"When Buhari was involved in coups, most Nigerian folk were not born. I tried to get a balanced local look at the elections, trying to see the local media, they are mostly happy and apprehensive at the same time about change. Buhari comes with a strong mandate to fight corruption. Putting that into action and changing perceptions about Nigeria will be a huge job, I wish him well along the way."
To market, to market to buy a fat pig. First quarter out. Gone. G'bye. Nice knowing you. You're good, kid, but as long as I'm around, you're only second best. The you being referred to here is the Cincinnati kid, Steve McQueen acted that part. That was fifty years ago, that movie! Yowsers. Whereas April fool is the first day of April each and every year. Pranks day, don't get caught and end up being, in the immortal words of B. A. Baracus, don't be a "a sucker fool". The all share index, if you are keeping score, managed a gain of 4.85 percent for the first quarter. Not bad I guess, all things considered. In the US, the S&P 500 eked out a 0.44 percent gain for the quarter, last night there was a slump of 0.9 percent. The Dow Jones last evening was down over a percent, for the quarter it was down just over one quarter of a percent.
The standout for the quarter has undoubtably been the tech giants, the nerds of NASDAQ added 3.48 percent for the quarter. I favourited a tweet of Paul Kedrosky (not everyone's cup of tea) this morning: "The combined market cap of Dell, Microsoft, Intel & Cisco peaked at around 45% of Nasdaq 100 capitalization - & has since fallen to 14%." As some other fellow pointed out, in 2000 Nortel was 35 percent of the Toronto Stock Exchange. I remember when Dimension Data accounted for one third of overall trade during early 2000, that is on the JSE. The Dimension Data market cap of 16.381 billion Rand at the end of 1999 was really sizeable. Quickly, read the DD annual report from back then.
I think the point that Paul Kedrosky is trying to make is that valuations may seem stretched for the chattering classes, the growth of the newer technology businesses are outstripping the expectations of the past. Google trades on a forward multiple of less than 20 times, for the current year earnings, this is the first time that I have ever seen that. Further out that flattens even further to 16 and a half, that is the same as "old tech" companies like Microsoft. Microsoft had a tough quarter, down over twelve percent, Google managed to gain over four percent, perhaps the folks questioning the ability of the company to dominate search and the competition from Facebook is a concern. I suspect that Google will continue to attract innovative people, who want to change the world.
Nigerian elections are over, Goodluck Jonathan has conceded defeat to Muhammadu Buhari after it became apparent that he was way short. It was not the outcome that we had expected in this office, in fact in the predictions market we had suggested that it would go the other way. From the nearly 69 million registered voters, a little over 28 million cast their votes and sent Jonathan's PDP (People's Democratic Party (Nigeria)) packing. Better luck next time. The All Progressives Congress is only two years old, it was formed to take on the PDP and shuffle out what was seen as corrupt.
What interests me is that people can change their minds pretty quickly, plus they can vote for a candidate that was a former military dictator. Muhammadu Buhari is a bit of a journeyman, read his Wikipedia entry. He has won these elections on security concerns, promising to make Nigeria a safer place for its citizens. After four times of trying hard to get into power via the ballot box, he has finally won.
This indicates a certain maturity in Nigerian democracy, the fact that Goodluck Jonathan conceded. You can argue that the population is young, very young. If you believe the CIA Factbook and the Population structure of Nigeria. Less than 2 years ago, the estimates were that 63 percent of the Nigerian population was under the age of 24. Wow. And 43.8 percent of the 174.5 million strong population was under the age of 14. That is an exceptionally young population who want the same things as their peers globally. An education, opportunities, a better handset, One Direction tickets. I just added that last part in. The average total age of Nigeria is 17.9 years. Which means that when military rule ended in May 1999, nearly 16 years ago, the average Nigerian was 2 years old.
When Buhari was involved in coups, most Nigerian folk were not born. I tried to get a balanced local look at the elections, trying to see the local media, they are mostly happy and apprehensive at the same time about change. Buhari comes with a strong mandate to fight corruption. Putting that into action and changing perceptions about Nigeria will be a huge job, I wish him well along the way.
I am only selfishly interested for the purposes of the companies that we own in Nigeria. A peaceful transition and an economy that moves away from reliance on a specific resource. Human capital, innovation, energy and that entrepreneurial spirit that is associated with all things that are right about Nigeria. Let us hope that the old Buhari does not turn back to his old ways, ruling with an iron fist. I suspect that people can change. Read this, from the Nigerian The Guardian: We'll be magnanimous in victory, says Amaechi. At the start of trade this morning, MTN (after a pretty big fall off) is trading up nearly three and a half percent.
There is however another piece of news as to why MTN could be higher, and it is not a new story, it is of the company outsourcing their front end stores to a global private business called Brightstar Communications. Not a new story, resurfacing however.
Company corner snippets
Mediclinic released an announcement on Monday, titled Swiss refinancing, impact of Swiss interest rates, and UAE growth and refinancing. It is pretty simple. Mediclinic are taking advantage of a world of low yields to refinance some of their existing debt at lower rates, in a market where investors are looking for yield.
Low yields and searching for yield does not quite fit together, however fixed income investors in Switzerland have fewer and fewer options, if you read that the rate is 2 percent above Swiss Libor, you might be forgiven for thinking that is not favourable. However, when you read that Swiss Libor, as per the SNB website is negative 0.81 percent (three month), then it makes sense.
As per the last point: "(an) estimated total blended cost of the new package at a zero Libor rate is c. 1.73 % per annum excluding upfront costs." Cheap. Good work. Not so good work was when the SNB removed the Euro peg, Mediclinic have incurred a a non-cash flow interest charge of 25 million Swiss Francs, 20 million after tax.
They have then not only refinanced their UAE business, 85 basis points cheaper at 200 basis points. There is also an announcement that they are going to be building a 150 bed facility in Southern Dubai (which we are told is growing quickly), Mediclinic has reached an agreement to acquire land. Just a reminder, from the interim results there were 2 hospitals, 9 clinics and a total of 355 hospital beds, 27 clinic beds and a whopping 2293 employees in this Dubai business. As well as 538 doctors, both self employed as well as working for Mediclinic.
Whilst there is increasing competition in the region, there are also more citizen benefits (health benefits), their hospitals are doing well. The Mediclinic Al Hili is open now in the city of Al Ain (Abu Dhabi) to further service the needs of the locals. Citizens can get access to world class facilities without the need to travel far and wide. We now wait for the next Mediclinic update, ahead of their results on the 21st of May.
The very best place to find information about a listed business is their annual report. I try and read them as they hit the screens, to pick up simple things like, I don't know, Nick Holland of Goldfields earning in his personal capacity over 50 million Rand in the last two years. How have shareholders fared? In fairness, they (Goldfields) have increased production, cash costs have been fairly steady, shareholder returns have coincided with a general downturn in the bullion price. Meaning that unfortunately shareholders have not enjoyed the same personal returns. I guess that he, Nick Holland is "just doing his job" it is up to shareholders to decide how much he gets paid, not so?
Things we are reading
Boiling water is used in many of our energy generating systems, using this virus allows us to generate energy more efficiently - Discovery uses virus to boil water three times faster. Where technology is moving always blows me away.
Having a look at longer dated history helps put things into perspective. In this case, it highlights Buffetts sustained incredible returns. The other thing to note is how many decades the average return was under 6% - Buffett's Performance by Decade
The power of technology to help promote freedom - The $50 device that symbolizes a shift in North Korea. Going back as far as the printing press, which made it harder for authorities to control what people "thought". This device is doing the same thing in North Korea.
Home again, home again, jiggety-jog. Markets are lower here to begin with, most noticeably the gold shares. After being up around 30 percent at one stage during the quarter, the performance collectively of the gold counters is below the rest of the market. Sigh. Check it out later today, the ADP numbers will be released, those are a precursor to the jobs number Friday, completely untraceable on Easter Friday.
Sasha Naryshkine, Byron Lotter and Michael Treherne
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