the financials supplemented with information obtained from the company’s top executive in interviews. The problem with that is that the company’s financials are anything between 3 months and 15 months old which tends to limit their value. Furthermore, the financials are not always an accurate representation of what happened in the company (as has been the case with Steinhoff, Tongaat et al).

But there can be no doubt, however, that, despite their limitations, the fundamental facts, when they are known and accurate, do impact share prices.

In the case of Aspen Pharmacare (APN), it published its results for the six months to 31st December 2020 last Friday (12-3-21). On the day, the information did not have a major impact on the share’s price – which implies that it had mostly been ascertained by the investment analyst community and contained relatively few surprises.

Everyone knew that Aspen was trying to reduce its debt levels. By the end of 2014, the board had allowed debt to reach unacceptable levels and ultimately had to sell its European Thrombosis assets and other assets to bring the debt down. By 31st December 2020 debt was down to R27,7bn from R35,2bn six months before and finally within the company’s debt covenants. A further R7bn was expected from the sale of the European Thrombosis assets which would bring debt levels down further to just over R20bn. Consider the chart:

>Aspen (APN): October 2011 - 12 March 2021. Chart by ShareFriend Pro.


Here you can see that until the start of 2015, six years ago, Aspen, an institutional favourite as a blue-chip rand-hedge share was rising steadily. Then the analysts began to become concerned about its debt levels and the share entered a period of sideways movement with declining tops and support at about R244. Those fears reached a climax in September 2018 and the share fell sharply to levels around R70 by August 2019 as the investment community tried to digest the implications of its over-gearing.

From that point the recovery began as the company’s board of directors realized that they would have to sell assets to bring the debt back under control. Their seriousness about reducing the company’s gearing resulted in a new upward channel which is still in progress.

In our view, this is a massive international pharmaceutical company which offers the private investor a solid rand-hedge. It is inherently profitable, and it is in an industry whose high-margin products are always going to be in demand. If management had not become excessively enthusiastic about new acquisitions, gearing levels would have remained under control and the growth path up to 2015 would have continued indefinitely.  

The current situation therefore represents a buying opportunity. This share, which you can buy for under R150 today, once traded for R434 – so we believe that there is still plenty of upside potential.


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.

Share this article:


The Confidential Report - December 2021


The US economy is still booming. Weekly jobless claims, for the week ended 20 November 2021, fell 71 000, while consumer spending jumped 1,3% in October month alone. Third quarter gross domestic product (GDP) came in at 2,1% - hammered by supply constraints, but above analysts’ expectations. Unemployment has fallen to 4,6% and

Transaction Capitals Trendline

In last week’s article on Grand Parade, we drew your attention to the importance and usefulness of downward trendlines (drawn above a downward trend) in establishing the best point to buy a share. This week we draw your attention to the benefit of upward trendlines (drawn below a rising trend) as a method of determining when a share, with a strong rising trend, has corrected

Grand Parade Trendlines

Technical analysis, which is the search for and analysis of patterns in share price charts, can become very complex and mathematical. Literally thousands of line indicators have been developed which claim to improve the investor’s probability of being right when determining the moment when a share’s price turns. In our experience, the

Private Investor Advantage

Finding winning shares is not just about looking for quality. It is about finding quality when it is cheap – which usually means finding it when it has fallen heavily and is out of favour with institutional fund managers. We advise you to look for the “mountain behind you” in the chart.

As a private investor

New Record High

As we predicted, the S&P500 reached a new all-time record high on Thursday 21st October 2021 at 4549.78. This officially means that the correction that it was going through is over. That correction took the index down to a closing low of 4300.46 (on 4th October 2021) – which is a 5,2% decline from the cycle high of 4536.95

Hulamin - Insider Trading

In our opinion on Hulamin, last updated on 3rd September 2021, we noted “What is noteworthy about this share is that it has a net asset value (NAV) which is more than 3 times its current share price making it a possible takeover target”.

On Thursday last week the company issued a bland “cautionary” notice


Calgro used to be the darling of the institutional investors. Every fund manager in South Africa was buying the share and it rose dramatically from as little at 50c in February 2011 to an intraday high of 2275c on 11th August 2015. At this point it had a market capitalisation of R2,8bn and was trading on a price:earnings (P:E) ratio of

The Confidential Report - October 2021


The S&P500 is in a correction which began after 2nd September 2021 when it made an all-time record high of 4537. Since then, it has fallen by as much as 249 points to an intra-day low of 4288 on Friday (1/10/21). This correction has taken 20 trading days and amounted to 5,4% at its worst. There are a variety


The context within which a chart is viewed is vital to your understanding of it. In this article we will attempt to show the broader context within which we view the market action which took place last Friday.


Let us focus our attention on the S&P500 index, which is a weighted average of the