Category Archives: Investment Strategies

Choosing Winning Shares

The problem which every private investor faces is that there are more than 400 different companies listed on the JSE. How can you choose those shares which are likely to be winners?

The old Wall Street adage goes, “Pick shares which are rising, in sectors which are rising and in markets which are rising”.

Of course, the problem with this idea is that it is likely to cause you to buy shares which already appear to be very fully-priced. The point that you need to get hold of is that shares which are very fully-priced often become even more fully-priced because they are extremely well-managed or have some kind of powerful business edge. A good example of this would be Capitec Bank – which is trading on a P:E which is nearly double that of the other banking shares, but which nonetheless continues to rise – excellent management and a powerful business edge. Read More

Picking Winners – Orion Minerals

One of the private investor’s biggest problems is selecting the right share. Out of the 400-odd shares listed on the JSE, how can you find those which will perform better – especially those which can offer a good capital gain?

Obviously, there are many different methods of finding winning shares, but the purpose of this article is to draw your attention to just one method which you may not have considered – looking at shares which are making new highs. A new high for a newly listed company is defined by the highest price since it was listed. For a share which has been listed for some time, it is defined as the highest price in the last six months. Read More

Our L4L Mistake

29th May 2017 we published an article (“Long 4 Life”) in which we extolled the virtues of a new listing – Long 4 Life (L4L). The important characteristic of this share was that it was started and championed by the famous entrepreneur, Brian Joffe (of Bidvest fame). Using his name, Mr Joffe raised R2,3 billion from eager investors anxious to participate in his latest venture.

Within a short time Mr. Joffe had brought Kevin Hedderwick on board as CEO. Mr Hedderwick is very well known for the fact that he built up Famous Brands to the dominant position that it now enjoys in the restaurant and fast-food business. The market loved this choice – how could Long 4 Life fail with two such talented businessmen running it? Read More

Premfish Plays the PE Game

One of the great advantages of listing on the JSE (or any market) is that it re-rates a company’s shares from their pre-listing level as a private company (which is usually between 3 and 5 times their most recent after-tax earnings). Most listed companies can look to trade on the JSE at somewhere between 10 and 15 times after-tax earnings – depending on their track-record and the type of business they are in (service companies tend to trade on higher multiples than, for example, manufacturing companies – because they have much less working capital risk). Read More