Money with a dash of Funny: June 2015

Tuesday 30 June 2015

Swimming Naked In Greece

"With Greece having a large tourism sector, the financial crisis meant that less people could afford to travel which added pressure to the Greek economy. You know the saying, when the tide goes out you see who has been swimming with their pants off. Greece were starkers. Here is one of the six graphs."

To market to market to buy a fat pig. Another day and another update from the birth place of democracy. Markets all over the world were deep in the red with most markets down around the 2% mark! Most companies that were sold off yesterday don't even have operations or a link to Greece but were sold anyway. I suppose money managers are worried about contagion of the Greek crisis to other areas of Europe, where most businesses do operate or are at least linked to. It is a giant web and we are all connected. The big assumption and risk lies in the contagion from a Greek default. Having a look at the debt profile, only 12% of the outstanding debt is held by private individuals, leaving the majority to be held by the ECB and the IMF. Defaults or 'haircuts' on the debt held by private individuals is where the contagion can come from; the ECB and IMF are big enough to contain a default on their debt. I think the risk of default spreading to the rest of Europe is low.

Another reason why stock prices are falling is from the impact of uncertainty on earnings multiples people are willing to pay on stocks. There are a couple of factors that determine the earnings multiple investors are willing to pay for a stock. The base of your calculation is what the market's average P/E ratio is on all the stocks, then you factor in what the expected growth of earnings is likely to be (you are willing to pay more for fast growing companies) and then finally you look at how confident you are in your forecast of the companies earnings (the more certain earnings are, the more you are willing to pay for them). Looking at those three factors, uncertainty may result in people being willing to pay less for stocks in general (lowering the market's average P/E ratio), adverse economic situations may impact on the growth of earnings (lowering the premium you are willing to pay) and then finally uncertainty means that your forecasts of the future are in doubt (lowering what you are willing to pay). That is the theoretical reason for the short term moves in the share prices, remember though that you buy (invest) for the long term. The big questions for the long run is: "Will this company still be around in 10 years?" and "Will they be bigger and more profitable than today?". Unless the company has direct business in Greece, the happenings in Greece don't have an impact on the answers to either of those questions. How many people remember the last Greece debt crisis when talking about company profits? None! The last Greek debt crisis created a great buying opportunity for the shares of your favourite companies.

For most of us we don't have 'skin in the game' with the outcome in Greece. I chatted to a Greek friend of mine and this was their view: "Greece has to see that getting out of the euro zone, will be their best course of action, it will hurt like hell, in the short term, but it will be beneficial longer out.". Most market commentators are saying the opposite of this but they are not the ones voting in the referendum on Sunday or the ones that the current government represents.

Why does the man on the street feel like they are getting a raw deal? These 6 graphs highlight how things have been going backwards for the average man - Greece, in Charts: How Bad Is It? With Greece having a large tourism sector, the financial crisis meant that less people could afford to travel which added pressure to the Greek economy. You know the saying, when the tide goes out you see who has been swimming with their pants off. Greece were starkers. Here is one of the six graphs.

image from the WSJ who sourced the data from Eurostat

Why do market commentates think that there is little chance that Greece will leave the EU? Here is why, Reverting to Drachma May Send Greek Currency at Least 40% Lower. Remember that all Greek assets will be valued in the new Drachma, so a 40% devaluation will result in an immediate state where your assets and cash are worth substantially less in Euro terms. It would be an ugly situation. The further result will be that any new loans that the Greek government would need to keep things running would be at interest rates substantially higher than the current interest they are paying.

Company Corner

Telkom released a Joint Update Announcement: Acquisition By Telkom Of The Entire Issued Share Capital Of Bcx. The purchase of Business Connexion has been in the pipe line since May last year, ideally transactions should be concluded in the shortest amount of time possible.

Even though Edcon is not listed, they have bond holders who need financial information. They released their Annual report today. The company has had a tough time with comparable store sales declining by 1.6% (subtract inflation from that number and you can see it is even lower than that). There has been a switch from their biggest brand Edgars to other stores like Woolworths. Their other brand CNA has been on a steady decline as technology makes their stores irrelevant in the modern day context. Interesting numbers in the annual report is their Zimbabwean business, which grew by 13% and has gross margins of 45.9%, higher than their South African cousins. Yesterday Bloomberg had an article showing how stretched things are in the company - Bain-Owned Edcon Faces Day of Reckoning With Bond Payment.

Yesterday Steinhoff released a Strategic review update, which gives a nice view of their business and the timing of their Germany listing. The plan is to push to grow market share in Germany, push for supply chain efficiencies and cost savings and the listing should take place in the final quarter of this year.

Then a big one for us and the market given its size is Naspers who announced its results for the year ended 31 March 2015.. Byron is currently writing an in-depth look at the results which we will post tomorrow, here is a snippet from the press release. "On an economic-interest basis, revenue grew 26% to R132,4bn, driven by growth across the internet, ecommerce and video-entertainment (previously pay-television) segments. Core headline earnings, an indication of sustainable earnings performance, grew 30% to R11,2bn, mainly due to increased earnings contributions from Tencent and some profitable ecommerce businesses".

Linkfest, lap it up

Ever wonder where to get cheap beer? Now you know - Here's What a Beer Will Cost You, From Kiev to Geneva. It makes sense that it is cheaper in developing markets where rents are lower and consumers have lower disposable incomes.

The reason that we get higher returns on the stock market is because of all the volatility in returns and the higher risk (when compared to cash) of having our investments drop in value - The Struggle to Define Risk. Depending on your time frame, resources, need for cash and a whole host of other factors; risk will have a different definition.

I love the Airbnb and Uber concepts because of my economics background. They make the way we use cars and houses far more efficient and are creating waves in the areas where they operate - How Airbnb is Taking Over Paris. Uber is unfortunately at the other end of the spectrum in Paris - Uber France Leaders Arrested For Running Illegal Taxi Company

Home again, home again, jiggety-jog. Markets in Asia are up today with Shanghai up a whopping 5.5%, following extreme volatility that has been experienced in the market over the last 2 weeks. European stocks are slightly in the red this morning, down around 0.5% and on a local front we are down 0.2%. Mining stocks are suffering today with Gold stocks down 3.8% after their solid day yesterday, the wide gulf between what unions are demanding and what companies are offering might be part of the reason coupled with the gold price declining over the last 2 days.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Monday 29 June 2015

Greecey Referendum

"On Saturday morning Tsipras announced that on the 5th of July a referendum will be held and the Greek people will decide on what to do. The result is mass confusion as to what the future looks like. The first problem is that the referendum may end up voting on proposals that are no longer valid as the deadline to reach a deal is tomorrow."

To market to market to buy a fat pig. The big news over the weekend is still the developments in Greece. On Saturday morning Tsipras announced that on the 5th of July a referendum will be held and the Greek people will decide on what to do. The result is mass confusion as to what the future looks like. The first problem is that the referendum may end up voting on proposals that are no longer valid as the deadline to reach a deal is tomorrow. The second problem is that a referendum may not even take place as some policy makers are saying that it may not be legal. The third problem relates to what the referendum will state, there are many moving parts to a potential deal, where some people may be happy with a certain level of compromise but not another level of compromise. Or will the result be to stay in the EU at any cost? Tsipras is in between a rock and a hard place. He was elected on the promise of lowering the debt burden but at the same time you do not want to be the Prime Minister who was responsible for your country leaving the EU. A referendum will allow him and his party to put any fallout blame on the Greek people themselves, where you can say the Greek people spoke and we implemented what they wanted.

Uncertainty has lead to people taking money off the table so to speak. Asian markets were deep in the red, the Hang Seng is currently down 3%, the FTSE is down over 2% and our market is down almost 2%. In Greece the banks and the stock market are closed today and there is a limit on ATM withdrawals of 60 Euros. The banks will remain closed until at least next week, after the proposed referendum. The bank closures are needed because a healthy bank can very quickly go bust if people believe that it is no longer healthy or in this case when people think the country that the bank operates in, is no longer healthy. Until there is certainty of where Greece is heading, there is going to be pressure on the banking system; the situation does not need to be made worse by the collapse of banks.

I don't think anyone wants to leave the EU but at the same time, having to cut back on government payouts will not be pleasant for the man on the street. Remember that one of the cut backs that will need to be put through is cut backs to pensions, the older you are the harder it is to still be working and it means you are essentially out of time to get a private pension going on the side. Here are some graphs showing how expensive it is for a state to fund a state pension.

Numbers from OECD report on pensions

A number of figures stick out for me, the first is how much more than average Greece pays in pensions as a percentage of GDP (13% v 7.7%). The other is relative pension that is paid out by the state in replacement of salaries (over 90% v 50%), which is again high. It is now clear why pension cutbacks need to take place for the government to get its spending in a place to pay back debt. The other stats to point out though is the Average Workers Earnings, which is around half that of the OECD average (explains why pensions are so high relative to average salaries). The next stat is the the percentage of the working population over 65, which sits at 30%; higher than the OECD average. There is a higher pension burden on the taxes of those people under 65.

The big news out of the US on Friday was the announcement from the US Supreme court that same sex marriages were legalised in all states. Regardless of your views on same sex marriages, there are definitly better things to be spending resources on than fighting it. The interesting thing to note though is how quickly public opinion has shifted in favour of it. I have seen a couple articles talk about how social media has made it more of a central topic and probably had an impact on the shift in public opinion.

Moving to the East, things are very volatile in the Chinese stock markets. Over the weekend China cut their interest rates by another 25 basis points to 4.85% which coupled with the Greece developments resulted in a very volatile market. There was an intra-day swing of more than 10%, the market bounced between being positive 2.5% and negative 7.6%, finally closing down 3.3%. Volatility like this is definitely a symptom of leverage where people start selling because they have to and not necessarily because they think they should. The problem with buying stocks with borrowed money is that when markets go down you can loose most or all of your initial investment which means you need to sell to keep the shirt on your back. One persons selling pushes prices down further which means the next person needs to sell their shares to not 'blow up' and so the cycle continues.

Company Corner

Last week Nike released solid fourth quarter and full year earnings which comfortably beat estimates, pushing the stock up 5% on Friday. Fiscal year revenues were up 10% to $30.6bn, this was up 14% if you exclude currency movements. Diluted earnings were up 25% to $3.70 per share for the year thanks to improving margins, share buy backs and of course solid sales growth.

The table below breaks down their sales by region, and then between Footwear, Apparel and Equipment.

For the full year footwear represented 58% of sales and grew by 17%, Apparel represented 29% of sales and grew by 10% while equipment contributed 5.7% of sales and was up 1%.

The stock price certainly reflects the growth and growth expected. Trading at $109.70 it affords a forward multiple of 26 times next years earnings. But with earnings growth of 25% the PE ratio to growth is close to 1.

Now we need to ask the question, will Nike maintain this incredible sales growth and what will be the drivers behind it?

First and foremost, brand strength is incredible. They are the Apple of apparel and footwear. They have just won sponsorship of the NBA and already dominate the NFL. They sponsor most of the major sports teams and personalities around the world. Here at Vestact we believe that not only will the adoption of sports and active lifestyles go from strength to strength but also the viewerships and following of professional sports. It targets our inner instincts for competition, rivalry and pride for club or country. In female sports this is also growing fast. The ladies Football World Cup is currently underway and receives huge media attention. There are huge global sporting events all the time and they are receiving more and more attention, especially amongst social media.

Participation rates are also growing fast. In the US there were 25000 marathon runners in 1976. In 2013 there were 541000. In 1976 10% were women, today 46% of the runners were female.

Nike have also embraced and to an extent pioneered the shift to athletics wear as a fashion statement, it even has a name, Athleisure. This shift has been huge for their apparel sales and we expect this to carry on growing, especially as it gets embraced in developing markets.

Our Investment philosophy at Vestact is to select stocks which are leaders in sectors which we expect to grow faster than what the market expects. Even though the market has high expectations we still believe it is underestimated amongst apparel and sportswear. We continue to buy Nike shares at these levels.

Linkfest, lap it up

It makes sense that armed forces are some of the biggest employers in the world - These are the 10 biggest employers in the world. I was surprised to see the UK NHS on the list.

An attempt like this pushes man and machine - Swiss Pilot Begins 5-Day Flight Attempt in Solar-Powered Plane. I struggle to be in a plane for longer than 12 hours, I cant imagine doing it for 5 days!

Home again, home again, jiggety-jog.Markets are down around the globe. Greece is being smeared all over our screens. Uncertainty means sell now, ask questions later. We remain calm here.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Friday 26 June 2015

Just Go to Gym

"One of our biggest holdings in the US, Nike had their 4Q and full year results out last night after the close of the market. They blew past analyst's already lofty estimates with EPS of $0.98 vs estimates of $0.83 and they grew revenue by 5% (13% excluding currency changes) to $7.79 billion for the 4Q vs estimates of $7.69 billion. Gross margins also grew by 60 basis points and their future orders are up by 13% to $13.5 billion. Given the earnings beat the stock was up 3% after hours, we will have to wait till 15:30 our time to see if the stock holds onto the over night gains when the US market opens."

To market to market to buy a fat pig. Still no deal in Greece. Moving swiftly along and more to the East, Iran. Negotiations will begin tomorrow in Vienna to set limits on Iran's nuclear program and result in sanctions being lifted. The target date for the agreement is the end of this month which could be postponed by another week. I don't profess to be a political expert but from an economic point of view it is always better for everyone involved to be part of an open economy and trading with the rest of the world. As per this article businesses are already lining up to get a piece of the pie - Iran is about to become the biggest free for all since the Soviet collapse. For us locally MTN has operations in Iran and has a whole bunch of cash sitting there that they would like to take out. If the deal to raise sanctions gives a clear commitment for the future, I see many businesses piling into the country which should lead to the Iranian Rial strengthening (see how the currency has weakened over the last year), which will be good for MTN when they take cash out.

taken from www.xe.com

The lifting of sanctions will allow more countries to buy oil from Iran, increasing local activity (good for MTN) and helping to push oil prices further down. For MTN, Iran is their 2rd biggest country in terms of customers and accounts for 20% of MTN total subscriber base. In terms of profitability Iranian Average Revenue per User (ARPU) sits at $ 4.01 compared to South Africa's $7.45 and a developed country like Cyprus of $19.35, there is huge room for growth in Iran and South Africa! As we have said before, a lower oil price is better for most people but will probably result in the slower adoption of green technology.

Company Corner

Advtech released a Cautionary Announcement at around lunch time yesterday. Here are the important parts, "The board of ADvTECH has received an unsolicited proposal from a third party which it is obliged to consider." The tone that I get from the SENS is that they are not too impressed with the offer and it will probably be rejected. We are not sure who the offer has come from. The two leading theories at the moment are Curro, who also happen to be under cautionary as of 2 weeks ago and the other is maybe the former CEO, Leslie Maasdorp. Given that Curro have recently done a rights issue and they would have to do another huge one if it was them making the bid (Curro market cap is R12 billion and Advtech is R5.2 billion); I doubt it is Curro who are making the bid.

One of our biggest holdings in the US, Nike had their 4Q and full year results out last night after the close of the market. They blew past analyst's already lofty estimates with EPS of $0.98 vs estimates of $0.83 and they grew revenue by 5% (13% excluding currency changes) to $7.79 billion for the 4Q vs estimates of $7.69 billion. Gross margins also grew by 60 basis points and their future orders are up by 13% to $13.5 billion. Given the earnings beat the stock was up 3% after hours, we will have to wait till 15:30 our time to see if the stock holds onto the over night gains when the US market opens.

Linkfest, lap it up

Looking at the growth in gym numbers and the growth in customers, it shines a good light on the Virgin acquisition by Brait. - Planet Fitness's IPO shows the incredible rise of budget fitness. This is not the Planet Fitness that we know in South Africa, this one is a different company and all their gym equipment is yellow and purple (hurts my eyes looking at them). The numbers confirm though the shift towards being more healthy which is good news for companies like Nike (as seen in their results) and for companies like Discovery who pay out less due to a healthier client base.

Linkin Park was and is one of my favourite bands. Given the rise of streaming services (which seems to result in less revenue for artists) the focus has shifted to leveraging off the brand of the artist to get revenue from other sources - What Happened When Linkin Park Asked Harvard for Help with Its Business Model. This is not a new concept, artists like Jay Z and Dr. Dre (who recently sold Beats to Apple) have been using their brands for years to make extra money.

One of my favourite bloggers shares his thoughts on Four Questions that he has been thinking about. He talks about what he thinks of interest rates, inflation and what he thinks the financial services sector will look like going forward. Here is a stat that he mentions which stood out to me (do with it what you will) - "There are 10,000 baby boomers retiring every day for the next 20 years"

Home again, home again, jiggety-jog. The healthcare stocks in the US were up last night after the US supreme court ruled in favour of Obamacare. The shares of HCA Holdings and Community Health Systems were up 8.8% and 13%! Having more people who are able to pay for healthcare, increasing the customer base for these companies is going to be very good for business. Markets in the US closed in the red, Asian markets followed suite and we are also in the red as I write. The volatility in the Chinese mainland market seems to be persisting, the Shanghai was down a mind boggling 7.4%! I've seen many reports of the average man on the street moving from speculating/investing in gold and moving into stocks. Add a bit of leverage to the mix and you can understand why there is such volatility. The image sums it up quite nicely.

I found this image in a newspaper a couple years ago, not sure which one though and who the artist is. Definitely not me!

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Thursday 25 June 2015

Monsanto the Environmentalist

"In the world I follow, I know that the biggest threat to endangered wild animals is land encroachment. GMO's are more efficient and require less land for higher crop yields. That allows more land to be untouched and to remain in their natural state. If everything was grown organically and naturally, the Amazon Jungle, the forests of Asia and certainly the plains of Africa would be under a lot more pressure."

To market to market to buy a fat pig. Greece! The name that is spoken regularly in our office not because of the debt situation but because Sasha is landing there sometime this morning. It will be interesting to hear what the views are from the average man on the street. For the rest of the world there was hope that the Greek saga would end last night. Not to be the case, talks reached a deadlock and will resume again today. The way I see it, the 30th June is still 5 days away, which to me means that a resolution won't be reached until then.

Moving closer to home, Cell C and Facebook through internet.org announced that they are teaming up to help bring free internet to South Africans. What is internet.org by Facebook? Here is what their web page says, "Internet.org is a Facebook-led initiative bringing together technology leaders, nonprofits and local communities to connect the two thirds of the world that doesn't have internet access." I think having access to the internet will do more to level the playing field than anything else; which will empower more people and lift more people out of poverty. Google has a similar project, loon for all. Project loon is more focused on bringing internet to hard to reach areas than making the internet free but even having to pay a fee for access to internet in a rural area is worth it. The internet connection on the balloons is LTE which makes it a faster speed than most parts of South Africa.

Load shedding has almost become a "normal" part of daily life for most of us; this article from Moneyweb highlights how dire things are at Eskom - Even 25% fee increase won't lift Eskom from junk, Moody's says. There is no doubt that it is going to take many years to fix the power supply issues and that the South African tax payer is going to be the one paying for it, either through taxes or through increased electricity tariffs. As we chatted about in yesterdays message, the increasing costs of electricity is great for the alternate energy sector.

I am not a fan of public enterprises because I think it is easy to spend someone else's money. It does not demand efficiency or innovation because your existence does not depend on it. The time is here where the money flow is stopping and there is a need to have private companies involved in the production of electricity. I hope that the increased involvement of the private sector and competition of the alternate energy sector coupled with the financial problems at Eskom, result in a more efficient organisation. Only time will tell.

Company Corner

On the company front, there was a Renewal of Cautionary Announcement- Possible Infant Nutritionals Business Acquisition from Aspen. I wonder how big the deal will be and if it will result in a rights issue?

Monsanto is a controversial company. I often see posts on Facebook with deformed mice who have been fed food grown from genetically modified seeds. I won't pretend to know the science behind it all but I certainly know where I stand on the issue. I see myself as a conservation conscious individual. In the world I follow, I know that the biggest threat to endangered wild animals is land encroachment. GMO's are more efficient and require less land for higher crop yields. That allows more land to be untouched and to remain in their natural state. If everything was grown organically and naturally, the Amazon Jungle, the forests of Asia and certainly the plains of Africa would be under a lot more pressure. Today we feed 7.3 billion people using the same amount of land as we did 40 years ago to feed 4 billion people.

Monsanto released results yesterday which were solid but were negatively received by the market. Here goes.

"Net sales for the fiscal year 2015 third quarter increased over the prior year's third quarter to $4.6 billion, with gross profit for the quarter also increasing over the prior year period to $2.7 billion. For the first nine months, net sales were $12.6 billion and gross profit $7.2 billion.

The company's fiscal year 2015 third-quarter earnings per share (EPS) was $2.39 on an ongoing and as-reported basis, compared to an EPS of $1.62 on an ongoing basis and as-reported basis in the same quarter last year. EPS for the first nine months of fiscal year 2015 was $5.75 on an ongoing and $5.80 on an as-reported basis, compared with an EPS of $5.43 on an ongoing and $5.45 on an as-reported basis in the same quarter last year."

The company has volatile earnings as it relies on volatile crop yields and prices. Just like any commodity based supplier. The negative share price reaction came from a weaker guidance and an announcement to stop the share buy back program in order to pursue a massive $45bn acquisition of Syngenta. Syngenta dominate the global pesticide market, Read more about the deal here Monsanto Claims Accelerated Innovation by Combining with Syngenta.

The company has good margins and offers a vital service in an industry that will never go away. In fact, as populations grow and people get wealthier, more food will be consumed. It is certainly a growing industry. If you can stomach the earnings swings as crop prices change then Monsanto is still a great long term investment.

Linkfest, lap it up

The latest South African to become a Sir - Former Xstrata CEO Mick Davis now Sir Mick. He now runs X2 resources who were reportedly interested in the assets that now form South32.

Considering that many people use social media while watching TV, why not bring TV to social media? HBO and Facebook have teamed up to do just that - HBO and Facebook are teaming up to stream Ballers and The Brink. Given the number of eye balls Facebook has access to, this may be a long term way of circumventing piracy by removing the need to pirate a show. HBO could get revenue through the adverts placed on Facebook and through product placement in the series and Facebook get more eye balls for longer.

Say what you will about Carl Icahn, he has a talent for making money - Carl Icahn just closed the book on one of the greatest trades we've seen in years. His Netflix stake was bought at $58 a share and he sold the last of it yesterday with the share price around $700. Not bad for 3 years worth of work.

To add a bit of culture to our lives - The next Guggenheim could be a charred timber lighthouse. Am I the only one who wasn't sure if this was a real image or a computer generated one?

Image courtesy of Moreau Kusunoki Architectes/Guggenheim

Here is a look at CEO pay in comparison to the market cap of the company and how well the stock did over the year - Performance Pay Here is the 2014 image, thanks to the WSJ. The graph is interactive and goes back to 2010, so go have a look.

Home again, home again, jiggety-jog. Markets are up today with our three healthcare related stocks all up over 1%. The Rand is a bit stronger against the Dollar currently trading at R/$ 12.12, it seems that the new normal is for the Rand to be above and around the R12 level now.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Wednesday 24 June 2015

Solar Revolution

"We have to use fossil fuels until we get to the point where alternatives are cheaper. In a South African context it is getting more expensive, electricity, I still believe we are on the cusp of a solar (residential) revolution. If I were the big banks, I would be thinking (I am sure that they are) of extending loans for rooftop solar installations, that would dramatically reduce usage from the grid. The inverter and battery packs are expensive."

To market to market to buy a fat pig. The afterglow of the Greek resolution continued yesterday, yet I get the sense that this is not quite "done". The contentious 13th cheque for 1.2 million pensioners receiving under 700 Euros a month is part of the concessions, Syriza promised to put that benefit back. If you cannot afford it, then I guess that you cannot afford it. Berlin however is insisting that if the Greeks want the money from the bailout package their parliament must vet the reforms. Fair enough. Ironically the opposition parties may be more inclined to support the incumbent who has faced possibly more than he bargained for. The opposition, at least the ones that are not that crazy, are all for staying in the broader European Union. This is it guys, the money moment that I have been waiting for. It is a yes or no to the money based on pension and tax reforms that have been presented to the rest of Europe.

PASOK has less than five percent of the seats in the Greek parliament, New Democracy (which "stole" the PASOK support base) has 27.8 percent, the Communist party (yes) has 5.5 percent of the vote. Syriza, which consists of 17 different factions (and perhaps some more) certainly do not speak from the same page. Yet, they see themselves as united. If you read the different coalition members ideology it reads like 100 years ago: Trotskyism, anti-capitalism, maoism, communism, Marxism-Leninism, revolutionary socialism, democratic socialism, Eurocommunism, green politics, left-wing nationalism, socialism, Euroscepticism, and the list goes on. You get my drift? Yet, like most things in life, you cannot enable yourself without the right resources. Collectively Syriza are less wild than the Golden Dawn chaps, who have been described as neo-Nazi and fascist. Count them out from supporting anything sensible, OK? Yes, this is 2015 and not 1915. And yes, these are the very people who "invented" democracy. Is that right?

The WSJ says to wait and watch, sorry, subscription only: Differences Persist as Creditors Scrutinize Greek Bailout Offer. I have absolutely no idea what is going to happen. All I can say is that whilst this recent rally is something that has taken place across the globe, it has done so in part of a delayed rate rising (and slower pace) than many anticipate. The fact that people think that the Fed HAVE to raise at 25 basis points, really? Surely they can raise by 10 basis points until we get to one percent, why not? The Peoples Bank of China do this, currently the rate is 5.1 percent, it has been 6.56, it has been 5.81 percent. You do not need to move in a number that was always the case in the past.

So whilst Greece and their access to much needed capital is the current and only story, there are of course many in the background that continue to dominate over the longer run, including the Fed and interest rates. I often say that in all of my reading of the past and equity markets of the past, there is always anxiety of what the Fed are going to do and when they are going to do it. Do not make that part of your equity investment long term plan. Of course if a company is currently indebted in this low rate environment, then it becomes difficult to service that debt in a higher rate environment. If one owns businesses that are likely to have a better than even chance of growing comfortably past their current debt burden, then it does not matter too much, where rates go.

Ultimately you want to be owning stocks that have a balance between offering you the best possible returns against current and future dividends that the company pays. Not everyone wants dividends, indeed the greatest investor of all time, Warren Buffet has not paid a dividend from Berkshire Hathaway since 1967. In fact that is the only dividend that they (Berkshire) have ever paid. Only 1. It does not mean that Buffett does not like dividends, he loves them coming in from the businesses that he owns inside of Berkshire, he reckons and rightfully so, that he can do better with them. If a company does not pay you a dividend, it does not mean that they cannot. I am guessing in the coming years that traditional non dividend payers, like Google and Facebook, could hint at changing that. I thought that this Keep calm poster must exist and by jove it does:

Exactly. Keep calm, buy quality, stay the distance, ignore the noise about the Fed, about Greece, about all time highs (there are always going to be those events and many more MUCH worse), if you did nothing forever, you would miss out on returns over decades that need a base.

The US shale revolution has gone quiet, possibly as a result of lower energy prices. We do not talk about it enough, yet I read an article from the same chap who championed the changing world of oil. Fracking is an ugly word for many people, until we crack 2 hour marathons on a daily basis, that commute is going to take place in some form of transportation, be it public or a private vehicle.

We have to use fossil fuels until we get to the point where alternatives are cheaper. In a South African context it is getting more expensive, electricity, I still believe we are on the cusp of a solar (residential) revolution. If I were the big banks, I would be thinking (I am sure that they are) of extending loans for rooftop solar installations, that would dramatically reduce usage from the grid. The inverter and battery packs are expensive. As is a Nissan Leaf, I checked on AutoTrader, there were only 5 and they were ALL new, at a cool 450 thousand Rand a pop. A BMW i3? Same, almost all new and around 530 thousand Rand "used". So it is expensive. To kit your whole house out and go completely off the grid is going to cost you between 150 to 250 thousand Rand. That excludes the geyser and heating.

I guess you could continue to get hybrid systems, some gas integrated into that. You do not have to get an Elba fit for a king and queen -> From Hirschs -> R39,589.99. There are reasonable gas ovens everywhere! What does the gas supply look like? Mozambique could supply us for days and days, for now of course. I guess solar is the longer term answer, the sun comes up each and every day and last I checked there was no way to tax that.

If you want to read about the looming shale revolution, phase two, then you should read Mark J. Perry's piece: Bakken updates: 1) Williston as ground zero for the American spirit and 2) Here comes Shale 2.0!. A whole new round of technological advances means that extracting oil becomes more cost efficient, thereby lowering the prices of energy. Unfortunately that is bad news for economies that are reliant on higher energy prices. Good news for us as a net importer of energy.

Linkfest, lap it up

What does 12 months of forward planning and 3000 hours of reading result in? Well in most cases, it results in a good out come and some form of mastery in what ever you are doing. In this article it resulted in going to 41 countries in 4 years - I travelled to 41 countries using borrowed air miles and credit card points

I can't imagine a world without Google and the internet - Google's making me dumb.

Here is the great story of Frank Magwegwe who was unemployed and sleeping on the streets in the Eastern Cape, worked to get enough money to study and now is the segment CEO at Momentum Retail - About Frank. Sasha got to meet Frank on the "Tonight with Bruce" show on CNBC, here it is - If you are born poor in S. Africa, are you likely to die that way?

Writing is a great way to grow your own knowledge base and to share what you have learnt, with others - 10 Things I Learned Writing a Book. The article is well worth the read, even if you just look at the headings for each point.

We have spoken a few times about how Amazon is changing the landscape of publishing, Ben Carlson is the first author that I came across who has spoken about Amazon and then I read about how Amazon is changing their business model for books - Amazon to pay e-book authors like Spotify pays artists. Here is a look at how simple books can be if they are self published - In Search of a Smile: A Cleft Palate Mission to Malawi

Home again, home again, jiggety-jog. Handre Pollard was one years old when we won the World Cup Rugby 20 years ago today. I remember it pretty well. It was varsity holidays, I went home the next day. I watched one match live at the stadium in Port Elizabeth, where Hennie le Roux was off screen laying into the Canadian rugby team. Not exactly the best performance from us, unlike when New Zealand stuck nearly 150 points past the hapless Japan. And on that topic of Japan, the Nikkei 225 closed at levels last seen in 1996, AFTER this event. Wow, it certainly has been a tough road for Japanese investors over the last 20 years, many folks suggesting that the US could turn out the same. Different, bigger population, more diverse, positive population growth. Paul was there at the stadium on that day, good, exciting experience. Laurie Kay, the pilot of that SAA Jumbo sadly passed away in 2013.

Markets have started better here, great news for those who are long. I am off, I leave you in very capable hands. I shall return with real stories about Greece, although having said that, I am hardly living in peoples houses and sharing their lived experiences, it is just what people are willing to tell polite people.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Tuesday 23 June 2015

Pensioners sucked GM Dry

"I recall a story about a General Motors employee who received benefits long after they had finished and retired from the company, I am guessing that it is no different for the country. General Motors, as per what I read on the web (of course you can always believe it) had global worldwide pension obligations of 134 billion Dollars at one stage. To appease the unions, the largest manufacturer of motor vehicles increased retirement benefits. Eventually the company could not afford it and hey presto, people had to accept that their promises were broken, simply as a result of the company not being able to meet them."

To market to market to buy a fat pig. Up, up and away yesterday, from Stockholm to Sao Paulo, Madrid to Mumbai, through to Brussels, markets were sprouting. The humble and horrifying at the same time, Brussels Sprout is cultivated mainly in the Netherlands and the UK. Temperate climates in those parts. Eat them with something more delicious, which in most kids opinion is about everything. So why the global rally? A small country by global economic standards that has been capturing the imagination of Europe for half a decade, for all the wrong reasons, is on the brink of receiving their next round of cash. Yes, Greece. And seeing as the EU headquarters are in Brussels and that butter is another option for Greece (grease), perhaps the two do actually go with one another.

So what is the skinny on Greece? The Greek proposals presented to the other EU members was more favourable, more favourable with the people sitting with the cash. Meaning more reforms that have to be implemented in Greece in order to get the next round of funding. And the European Commission president, Jean-Claude Juncker said that he is confident that after the overnight meeting that he is almost certain that a deal will be reached before the week is out. Higher taxes for ordinary Greeks and changes to rules with regard to early retirement.

I recall a story about a General Motors employee who received benefits long after they had finished and retired from the company, I am guessing that it is no different for the country. General Motors, as per what I read on the web (of course you can always believe it) had global worldwide pension obligations of 134 billion Dollars at one stage. To appease the unions, the largest manufacturer of motor vehicles increased retirement benefits. Eventually the company could not afford it and hey presto, people had to accept that their promises were broken, simply as a result of the company not being able to meet them.

At the time of the bankruptcy in 2008, General Motors had 234 thousand people on the work force and an astonishing 493 thousand retired workers, all reliant on the company for their health and pension benefits. It was OK in the 1950's to offer free healthcare for life, times were amazing back then, as the market became bigger and the Japanese had better vehicles, GM lost their place as king of the castle. It is a reminder that there are many unintended consequences to offering people too much today, once the bar is raised there will be eternal bitterness when it is lowered. Apparently around 2 out of every three families in England depends on the state for welfare in some way or another.

Remembering that a lot of people earn the benefits whilst being a forced saver inside of formal employment for many years, not necessarily for the government. The fact remains that whilst rich countries have an obligation to look after the needy in society, where do you draw the line, or is that insensitive? I recall a Mad Magazine piece of two high street types looking disparagingly at a homeless person, one of them said: "Why can't he make his money the good old fashioned way, like me", to which the other one quipped "What, inherit it?" Whilst the world seems at times very unfair, you can "make it" from extreme circumstances even if the odds are stacked against you.

Getting reelected, offering too many benefits, that is what politicians do without thinking beyond their term in office. Not celebrating the human spirit enough, that is a fault that too many ordinary people make, celebrate excellence and aspire to be something "special". People solve people problems, not organisations or governments. To end off with, the Greek "situation" is now heading towards a solution, which is actually what everyone wants to see. Can kicking is a loose description given to extending the problem, I prefer using the expression, buying time. It turns out that we may well have to wait until Thursday for a "full deal", there is still work to be done.

Thanks as ever for your feedback, it is much appreciated. Here is an email sent from "agent Smith" down in Durban, when we spoke about older companies in South Africa:

... you might be interested to know that Adams & Co a Durban bookshop which is still trading in what was the main street of Durban and has several branches in the Province. It is 150 years old this year and Peter Adams is the present owner and who from time to time you can meet and be served by in one of his stores. He is a polite approachable gentleman and like his forebears a sagacious businessman.

For all you ignoramuses like me, who are less skilled in the English language, sagacious is as per the online definition wise or shrewd. I guess the biggest risk to their business is the internet and the changing environment from a technological point of view. You know that South African born Elon Musk is wildly clever, he pulled his kids from a school for gifted kids and stuck them into his own school, called Ad Astra. The school has so few pupils and most of them are from SpaceX. I agree that we continue to teach our kids in the same way for decades, it is time for a revolution in learning, we have the best tool at our disposal, where you can learn anything, the internet. What does that do for Mr. Adams' bookstore?

Company corner

Another thing about that Mediclinic deal to acquire nearly 30 percent of Spire Healthcare, and I only thought about it after the newsletter had departed our shores, is this a precursor to injecting bigger assets into Spire for a bigger equity stake, a controlling stake at some point? I was shocked when I did the snooping to learn that in 17 years since SABMiller listed in London (I am told they had actually listed in London 100 years prior, a couple of years before listing here), the share register, in terms of percentage is skewed at 84 percent in London and 16 percent here. It boggles the mind to think that ownership can change at that sort of rate in a relatively short period of time.

For the time being Mediclinic and Remgro, via the Spire Healthcare release (Acquisition of a 29.9% stake in Spire), are not allowed to make a further offers for all the shares inside of the next six months. That is how British company law works. And as the seller of all, bar for 8.4 percent of the rest of Spire, Cinven could well wait for the expiry date to finish before Mediclinic/Remgro buys the balance. After all was said and done, Mediclinic can buy more, they just need approval from the Takeover Panel. I guess that this is a cooling off period of sorts.

Two SENS announcements out this morning for companies that we hold.

The first is from Omnia, who have struggled of late. The Audited Results for the Year Ended 31 March 2015 were better than the market expected. The stock is up 7% as I write this. HEPS were up 2.6% and the dividend is up 3%, which isn't huge but I think the market was expecting those numbers to go backwards. Being linked to the mining and agriculture industries has not been easy, a saving grace for them has been the weaker Rand. We will cover them more tomorrow.

The second stock was Famous Brands, who will Acquire 51% of Retail Group (Pty) Ltd, Botswana. This is not a huge acquisition but it does give them more control of the operations in Botswana and more importantly it gives their (Famous Brands) huge amount of cash a place to work a bit harder. In their recent results they had R 126 million sitting in cash on the balance sheet.

Fact of the day

I wondered over the weekend what the origin of the Dollar was, the word and currency of course. The word Dollar is derived from "thaler", which is short for Joachimsthaler, according to Wiki. Which in turn was close to the name of a silver mine in the town of Joachimsthal, a place in Bohemia, modern day Czech Republic near the Ore Mountains. The Ore Mountains border Germany and the Czech republic and are often regarded as the place that modern day mining and by extension the industrial revolution started.

Silver coins were minted from this specific mine at Joachimsthaler. And Thal, according to Wiki is German for either a thing or a person from the valley. So the Dollar was a silver coin, the Thaler. In three years time, the first minted silver Thaler will be 500 years old. The size of the coin minted here became a standard of sorts and the Dutch produced something called the leeuwendaler, the lion daler (thaler/daaler). The Dutch East India company (which eventually became the Dutch West Indies company) set up shop in and around modern day Albany, which was far more hospitable. And guess what, they began using their coins, the lion daaler/daler. The Dutch had three coins, the aforementioned leeuwendaler, the rijksdaalder and the gulden, the modern day Dutch Guilder. Which was the precursor to the Euro, of course. Jeroen Dijsselbloem, the Dutch Finance minister remembers it well.

The coin was adopted amongst the Thirteen Colonies of the United States, the rest as they say is history. So the origin of the US Dollar can be traced back to a small area of Bohemia, where there was once a famous silver mine. And two parties, Georgius Agricola who hailed from Germany and was the pioneer in mineralogy, as well as a doctor, and the Counts Schlik family, who owned the silver mines from which the coins were minted. Hazy origins and not what you would expect, there you go. Today the US Dollar is the top reserve currency in the world, all commodities are priced in Dollars, so until that changes, it will stay the same.

Linkfest, lap it up

Every now and then you stumble across something non market related that you just have to share. Cape Town based, and on Instagram (she has 186 thousand followers) her miniature paintings are incredible, make sure you take a look: Postcards for Ants, Lorraine Loots. What talent, see her Instagram page to appreciate more.

Facebook is going to use all their data on you to add power to the Instagram advertising machine - Facebook is about to turn on the money jets for Instagram. The forecasts are for Instagram to have revenues next year of over $1 billion (same as they paid for it), the investment looks like a great one 3 years on. Going back to when they originally purchased it many people said they grossly over paid and others said that they got it for a bargain.

When was the last time you added photos on Facebook? I did over the weekend and I was pleased and surprised to see how many of my friends faces, Facebook could identify without me having to do anything. The result is that advertises know your face and will use it for better targeted adverts in the future.

While we are talking about Facebook - Facebook is now worth more than Walmart

There is still a huge luxury market in China, being able to sell 500 Maybachs a month is no easy feat - Mercedes-Benz's Maybach Sales in China Are Soaring

Have you seen the new Jurassic movie? Someone went and calculated how much it would cost to bring a Jurassic world to life today - Here's how much it would cost to build a real Jurassic Park. The number comes in the region of $23 billion, now all we have to do is find all those Dinosaurs DNA.

Home again, home again, jiggety-jog. Our market is marginally higher. I have a question, why do we never tell people how awesome they are when they are alive? Where is this going? Read Jamie Dimon of JP Morgan's eulogy for his mate Jimmy Lee. Do yourself a favour, tell your favourite people around you how awesome they are. Rather than when they are no longer around, ok?

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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Monday 22 June 2015

Mediclinic aSpire to grow in the UK

"So how is this going to work? Remgro, through a subsidiary in Jersey (Remgro Jersey, strange that, hey?) will buy the 29.9 percent stake for 8.6 billion Rand. Now you must remember that Remgro are the largest shareholder in Mediclinic, they own 41.3 percent of the business. Mediclinic, and this is the important part for us as Mediclinic shareholders, will then look to raise 10 billion Rand by offering 111 million shares at 90 Rand a share."

To market to market to buy a fat pig. There was a pretty big swing in markets here locally through the afternoon, the only stocks as a collective that managed to end in the green were the industrials. And that was just. US markets were having their equivalent of futures close out, triple witching is what they call it. As a holder of stocks and not a trader, this event has very little impact on you. All that it means is stock indices futures, stock futures and stock options all expire on the same day. File it in the drawer of events that happen, yet they do not impact on your life specifically. Things like a massive amount of sport on the weekend, if you are a Stormers fan then think about the free time you are going to have over the next two weekends rather than having to be somewhere, that sort of thing.

Whilst the Greek issue remains front and centre, somehow people are mystified at how this is not impacting the markets more. It is small, that is why. The total economy is less than 2 percent of the overall European Economy. It is solvable, that is why. I wonder if the government ever thought about asking the diaspora to lend a hand? According to wikipedia, there are an estimated 3 million people of Greek descent living in the US, 700 thousand in Australia and 400 thousand in the United Kingdom. In South Africa there are around 50 to 60 thousand, in Canada there are around 720 thousand, Germany, around 320 thousand. Add those all up and you can get to around half of the current Greek population. As I scroll right down the list I get to Mozambique and see that the estimate is 20. I remember that there was actually a Greek Orthodox church in Maputo, a woman that worked with my dad was Greek, so I guess I knew 5 percent of all the Greeks in Maputo. Here in South Africa, well, much less.

There seems, as we thought there might be, concessions from the far left. Which means that the Greeks may get the money in order to pay for the IMF portion of the loan, perhaps we should update it to getting (rather than rob, that is mean) from Petros to pay Paulos. I still think that the base case is that the Greeks concede and stay inside of the European Union, why would people be drawing money out of the system on masse, otherwise? Greek deposits are at an 11 year low.

As far as I can understand it, from the current withdrawal mode (around 1 to 1.2 billion Euros being pulled a day), reserves would be exhausted inside of the next four weeks. And then that would constitute a bank run. So all rich Greeks are telling you is that they want to still be inside of the European Union, otherwise they would gladly accept the alternative. As important as it is, it really is not the only story in town, it is just being made to seem that way as it is the most newsworthy. File it in the same drawer as options expiry day, it happens, yet as a longer term stock holder it has little or no bearing on what you are trying to achieve with portfolio construction. Even Bloomberg this morning asked if it is a sideshow, a very important one I would say, not the news that should make headlines every day.

Company corner

Whoa! This is huge. Mediclinic are going to buy a 29.9 percent stake in a LSE listed business called Spire Healthcare Group from Remgro, who will acquire it first from a crowd called Cinven. The exiting shareholder, Cinven, is a private equity business who initially bought the whole business, which consisted of 25 hospitals back then from BUPA in June 2007 for 1.44 billion Pounds. The business, Spire, was listed in 2014, Ciniven's holding went from 98.6 percent to around 54 percent. I am not entirely sure whether or not they will still hold stock after this, Cinven that is, in Spire. In April this year, JP Morgan placed 40 million shares with institutional buyers to see the Cinven stake reduce to 38.3 percent. They had previously done almost exactly the same number of shares in January of this year, clearly the stake was there to be exited and this probably serves the Spire Management really well.

So who are Spire Healthcare? They are one of the leading private hospital groups in the UK, operating (as per the prospectus): "39 private hospitals and 13 clinics across England, Wales and Scotland. The Group delivered tailored, personalised care to more than 236,000 in-patients and daycase patients in 2013, and is the leading provider by volume of knee and hip operations in the United Kingdom. The Group estimates that it also had more than 1.7 million out-patient episodes (including consultations) in the same period." They are specialists in orthopaedics, one of the majors in the UK. So, older patients being more active and getting paid by the NHS, that sounds like a good place to be invested? Yes, the short answer is definitely yes.

So how is this going to work? Remgro, through a subsidiary in Jersey (Remgro Jersey, strange that, hey?) will buy the 29.9 percent stake for 8.6 billion Rand. Now you must remember that Remgro are the largest shareholder in Mediclinic, they own 41.3 percent of the business. Mediclinic, and this is the important part for us as Mediclinic shareholders, will then look to raise 10 billion Rand by offering 111 million shares at 90 Rand a share. The number of shares in issue currently is around 865 million shares, around 1 per 8 shares you have right. I guess we will know in the coming weeks how it all works out. For the time being, all you need to know is that Remgro have the money to purchase this stake (which they need to get as a matter of urgency) and secondly, Remgro are the main shareholder, who will get their own back here by underwriting the rights issue.

What are Mediclinic ultimately buying? Well, for 8.6 billion Rand, for the 29.9 percent stake, you are getting 22 million Pounds in earnings on a pro-forma adjusted basis. As per the release. At the current exchange rate, that amounts to 424 million Rand, which means that this was bought at a pretty lofty valuation, around 20 times. That is however less than the Mediclinic rating currently. The share price of Mediclinic initially sank, it is however higher, along with the rest of the market, it is up around half a percent. What they are buying, Spire Healthcare, is 9 percent higher. It is however, below the price that they are paying, 360 pence is the purchase price, currently 349 pence.

Is it a big deal? The current market cap of Mediclinic is 86 billion Rand. The purchase consideration is around 10 percent of the current market cap, there is of course going to be a dilutionary impact in time. From a profits point of view, marginally more, the business is new to the market (even though the Spire assets are older). Opportunities finding their way through the developed market, Mediclinic is evolving faster than most would have anticipated. We certainly view this as a positive, remembering that the share price performance has been awful, since it peaked at 133 Rand a couple of months ago. We continue to recommend buying this company on weakness, at and around 100 Rand a share.

Taylor Swift is peeved at Apple and perhaps rightfully so, I can see it from her perspective. She reckons that many artists are too scared to speak out against the giant as a result of their clout, this time it is as a result of a three month free service for people using Apple streaming. Swift does not want her album there, she obviously can afford to be picky I guess, she hardly had a ghetto upbringing. That is not fair, you know what I mean though. So here is the letter: To Apple, Love Taylor. As she says, she is just doing this for the new artist, who cannot look out for themselves yet. She just reckons that Apple should start charging people from the beginning. I guess that might well be right, as she points out, she did not get a free iPhone, why should people get free music?

Apple caved. Eddie Cue, a big deal at Apple tweeted a series of tweets to confirm that artists will be paid for the three free months, read tweets from the bottom up of course:

No Apple "stakeholders" (I don't really like that term), rather shareholders will pay Apple Music streaming artists for three months. Bravo Taylor and bravo Apple for sorting this out so quickly.

Staying with Apple for a second and then shifting gears, the Lex column in the FT pointed out, sales from Apple watches alone may fetch around the same that Swatch might do for the full year. That is pretty astonishing that a new product can do as much in sales alongside a company that has been around for three decades plus. Of course the precursor to the Swatch brand and the group was Omega and Tissot, as well as Longines. And just recently they, Swatch, bought Harry Winston, which has been around since the 1930's. Omega is more than 110 years old, Tissot is 150 years plus, Swatch itself is "new" by watch standards, a dinosaur by internet standards.

Staying with watches for a moment, the Federation of the Swiss Watch Industry (FHS) pointed out that May sales saw the total Swiss Franc amount for the year (versus last year) come in flat. You can check out the sales numbers year to date, World distribution of Swiss watch exports. What is most interesting from that .pdf document is that whilst the biggest market in the world is Hong Kong, mainland China, the US and Italy all bounced back sharply. And I think that you want to know this too, how many watches a month are finished and sold. Roughly 2 million a month, around 25 million watches a year. See from this table: Wristwatches by materials:

They sell, as you can see, a lot of steel watches, half of the watches sold every month are stainless steel. Gold, not so many, around 2 percent of total sales. What is however more amazing is the following longer term Swiss watch exports by country, over a 15 year period, you can see how the value has exploded in China and Hong Kong. Equally the UAE experienced a whole lot of new watch sales, in 15 years, the most astounding is clearly mainland China. Who went from 45 million Swiss Francs in sales to 1.4 billion Swiss Francs. Whilst China is still a way off the biggest market in the world (Hong Kong), they are catching them fast:

What is more amazing is that the top five countries in the world (if you count China and Hong Kong as one) account for half the watch demand globally, the USA, France, Italy and Japan make up the balance of that list. The Germans obviously like German watches and not Swiss ones, even though in terms of proximity and access, it is the "closest". Perhaps the Germans are just less flash and more about functionality, then again, one hates to generalise. Any thoughts on that?

Linkfest, lap it up

Having a look at one of South Africa's best companies - The Steinhoff story - revisiting the humble roots of today's R260bn giant. I always enjoy reading about where companies begin. This piece is from 2006 which is before they become the power house they are today.

Given that most of the maps we see are flat; our view of relative size is distorted - Is Africa bigger than North America?. This web page allows you to compare different part of the globe with other parts.

Data consumption in South Africa is soaring and it is using mobile connections thanks to Telkom dropping the ball - Demand for online video soars in SA. Here is the reason to own MTN and Vodacom, "That number puts internet traffic at 24.5 Exabytes per month by 2019, a 10-fold increase over 2014 numbers."

Our lives are very busy and fast paced, so if I can get an extra hour or two out of a day because I sleep less then that is great - I once tried to cheat sleep, and for a year I succeeded. The conclusion is that we can't cheat sleep for the long term but the writer gives some good insight in their journey to changing their sleep patterns. I liked the concept of having power naps and being refreshed when you wake up (my most productive time is in the morning). I'm not sure taking a nap at my desk will go down well though.

Home again, home again, jiggety-jog. It is a holiday in China today. So at least their market cannot go down again, it has certainly been a lesson for the millions involved in the equities market there. I guess the important "thing" is that investors learn that there is no such thing as easy money. And this notion that there is free money, nonsense, each Rand/Dollar/Pound is hard earned. I can't ever remember the last Rand being easier to earn than the next one, no sir.

Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.

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