The Confidential Report - June 2025
4 June 2025 By PDSNETAmerica
Over the past month, as expected, Trump has vacillated on his tariff policies and Wall Street has recovered. In fact, investors have become so sceptical about Trump’s actions and statements that a new term “The TACO Trade” has been coined. This term refers to those trades which seek to exploit the fact that Trump inevitably backs down on the radical policies which he has proposed. TACO is an acronym of “Trump Always Chickens Out”. The TACO trade seeks to take advantage of Wall Street’s initial downtrend when a tariff is announced by going long on equities at the low point and then waiting for Trump to reverse his position with an inevitable market recovery. Trump’s repeated reversal of radical tariffs over the last few months has caused investors to become blasé about his statements with the result that his ability to impact markets is declining. Consider the chart:
The S&P500 has now recovered most of what it lost during the Trump tariff correction – mainly because he has predictably backed down on most of the tariffs which he announced. In last month’s Confidential Report, we suggested any recovery in the S&P of above 50% (i.e. a level of 5563) would increase the probability of the index reaching a new record high. It has now recovered 80% of what it lost, and we believe that a new record high is almost inevitable within the next few weeks. On Friday it closed just 3,8% below the record high of 6144 which it made on 19th February 2025.
Two months ago, on 7th April 2025, and immediately after Trump’s so-called Liberation Day announcements when the S&P was close to its lowest point, we published an article in which we said.
“What would cause the downward trend to reverse? At this point only some sort of back-tracking by Trump on his announced tariffs could do this – and we remain hopeful that as the pressure on him to increases he will be forced to retract at least to some extent and with some countries.”
Trump’s consistent and predictable back-tracking which we anticipated in that article has now become a legend on Wall Street and we see his ability to impact markets being significantly reduced in future.
Notably, the US Trade Court has declared that Trump’s tariffs are unlawful and that he overstepped his authority. The tariffs have been cancelled by the court, and the government is required to refund those tariffs which it has already collected. Needless to say, the Trump administration has already given notice of their intention to appeal the judgement which may well go as far as the Supreme Court. Obviously, markets are relieved at the judgement. In our view, Trump’s ability to impact the markets has been significantly degraded. We think it is unlikely that his actions and statements will impact markets nearly as much in the future.
And again, we draw attention to the fact that the JSE hardly fell at all during the month of Trump’s correction on Wall Street. Instead, it has been making a series of new record highs. Consider the chart:
This shows that local investors (including ourselves) never really believed that Trump could or would actually implement the tariffs that he had announced.
The US national debt is rapidly approaching $37 trillion as Congress considers Trump’s “Big, Beautiful bill” which will cut taxes and add a further $3,3 trillion to the national deficit. The deficit is becoming a major consideration as the cost of servicing it absorbs more and more of the government’s income. It is fair to say that America is teetering on the edge of a debt trap - to the point where Moody’s has become the last of the three international rating agencies to downgrade America’s sovereign credit rating. This means that the US is no longer rated AAA by any of the agencies. Moody’s is predicting that the cost of servicing the US debt will consume close to 30% of total revenue by the year 2035. At the same time, the US government is expected to reach its current debt ceiling by August this year. The yield on the US 30-year Treasury Bill has risen above 5% making it even more expensive to finance the government’s burgeoning debt. Despite the unpopular efforts of Musk’s Department of Government Efficiency (DOGE) the government debt continues to rise towards unsustainable levels
Elon Musk, of course, has by now left Trump’s administration after having significantly disrupted various government departments with his DOGE. It is apparent that relations between Musk and Trump have also deteriorated with Musk now openly criticising Trump’s marquee tax bill because it will result in a higher deficit. DOGE has managed to reduce the size of the government workforce by 12% with early retirements, firings and buyouts. But his activities in government and his association with Trump have at the same time done enormous damage to the Tesla brand.
The Federal Reserve Bank’s monetary policy committee (MPC) held interest rates unchanged at their meeting on 8th May 2025 with Chairman, Jerome Powell, saying that the US was in a strong position and could afford to wait and see the effect of Trump’s tariffs on the economy before taking further action. At the same time, the Chinese announced that they would be cutting interest rates and there was news that the US Secretary of State, Bessent, would be meeting with a Chinese delegation in Switzerland to pave the way for trade talks. Our view remains that Trump will back down sooner or later on almost all of the tariffs that he has announced, both with China and other US trading partners.
Supporting Jerome Powell and the monetary policy committee’s position, the US consumer price index (CPI) fell to 2,3% in the month of April 2025 – the lowest level it has been in 4 months and down from the March figure of 2,4%. Core inflation, which excludes food and fuel was static at 2,8%. Both food prices and the oil price were lower dragging the CPI down. There is still no clarity on exactly how the new tariffs will impact inflation. The agreement reached with the UK and the prospect of an agreement with China have certainly improved the inflation outlook, but clearly not enough to cause the monetary policy committee (MPC) to cut rates. The Federal Reserve Bank is taking a cautious “wait and see” approach. They are in a good position to do that because the economy is performing well, and inflation is relatively low. If the tariffs are ignored it is apparent that the objective of a “soft landing” is in progress.
Ukraine
In the last week or so Russia has been increasing its drone and missile attacks on Ukrainian cities. It has also apparently been amassing troops for a major “summer offensive” in which it hopes to take the remaining portion of Donetsk which the Ukrainians still control. Both sides are increasing their monthly conscription, but the Ukrainians can only field about half as many troops. Those troops are, however, better equipped and more motivated. Ukraine itself is receiving increased financial and military support from European countries, most notably Germany. In fact, the Russian invasion of Ukraine together with America under Trump’s pro-Putin position has spurred Germany to begin seriously rebuilding its military. Germany has recently committed to supplying an additional $7bn in aid to Ukraine this year. It is also establishing Ukraine’s ability to manufacture long-range missiles inside the country to make it more independent and able to defend itself. Some say that the situation has at last “awoken the sleeping giant”. And this is clearly very bad news for Putin.
In our view, Russia’s summer offensive is probably going to prove to be its last major push in this war. We believe that offensive is unlikely to succeed to any significant extent. Russia cannot afford to continue fighting indefinitely as its economy is taking enormous strain and its people are becoming more and more unhappy. At the same time, Putin is very aware that if the war stops his time as leader of Russia will be short-lived. The Europeans have also dropped all limitations of where Ukraine is allowed to strike making all of Russia a potential target.
It appears that Trump and America are now increasingly being sidelined in the efforts to negotiate a peace deal between Russia and Ukraine. In the latest effort four major European countries representing the “Coalition of the Willing” have agreed with Zelensky that the first step towards peace negotiations must be an unconditional ceasefire by both sides. Predictably, Putin has rejected this premise, probably because he is aware that peace talks could continue for a long time during which it would become increasingly difficult for him to keep his troops motivated on the frontline. He is also concerned that opposition to the war within Russia could result in him being ousted from power. The continuing war has become essential for his increasingly tenuous hold on power especially now that he is the unpopular process of conscripting a further 160 000 troops. The rejection of an unconditional ceasefire opens the way for US and European sanctions to be tightened further and for increased aid to Ukraine.
Political
Tony Leon, previously the leader of the DA, has said that the Government of National Unity (GNU) is subject to considerable stress because economic growth is not part of the ANC’s “orthodoxy”. Leon suggests that there are two major political events that will endanger the GNU. The first is the local government elections due to take place in 2026 or 2027 and the second is the ANC’s elective conference in 2027. If Paul Mashatile is appointed to lead the ANC it is unlikely that GNU will survive because both he and the minister of Minerals and Energy, Gwede Mantashe are “fiercely opposed” to the DA and want to see it removed from the GNU. Obviously, if the GNU cannot improve the level of growth in the SA economy, then it is unlikely to survive.
In the last quarter of last year South Africa averaged 76 murders and 128 rapes per day. These dreadful crime statistics show that policing in this country is of a very low standard. The police are themselves often criminal or corrupt and at best they are incompetent and poorly trained. The high level of crime is a significant disincentive to the foreign direct investment (FDI) which we so desperately need. Trump’s allegation that crime in South Africa is based on anti-white racial hatred is clearly unfounded, but crime is nonetheless a major problem which the ANC has completely failed to deal with during its 3 decades in office. As in many areas, the private sector has stepped in to replace the government’s lack of service. There are now 520 000 people working in private sector security in this country compared with just 180 000 police and crime has become a daily reality for most citizens. On a positive note, the DA leader, John Steenhuisen, backed up President Ramaphosa in the meeting with Trump to show that this country really does embrace a multi-racial solution to its problems. Whether that is sufficient to ensure our continued membership of the African Growth and Opportunity Act (AGOA) and the duty-free status of our exports to America remains to be seen.
The Sustainable Infrastructure Development Symposium (SIDSSA) which was held in Cape Town last week is used to launch the Construction Book for the year which includes 250 projects worth about R238bn. The government is planning to spend about R1 trillion on infrastructure over the next three years. The symposium was addressed by President Ramaphosa back from his successful visit to America where he met with Trump and discussed US/SA relations. In our view, Ramaphosa and his team handled the difficult situation with America very well and managed to effectively reverse the idea that there was a racist bias within this country’s government.
Black economic empowerment in South Africa, which is entrenched in our law, requires companies to achieve certain levels of black economic control, management, supply and skills with the objective of redressing the imbalances of the past and increasing black participation in the economy. Only about one third of JSE listed companies are submitting the required reports on their BEE performance. President Ramaphosa is a strong supporter of BEE and says that the economy is being held back by the relative concentration of ownership in minority hands. 20 years after the BEE policy was introduced only about 30% of the economy is estimated to be in the hands of black people. Notably, the DA is opposed to the policy of BEE in its current form.
Economy
The monetary policy committee's (MPC) decision to reduce interest rates by a further 25 basis points signals a resumption of the interest rate cutting cycle that began last year, and it is good news for the SA economy. The decision was based on benign inflation figures where the Reserve Bank projects inflation of 3,2% on average this year rising to 4,2% next year. The Bank also expects growth this year to be 1,2% rising to 1,8% next year. In our view, these projections are conservative. The gains in real take-home pay indicate spending in the economy may now begin to pick up steadily. A factor in the MPC’s decision was undoubtedly the more benign global situation where Trump has been back-pedalling on the tariffs he proposed on 2nd April 2025. The MPC is expecting one more 25 basis point cut before the end of the year.
The producer price inflation rate (PPI) has been stable at 0,5% in both March and April this year and is at the lowest level it has been for 5 years. Petrol prices have dropped 16,3% and diesel prices are down 14,5% over the past year leaving increase in food, beverages and tobacco up 4,7% as the main contributor to the PPI. The cost of water and electricity were sharply up in April and that has exerted more pressure on mining companies. The low producer inflation rate means that consumer prices are also likely to remain subdued going forward.
Take-home pay in April 2025 was down 2% from March – but up 13,8% from a year ago. With inflation at just 2,8%, this means that wage and salary earners are 11% better off in real terms than they were a year ago. Some of this extra cash will have to be used to counter higher effective tax rates this year (due to no adjustment to the tax brackets) and some will be used to meet Eskom’s 12,7% price increase. The consistently stronger rand and the lower oil price have reduced the cost of fuel locally and that is expected to continue into June 2025. Interest rates are also in a downward trend making home-owners better off as their bond repayments decline. The oil price (North Sea Brent) has fallen to a new support level at $60 per barrel – its lowest level since February 2021.
The BankServ economic transactions index (BETI) fell to 136,4 in April 2025, down from March’s 137,2 and the lowest level so far this year. BankServ is an automated transactions clearing house. The number of transactions in the month was 167,9m and the average value of those transactions was R7482. As South Africans make more electronic payments for smaller amounts, the average value of transactions is falling. The index also shows that South African’s are consolidating their financial positions, repaying debt and increasing savings as the high level of real interest rates in this country moves us from being a nation of spenders to a nation of savers.
The Bureau for Economic Research (BER) has reduced its forecast for South Africa’s growth this year to 1,5% from 2%, bringing it into line with Moody’s who also reduced their projection to 1,5%. The reduction was due to the new “Trumpian” world order as well as the difficulties in the GNU. BER now expects growth in the period between 2027 and 2030 to average about 1,6% which is well below what South Africa needs to absorb its school leavers into the economy. The International Monetary Fund (IMF) is expecting growth of just 1% this year and Standard and Poors has increased their forecast slightly for the period between 2025 and 2027 to between 1,3% and 1,6% [BD14]. The forecast would obviously improve if South Africa could negotiate a favourable trade deal with the US and also if the third iteration of the Budget was negotiated without endangering the GNU.
An organisation called the “Transnational Alliance to Combat Illicit Trade” or (TRACIT) has published a report in which it claims that the South African economy loses as much as 10% of its gross domestic product (GDP) to illicit trade in cigarettes, alcohol and pharmaceuticals. This has the effect of reducing tax revenue by as much as R18bn per annum. Over the 20 years from 2002 to 2022, the accumulated cost has been approximately R120bn. This obviously damages legal markets in these products and discourages investment into the country.
The budget finally agreed to by both the ANC and the DA does not include any VAT increases and cuts various government expenditures to compensate. Importantly, the deficit peak remains at 77% of gross domestic product (GDP), but the projected growth rate slows from 1,9% to 1,4% for this year. Finance minister Godongwana said that interest payments on the deficit were now R1,2bn every day. The government borrowing had been cut by R30bn compared to what was forecast in the 2024 budget. Overall, the final budget must be seen as a great achievement of bipartisanship by the government of national unity (GNU). The ability of the ANC and DA to work together is encouraging for both local and international investors.
The reality of the final iteration of the budget is that the now abandoned VAT increase is replaced by the increase in the fuel levy (16c per litre on petrol and 15c on diesel) and the fact that the budget does not adjust personal income tax brackets to adjust for “bracket creep”. Is this a good thing? Probably not, because the real problem is the bloated and highly inefficient civil service in this country and the constant need to bail out state owned enterprises (SOE). The government guarantee of a further R51bn for Transnet is the most recent example of this. The increase in the fuel levy is seen as burden on the poorest people in the country who are very exposed to transport and food costs.
In 2023 there were 329 days of loadshedding, in 2024 that dropped to 13 days, mainly due to Eskom's planned maintenance program which resulted in a higher energy availability factor (EAF). Now in the winter of 2025, apparently, the planned maintenance program has fallen behind and there will be more loadshedding. A little while ago, management at Eskom was saying that if unplanned outages remained below 15 gigawatts, then there would be no loadshedding this winter. Now the planned maintenance program has been scaled back and the Minister of Electricity, Ramokgopa, is calling for consequences as the country returns to stage 2 loadshedding.
In 2015, municipalities owed Eskom R5bn. Today they owe R109bn. This debt is the primary reason for Eskom requiring a bailout package from Treasury of R254bn. In an effort to contain and reduce this problem Eskom has been signing up three of the worst municipalities in distribution agreements – Limpopo, Free State and Mpumalanga. Eskom is asking the Treasury to make such agreements for all municipalities which are heavily in debt, mandatory. The Treasury’s municipal debt relief program for the municipalities has failed to reduce their debt.
The official unemployment rate increased in the first three months of 2025 to 32,9%. And if those no longer seeking employment is included then the figure jumps to 43%. In the quarter the economy lost 291 000 jobs compared with a gain of 132 000 jobs in the previous quarter. 119 000 jobs were lost in construction alone. The total number of employed people is 16,8m while the number of people without jobs is 8,2m. It is normal for unemployment to get worse in the first quarter because school-leavers are added to the workforce and the temporary work over the Festive Season comes to an end. Unemployment in the 15 to 24-year-old category is the worst with an unemployment rate of 62,4% - so unemployment among young people has increased from 43,8% to 45,1%. Having a matric qualification makes a difference, with matriculants only having an unemployment rate of 34,9% and those without matric at 39%. The North-West province has the worst unemployment rate at 56% while the Western Cape has the lowest at 24,7%. The city of Cape Town has added 86 000 jobs over the past year.
Manufacturing production fell in March 2025 by 0,8% - which is better than February’s 3,2% and January’s 3,3%. Manufacturing will certainly be a drag on gross domestic product (GDP) in the first quarter coming in at -2,3%. Manufacturing is still about 8% below the level that it was at before COVID-19 in 2020. Manufacturing sales declined 0,2% reversing February’s gain on 0,2% and following January’s 1% drop. Motor vehicles and transport equipment sales fell by 3,2%.
Mining production fell by 4,5% in the first three months of 2025 compared to the same period last year and mineral sales were down by more than 10%. The main culprit was platinum group metals (PGM) which fell by 13,7%. Low demand led to a drop in PGM prices and production cutbacks. Iron ore production was up 7,5% with Kumba increasing sales by 6%. Obviously, mining production remains important for tax revenue and also for employment. The decline in PGM sales is partly due to the spread of electric vehicles worldwide and increased use of solar power.
New vehicle sales in April 2025 were 11,9% higher than in the same month last year. In the first 4 months to 2025, vehicle sales are up 10,6% on 2024 – but prices have dropped on average by 8,6%. There was an improvement in the sales of bakkies and minibuses indicating that the economy is beginning to perform again. Affordability remains a problem with interest rates still relatively high, but the low inflation rate is resulting in a steady increase in people real wages. That also means that interest rates will be coming down some time later this year.
In December 2023 Transnet received R47bn in additional government guarantees to enable it to continue in business and engage in various reforms. By the end of March 2025, it only had R7bn of that left so on 22nd May 2025 the government gave it a further R51bn in guarantees – of which R10bn will be used just to pay the interest on its existing debts. The company’s debt stands at more than R135bn, some of which will have to be repaid or rolled over soon. Last week the international ratings agency Moody’s downgraded Transnet due to “unsustainable capital structure and deteriorating liquidity.” Obviously, Transnet’s role in the economy is too important for it to be allowed to fail so the government is keeping it alive with cash injections. Transnet is bringing in the private sector to assist with some of its operational problems.
The South African Post Office (SAPO) is in business rescue and, according to the business rescue practitioners, only has sufficient cash to cover its expenses for a further six months. SAPO received a cash bailout from government of R150m in March this year, but no further bailouts are included in the 2025/2026 budget. The business rescue plan, approved by creditors, is based on a further R3,8bn injection from government. SAPO owes money to SARS, its own retirement fund and medical aid (Medipos). It serves no useful function in the South African that we can discern and the sooner it ceases to exist, the better – especially for South African taxpayers.
South Africa has 2850 individuals with assets of R50m or more who contribute about R7bn a year to taxes. Altogether they have about R245bn in assets in South African and about R150bn overseas. It has been suggested that South Africa should implement a wealth tax on these individuals. However, any such tax would encourage them to take their money offshore and that would result in a loss of the tax revenue which they generate. People with this type of wealth are typically very flexible and capable of making alternative arrangements to move their funds to various overseas tax havens if it is worth their while.
The Rand
The rand/US dollar exchange rate has continued to strengthen over the past month but become more volatile as it responds to Trump’s unpredictable assertions and activities. The strengthening trend corresponds with the perception among international investors that the worst of Trump’s impact on the markets is now in the rearview mirror. This idea has led to a restoration of the “risk-on” sentiment which existed before his Liberation Day announcement. Consider the chart:
Following Trump’s election victory on 6th November 2024, the rand weakened steadily to reach an intraday low point of R19.93 to the US dollar on 9th April 2025 following reaction to the disastrous Liberation Day tariff announcement. After that it has been strengthening and now has broken below the previous cycle low and resistance at R18.80.
The strength also reflects the approval of a final iteration of the local budget by the government of national unity (GNU). This has consolidated the idea that the GNU is fairly robust and capable of compromise which is very encouraging for international investors. Our government bonds continue to offer very high real rates of return, especially since our annual inflation rate has fallen below 3%.
In our view, the rand will continue to strengthen although there will undoubtedly be periods of volatility and weakness as the situation in America fluctuates.
Commodities
COPPER The copper price, while volatile, has been in an upward trend since the middle of 2003. The upward trend reflects a general shortage of supply in the face of rising demand, especially from electric vehicles (EV) and the spread of solar power. Consider the chart:
According to the United Nations (UN) about $250bn of new investment will be required to meet future demand for the metal. By 2040, demand is expected to rise about 40% from current levels because of the spread of electric vehicles (EV) and solar panels but may fall in the short term due to global trade tensions. BHP made an attempt to buy Anglo American’s copper assets in South America for almost $50bn – but failed. We expect the copper price to continue rising as demand increases and supply lags.
GOLD
The World Bank expects the gold price to remain at high levels in 2026 as investors switch to gold as a safe haven investment during the current period of global trade tensions. The bank predicts that the gold price will average $3250 this year and $3200 next year. Technically, the US dollar price of gold has just made a short-term “double top” at about $3400 and fallen back. Obviously, the high gold price is very good for South African listed gold producers like Gold Fields, Harmony and Anglogold. Sibanye has also benefited from its local gold mining operations. We continue to expect gold to perform well in coming months.
COAL
The South African coal industry is in a long downward spiral as renewable energy replaces fossil fuels world-wide. The coal sector employs about 150 000 people, most of whom are involved in the mining of the mineral. In 2022 the Komati mine closed down while Hendrina, Grootvlei and Camden are set to close by 2030. Renewable energy accounted for just 2% of total energy in 2010 and now accounts for almost 20%. This trend is set to continue as companies and households move away from Eskom and install alternative solutions.
PLATINUM
The price of platinum is expected to increase by only 1% in 2025 to $970 per ounce. The falling price has led to the closure of mine shafts and the lay-off of more than 10 000 employees in the South African PGM industry. The platinum price has been falling since its peak at the end of February 2008 at $2150 per ounce. Amplats is planning to retrench 3700 staff, Implats has plans to let 4000 go and Sibanye has already fired 2600. Palladium prices are also expected to fall by as much as 5% this year. Only Rhodium is expected to go up by 8%. Obviously, much of the decline in PGM prices is linked to the spread of electric vehicles (EV) throughout the world. The 12,7% increase in electricity prices by Eskom is also a factor.
Companies
NEW LISTING
Shuka Minerals (SKA) listed on the JSE on 22nd May 2025. It describes itself as a “mine operator and developer” and its first project is to restart a coal mining operation in Tanzania known as “Rukwa”. The company is looking for capital of about $150 000 to get the mine up to a production level of 5000 tons a month and thereafter further capital of $1 million to take production to 7500 tons per month. The company says, “Shuka is also considering projects in Zambia, South Africa, and other African countries that are rich in copper, lead, and zinc.” As a start-up mining exploration venture operating in Africa which is known to be politically unstable, this share is extremely risky. So far, volumes have been thin with trades only occurring on 2 out of 7 trading days. In any event, the coal industry is in decline with the spread of renewable energy worldwide.
LEWIS (LEW)
Lewis has long been a favourite share of ours. It operates a chain of 918 furniture and white goods stores across South Africa. These stores sell furniture and appliances usually on credit to lower income groups and as a result the management of its debtors’ book is crucial to the company’s success. In its recently published results for the year to 31st March 2025 the company reported revenue up 13,5% and headline earnings per share (HEPS) up an amazing 60,35. The company’s store footprint was increased by the opening of 33 new stores plus the 16 stores it obtained with the acquisition of Real Beds. One of the most attractive aspects of this company is its strong balance sheet. At year end it had a net asset value (NAV) of R5,1 billion against current liabilities of R2,5bn and non-current liabilities of R854 million. This enables it to grow rapidly by making bolt-on acquisitions like Real Beds. Consider the chart:
We first recommended Lewis back in September 2020 nearly five years ago when it was trading for a price of 1540c. Then on 1st December 2023 we added it to the Winning Shares List (WSL) when it was 4150c. Since then, it has risen to its closing price last Friday of 8280c. On a P:E of 5,59 and a dividend yield (DY) of 7,73 it remains cheap, and we expect it to continue performing well.
ALTRON (AEL)
Allied Electronics Corp, or Altron (AEL), is an information and communications technology company which was started by Bill Venter in 1965. On 17th December 2020, the company announced the successful listing of its subsidiary Bytes Technology on the London Stock Exchange (LSE) at a price of GBP2.70. This unlocked considerable value into the hands of Altron shareholders but resulted in a "cliff" in the Altron share price. Consider the chart:
In its financials for the year to 28th February 2025 the company reported revenue up 3% and headline earnings per share (HEPS) up a whopping 73%. The company said, “Altron FinTech delivered strong profitability growth, with EBITDA up 38% to R457 million, driven primarily by strong growth in the SME customer base and increased volume and value of debit orders processed through its collection and payment platform.” This shows the potential of this company to grow further in coming years. Following the separate listing of Bytes, the share drifted down for about 3 years before beginning to recover. We added it to the Winning Shares List (WSL) on 15th November 2023 at 949c. It has subsequently moved up to 2358c – a gain of close 96% per annum or a total of 148,47%. We believe that it will continue to perform well.
SANTAM (SNT)
Santam is what we refer to as a diagonal share because the chart goes from the bottom left-hand corner of the screen to the top right-hand corner over a period of decades. The chart below shows the progress of Santam’s share price since the beginning of June 1986. On 15th June 1986 you could have bought Santam shares for just 90c each. On Friday last week, they closed at R420 and during that 39-year period they have paid numerous dividends culminating in their most recent dividend of 1520c last year.
In their most recent update for the three months to 31st March 2025 the company reported a return on capital of more than 30% - which extraordinary given the size of the company. Santam is in the insurance business and has operations throughout Africa and overseas. Consider the chart:
Here you can see the progress of Santam’s share price over the last 29 years. The period includes the 1987 crash, the dot-com crash of 1998, the sub-prime crisis of 2007/8, the COVID-19 pandemic, the Ukraine war and Trump’s recent tariff correction. What is notable is through all these diverse problems and the 9 years of Zuma’s state capture period, Santam shares just kept on going up. In our view this share should be acquired on any weakness and should be part of any private investor’s portfolio.
BLUTEL (BLU) – FOLLOW-UP
In last month’s Confidential Report we suggested that Blutel was worth a further look. At that time, it was trading for 849c. A week later on 16th May 2025 the company published a cautionary and alerted investors to their intention to separately list Cell-C on the JSE. BLU owns 45% of Cell-C which it acquired in September 2016. Separately listing Cell-C will obviously increase BLU’s net asset value(NAV) considerably.
Since that announcement the share has risen to 1185c – a gain of nearly 40% in just one week. Consider the chart:
TIGERBRANDS (TBS)
Tigerbrands (TBS) was always a solid blue chip on the JSE for many decades. Back in 1985 you could have bought the share for 395c (28-2-1985) and over the next 33 years it rose to a peak value of 47450c (25-1-2018). Then the listeriosis crisis hit and the share fell heavily, eventually reaching a cycle low of 13594c on 14th June 2022. Since that time, with the listeriosis problem largely resolved, the share has been returning to its former glory. Consider the long-term chart:
This is a semi-log chart of the TBS closing share price going back 40 years. On it you can see the impact of the 1987 crash, the 1998 dot-com crash, the 2008 sub-prime crisis and finally the effect of the deaths from listeriosis. It has taken the company years to overcome the reputational and financial consequences of the listeriosis event, but we finally came to the conclusion that the problem was over on 1st December 2023 and added the share to the Winning Shares List (WSL) at 18295c. Since then, it has been performing very well and look set to return to its former blue-chip status. The share closed on Friday last week at 34619c – a gain of 89,23% in 18 months. We see it as continuing its upward move.
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