To market, to market to buy a fat pig. Wow. That was huge, a day of over two percent on the local market. Perhaps some Fed afterglow and the reality that whilst all the measures that the Fed put in place over the last 6 years seem to have worked, it can be celebrated that the economy of the biggest economy on the planet can now stand on their own two feet. It took longer than everyone anticipated, at least in the case of the US, the Europeans are still grappling with how to solve their problems effectively, productivity and human innovation would solve a lot.
You cannot have the working conditions and accept the same outcome as elsewhere in the developed world, or perhaps their model is the right one. As you know, each country in Europe has centuries of differences from one another, to amalgamate them with a single currency and accept plain sailing, perhaps that is naive. After all was said and done the S&P 500 did not quite hit an all time high, the index registered an all time closing high of 2018. The Dow Jones also set a new closing high.
Locally the ALSI ended at 49723 points, still over 2000 points away from the high point here. Dragging the rest of the index down are undoubtably the resource companies, average Chinese PMI data and a cooling (off an impressive base) economy has a lot to do with it. I am pretty sure that every single government in the world would want a "cooling" economy with a number of 7 in the front. From the end of July the resource stocks as a collective are down 21 and one quarter of a percent. Wow. And to add insult to injury, I tweeted (self importance time):
That is both right and wrong, as of this morning AngloGold Ashanti is in 44th place on the ranking tables by market capitalisation, it is however still a constituent of the Top 40 I was told. The index review happens quarterly, and takes place in March, June, September and December. According to the JSE website, this is the process: "The meeting to review the constituents will be held on the Wednesday before the first Friday of March, June, September and December using data for the purpose of determining full market cap as at the close of business on the Monday 4 weeks prior to the review effective date. Any constituent changes will be implemented after the close of business on the third Friday of the review month (i.e. effective Monday)."
The next meeting date is in a month time and will be based on closing prices 12 December. If it stays the same, then yes, AngloGold Ashanti will fall out of the top 40. The irony, the city that was founded on gold will not have a pure gold company in the top 40, that is progress, as someone tweeted back to me. It means that we have moved away completely from that reliance, the province and the city and we are now different. Good news I guess. The good news for now for long suffering AngloGold Ashanti shareholders is the share price on the results today (for their third quarter) is up over 3 percent at the start.
Good or bad, I guess the outcome has not been the best received by the market, this morning Bidvest said the following: "Following the conclusion of the preliminary evaluation of the Potential Listing, as well as a review of the strategic positioning of the Bidvest Group as a whole, the Board has concluded that the Potential Listing will not, in current circumstances, be in Shareholders' best interest. The strategic review has identified new opportunities in regard to the Group's operations which will be pursued over time." Oh. Well, perhaps the smart folks will apply their own discounts to the local business and their own premiums on the international businesses and come to a middling road there. Either way the disappointment from Mr. Market sees the share price down over three percent today.
And then the big news, at least from our point of view. On Friday, along with the rest of the market roaring ahead was an announcement from Aspen Pharma, I think that it is worth copying and pasting the relatively short announcement:
"Aspen Holdings is pleased to announce that it has concluded a transaction to acquire a 50% shareholding in New Zealand New Milk Limited (NZNM), a producer of infant milk formula in Auckland, New Zealand. In terms of a supply agreement concluded between Aspen Global Incorporated and NZNM, long-term supply of infant milk formula for distribution by Aspen in Australia will be secured. NZNM is one of a limited number of companies which holds the required endorsements from the Chinese regulatory authorities to produce infant milk formula for this key territory and the investment in NZNM represents another step towards Aspen's aspirations to enter the Chinese infant milk formula sector, valued at approximately US$15 billion."
Proximity to the Chinese market is key, although 9000 km is not exactly nearby, right? It is worth noting that in China there have been scares with milk formula specifically, there were some high profile cases a while back. In the same way that the origin of the product is important, for the feeling of security on standards, with your own child there is never a compromise. The "Made in New Zealand" infant formula, that country branding must be huge for parents across China, enough so for Aspen to cross the seas. Not much is known (for me and my research) about the company, New Zealand New Milk, all I have is that the CEO, Sanjay Khosla has worked for Unilever, Kraft and then Mondelez after the split.
NZNM, founded in 2001 is about all I can tell you. Perhaps more will be revealed in the coming days. A good move, as ever, from Aspen, the share price touched 400 Rand on Friday. Astonishing.
Leaving you hanging like that is the same as not knowing the high school secret. I am talking about Famous Brands, who late Friday terminated their cautionary as discussions related to it (the cautionary) had been terminated. From August 19 all the way through to now, that is over 70 days of talking, which is not insubstantial. The only other news in the last week is that Norman Adami, the current chair of SABMiller, will assume the role of independent non executive director from the 24th of February. Adami had retired from from his lifetime employer, SABMiller, at the end of July this year. Adami had been at that the beer company from 1979. Hold on, the Famous Brands announcement of the appointment of Adami suggested that Friday was his last day. Either way, we can be sure that Adami has a long holiday, much deserved!
35 years is a long time at any single company, loyalty is something rarer today, at least I think so. I saw that Adami (On his Who's who profile) was at some point in charge of SAB Limited Transkei in the 80's, working his way up to ten years later being Managing director in Jozi, until 2000. From then it was a stint in the US, back to South Africa for the end of his career. At SABMiller at least.
A new chapter begins for Adami, alongside his passion, breeding of big wild animals, the SENS release: "Norman is also a partner in Stud Game Breeders, one of the pre-eminent groups leading the emergence of South Africa's burgeoning game breeding industry, which has made great strides in revitalising threatened animal species and in creating sustainable employment in many rural areas." Sirloin burgers? I doubt it.
We wish the company and Adami good luck. This company has transformed from a business in which the family had control to one where professional managers run the business, Kevin Hedderwick (ex SABMiller himself), Santie Botha (ex ABSA and ex MTN) and now Adami are the high profile board members, the middle management layer is also excellent. The person being groomed for the top job seems to be Darren Hele (pronounced in the same way you would the ex Australian wicketkeeper), he is only 42. I must do some more homework.
Things that we are reading, that we think you should be too
The Norwegian Sovereign Wealth Fund is something that interests me, it is a fund set up by the state using taxes from the sales of oil. The logic is to have something for future generations from the natural resource advantage the country has today; something that could work in RSA? - How To Lose 158 Billion Dollars On Stocks In A Week
Investing/ Trading can sometimes seem all luck and all it requires is being in the market and you could select the stocks with a dart board - Could a Four-Year-Old Do What Carl Icahn Does?
Home again, home again, jiggety-jog. Hey, were you at the Soweto Marathon yesterday? I ran it again after last having done it in 2006 I think (I will have to check), equally slow, our little group managed to see Byron through his first marathon, we were all finished! All at our desks, so I guess we are NOT that finished, we should have tried much harder. Paul did the 21, he absolutely flew around the course, Michael did the 10km. And on that note, a very well done to Michael, he got engaged on Friday, that is the best news of the weekend!
The most disgraceful news, once a year we are met with the news that the US changes their clocks and the worst thing about that is for us, the market in New York opens an hour later. At 16:30 local time. Ah well. European markets opened an hour later last week, the first hour now has that void, the space before, the full hour before where we trade on our own. Such is life, the only good thing that it represents is that summer is in full view now.
Sasha Naryshkine, Byron Lotter and Michael Treherne
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