ARTICLES

Two interesting shares.

Warren Buffett has famously been quoted as saying “Be fearful when others are greedy and greedy when other are fearful”. Right now, investors are understandably fearful and for that reason there are some unusual opportunities in the market. The shares which would obviously benefit in the post-COVID-19 period have already moved – shares like Prosus and Sibanye. In fact, mining shares generally have benefited from the fact that the commodity boom appears to be resuming its upward trend with base metals such as copper, nickel, zinc and precious metals, especially gold, palladium and rhodium rising to new highs.

So that begs the question, “Where should the private investor be looking now?”

Well there are some secondary shares which have been taking a real beating. They have fallen out of favour with the big institutions, but they are in industries which benefit from the economic recovery which is expected both here in South Africa and world-wide. In this article we are looking at two.

MASSMART

Is it just possible that Massmart is going to recover? Right now, most investors are quite rightly fearful of Massmart. But the new CEO, Mitchell Slape, imported from Walmart, has just bought R8,37m worth of Massmart shares – being 300 000 shares at an average price of R27.29 each. This is a rare display of faith by the man in charge. His opinion of what is going to happen at Massmart must surely be worth more than all the analysts combined. He is a high-flyer with a reputation for turning businesses around. He stands to lose not just his money but also his reputation.

Notably, his purchase of shares has been done at the exact moment when Massmart’s shares appear to be on the cusp of breaking above their long-term downward trendline. Consider the chart:

Slape has had enough time in charge of Massmart to have made a clear assessment of its potential and its value. We doubt that there is anything negative which he is not by now aware of. It is highly unlikely that he would make such an investment unless he believed that he would make a good return out of it.

And there is little doubt that if Massmart can be turned around, it will become a retailing powerhouse, not just in South Africa but also in the rest of Africa. South Africans have been putting off purchases of big-ticket items like fridges and washing machines because of the uncertainty surrounding the fallout from COVID-19. As the impact of the pandemic begins to fade, they will begin to buy again and Massmart stocks the kind of products that they will be looking for. We believe that there is some considerable pent up demand waiting for a return to some degree of normality in the economy.

If the share breaks strongly above that long-term downward trendline, then it must mean that institutional investors are buying up the shares at these low prices. In other words, perhaps you should add this share to your “watch list”.

BLUE LABEL (BLU)

This is a company which was pounded, because of its questionable purchase of 45% of Cell-C which is drowning under a mountain of debt. BLU has written its investment in Cell-C down to zero so that should no longer be a problem, and its remaining businesses are performing well.

The company is now looking at getting into the collection of electricity payments on behalf of municipalities. Collectively, the 257 municipalities in South Africa are estimated to be owed R191bn (of which R15bn is owed by government agencies). They are keen to install pay-as-you-go meters and turn their electricity supply back into the profit generator that it once was. To us this seems like an excellent business opportunity and one which offers considerable synergies with the existing businesses of BLU.

Technically, the BLU share looks like it might be about to begin moving upwards. Consider the chart:

Here you can see that after a long downward trend, the share is in the process of completing a reverse head-and-shoulders formation which is one of the most bullish formations in technical analysis. You can see that it is currently on the point of breaking out of this formation on the upside. It also gave a strong on-balance volume buy signal on 31^st August 2020. In our opinion, this share looks like a potential winner.

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

WeBuyCars - Results

The financial results of companies show how profitable they are and give a good indication of their share’s risk and potential return. WeBuyCars (WBC) is a recent listing which came to the JSE on the 11^th of April 2024. Unlike other listed motor vehicle companies, it is a company which specialises in the purchase and sale

Choosing Winners

We are often asked how we go about selecting the shares to put on to the Winning Shares List (WSL). Right now, there are 102 shares on the list with 5 having gone down since they were added, 94 are up and 3 are unchanged. On an annualised basis, 24 of them are performing at above 100% per annum.   

As a private investor,

Kore Revisited

Kore (KP2) remains at once the most exciting and most risky investment on our Winning Shares List (WSL) at the moment. We originally added it to the list just over a year ago on 16^th May 2024 at a price of 20c. It subsequently rose to a high of 83c on 3^rd October 2024 and we published an article

Rand Strength 2025

The strength of the rand is both a critical and a complex issue for private investors on the JSE. Our currency is influenced by two primary forces:

1. Our local economy’s prospects
2. The rand’s role as a leading emerging market currency

These, in turn, are

Sibanye Revisited

In these uncertain times, when nobody really knows to what extent Trump will back down on the international trade war which he has initiated, many investors are moving into precious metals as a hedge against the weakness of paper currencies (especially the US dollar) and paper assets like equities and bonds.

The problem

Smart Local Investors

The last two months have been wild on the markets – mainly because of Trump’s ill-advised, on-again, off-again tariff policies. The issue now is:

Will this morph into a full-blown bear trend? Or is this correction almost over?

From his election victory on the 6^th of November 2024,

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,