ARTICLES

Remgro

Six weeks ago, on the 3^rd of July 2023, we started the Winning Shares List (WSL) as a mechanism to help clients with their share selections. The idea of the list is that we add shares as our analysis shows that they have potential to go up by at least 30% per annum, excluding their dividends.

Our analysis, as always, is both fundamental and technical with a view to broader economic trends. Since no one can be 100% accurate in their share selections, we urged clients to maintain a strict stop-loss strategy so as to eliminate those shares where we got it wrong.

By the end of last week, we had thirty shares on the WSL, of which twenty-three were up and 7 were down. In order to achieve at least a 30% per annum capital gain, we require that shares go up by at least 0,082% (30/365) per calendar day. The WSL is available to clients on our web site (www.pdsnet.co.za) and on the Data Center.

On the day that we started the WSL (3/7/23) one of the shares we added was Remgro at a price of 14908c. On the previous trading day, 30^th June 2023 we had updated our opinion on Remgro in response to the Mediclinic results and said of Remgro, “We think it remains good value at current levels”.

Remgro is a diversified investment holding company with the following shareholdings at 31^st December 2022: Mediclinic 44.6%, OUTsurance 30.6%, Community Investment Ventures Holdings Proprietary Limited (CIVH) 57.0%, Distell 31.7%, RCL Foods 80.2%, Siqalo Foods 100.0%, FirstRand 2.2%, Discovery 7.8%, Air Products 50%, Total Energies 24.9% and Kagiso Tiso 43.5%.

Like most investment holding companies, Remgro trades at a significant discount to its intrinsic net asset value (INAV). Last Friday (11-8-2023) the share closed at 15799c – a 29,4% discount to its INAV of 22386c per share. This discount makes it immediately attractive, because it has already shown its propensity to release shareholder value by unbundling various assets, especially in RMIH (now OUTsurance).

Technically, after its recovery from the impact of COVID-19, the share moved sideways from June 2022 until June 2023. Then it staged an upside breakout on the 3^rd of July 2023 – which is when we added it to the WSL. Consider the chart:

It is well known that when a share moves sideways for a protracted period and then has an upside break as you see in chart above, the longer the sideways move, the stronger the subsequent upside move will be.

Using the low point in the sideways move (12573c on 14-7-2022) we can calculate the potential upside of the current move in Remgro. Our calculations indicate that Remgro could go as high as 25000c. Such “horizontal count” methods of determining the potential upside of a move are approximately 80% accurate in our experience and often under-estimate the potential.

Since we added Remgro to the WSL it has risen by about 6% in 40 days – which is the equivalent of 54,75% per annum (365/40 X 6%). We expect it to continue to perform strongly and certainly to remain at our benchmark of 30% per annum.

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.

PDSNET ARTICLES

Jerome Powell

The Federal Reserve Bank (“the Fed”) is completely outside the control of the President and Executive Branch of the US government. The chairman of the Fed is appointed for a renewable 4-year term by the President. The President cannot remove the Chair without cause. The current chairman, Jerome Powell was appointed by Trump during his first term as President and reappointed by

Uncertainty Soars

Investors are by their very nature risk takers, but they are always trying to reduce the risk which they have to take to a minimum. Donald Trump, with his threat of an international trade war and his on-again, off-again tariffs has significantly increased the level of risk in markets across the world. This can be seen in the extraordinary volatility in the S&P500

Liberation Day

Trump has done the unthinkable. He has deliberately engineered the collapse of the US and world stock markets in the nonsensical belief that somehow an international trade war will make Americans richer. Nothing could be further from the truth. His actions have taken the S&P down from its all-time record high of 6144.15 on 19^th February 2025 to Friday’s

The Creation of Money

The money supply of a country is a symbol of the goods and services of that country. Obviously, if the size of the money supply is increased more rapidly than the real growth of its economy, then you have more money chasing the same goods and services, resulting in rising prices. Since, over the long term, the only organisation that can create money is the government,

V-Bottom is likely

The 10% collapse of Wall Street, which is a direct result of Trump’s random policy of on-again, off-again tariffs, is very similar to what happened to Wall Street in February/March 2020 when investors tried desperately to accurately discount the impact of the COVID-19 pandemic.

Normally, corrections in the market

The Trump Correction

It is relatively unusual for the activities of American presidents or what they say to have an impact on the New York Stock Exchange, especially during their first 100 days in office. Trump, however, is the exception. His confused, on-again, off-again rulings on tariffs have rattled the market. Markets hate uncertainty and even Trump himself doesn’t appear to know exactly

Dividends

Investors know that the return on a share is made up of a capital gain plus the dividend. Private investors are mostly attracted to the prospect of making a capital gain on the shares which they buy and do not often consider the dividends. What they perhaps do not realise is that a capital gain is actually just the dividend in a different form.

Quarterlies

One of the major differences between the US equity markets and the JSE is that listed companies in America are required to report every 3 months, not every 6 months as they are on the JSE. The quarterly reports of the S&P500 companies are closely followed by investment analysts and predictions are made for their profits.

Gold's Record Run

On Friday last week, gold reached a new all-time record high of $2871.42 per ounce. Its gain in rands has been even more impressive rising from less than R1000 per ounce in August 1992 to last Friday’s close of R52864.85.

In our Confidential Report of March

Growth by Acquisition

Hudaco (HDC) is a master of growing by acquiring smaller businesses in similar fields of activity or businesses, which then complement its existing suite of businesses. It has been making these bolt-on acquisitions for many years and has developed great expertise at selecting and evaluating appropriate targets.

These bolt-on acquisitions are mostly small