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 - May 2021

The US economy grew at an annualized rate of 6,4% in the first quarter of 2021 – which was much faster than expected. Gross Domestic Product (GDP) was $19,1 trillion – which can be compared to the $19,3 trillion of the December quarter of 2019 - before the pandemic took hold. This shows that the economy is now virtually back to pre-COVID-19 levels. The

Top of the Market Signs

In last week’s article, 12-Year Bull Trend, we pointed out that the bull trend was rising exponentially and ultimately that could only end with an exponential collapse. We said that the exact timing of that collapse was very difficult to assess.

You may also recall our article of 23rd January

12 Year Bull Trend

On 6th March 2009, just over 12 years ago, the S&P500 index made an intra-day cycle low at 666.79. It was the end of a 17-month bear trend which had seen the S&P fall by 57,4%. The world was in the teeth of the sub-prime crisis and negativity abounded. Investors were terrified.  The response to the crisis was massive and world-wide.

The Confidential Report - April 2021

The S&P500 index closed above 4000 for the first time on Thursday 1st April 2021 at 4019.


You can see the impact of the COVID-19 V-bottom, which we regard as an extraneous non-economic factor, and the subsequent acceleration of the S&P. Obviously, the


Hammerson has been listed on the London Stock Exchange since 1945. It is a real estate investment trust (REIT) and owns “flagship destinations and premium outlets in key cities across the UK and Europe”. Most of the company’s properties are shopping malls like Brent Cross in London, The Bullring in Birmingham and Dundrum Town Center in Dublin. Obviously,

Afrimat Revisited

On 25th May 2020, ten months ago, we published an article on Afrimat in which we said we liked what the company was doing and considered it to be undervalued. At the time Afrimat shares were trading in the market for R29. In the past ten months they have risen to R46 – a gain of 58,6%. Consider the chart:


OBV and Mpact

Joseph Granville, talking about the share market, famously said, “volume leads price”. By this he meant that the volume traded in a share tends to begin increasing before the price rises. He encapsulated this idea in his “On Balance Volume” technique (OBV). If you are not clear on OBV go back and re-read On

The Confidential Report - March 2021

The major change that has come about in America since the advent of the Biden administration has been a broad shift towards “risk-on”. The uncertainties associated with Trump are fading. American investors have welcomed the economic logic and sanity of the new administration with a desire to generate returns which are well above those offered by US Treasury


Naspers is the largest share on the JSE with a market capitalisation of R1,67 trillion. Naspers was founded in 1915, as a printer and publisher of newspapers and magazines. It has since evolved into an international social media, entertainment and gaming company.

This share has the problem that it is undervalued in relation