Money with a dash of Funny: May 2017

Wednesday 31 May 2017

Abundance in the Jungle

"Equally, another business that reached an all time high last evening was Amazon. The stock price crested 1000 Dollars a share for the first time, having listed just over 20 years at 2 Dollars. Dividends you have been paid along the way? Zip."

To market to market to buy a fat pig Stocks were lower in the Wall Street session, open again after a long weekend. Most of the losses were as a result of the energy sector slipping over a percent on the session. The irony was that the Tesla share price reached an all time high, Elon Musk suggested recently that he thought the stock was overvalued (a week or two ago), that does not seem to bother those buying recently.

If anything, it is becoming incredibly difficult to dispute that the future of transportation and energy storage will be involving this business more and more. And their competitors of course, which is why Musk opened the book to all his competitors, that shows at some level that he genuinely cares about the environment and the future of the planet. In fact, he cares deeply about it so much (humanity), that he is exploring (like Amazon chief Bezos) about interplanetary living. And nobody thinks he is nuts, they rather think ..... when Elon, when? To own Tesla, you must be painfully aware that building an empire of this sort requires an enormous amount of capital and will suck cash in getting there. There will be moments that it looks like a failure, and it is not working.

Remember the fellow Austen Allred, who said that he was "all in" (his life savings) in Tesla in the high 180's, the stock is now 335 Dollars as of last night. And this is all in mid November last year. Astonishing, right? Musk simply answered (in-between all the haters telling Austen how dumb he was) "Wow, thanks. We won't let you down." There was another interaction on the same tweet sequence in which people were reminded that in the darkest hours when Tesla and SolarCity were on their knees (those of you who have read the book will recall this), late 2008, a day before Christmas, that Musk was all in on these investments too. And had run out of cash. He knows what it is like to "burn" and almost crash. In fact, he wrote off his dream car. He knows what it is like to write off dreams too.

All I can add to Tesla is that this is a company that you do not want to be against succeeding. The actual valuations, losses for the foreseeable future and question marks around the ramp up in Model 3 vehicles and deliveries will no doubt motivate Tesla more and more. People who work there want to change the future. The share price could halve from here. It could double. It may go nowhere for five years. Unlike old Austen (who may be in his twenties, judging from his pictures), I would advocate owning a "slice" in your portfolio, enough to take ownership and be a difference. Whilst I don't think that the outcome could be binary (it is not going to zero), the share price will definitely take heat if they do not meet lofty expectations.

Equally, another business that reached an all time high last evening was Amazon. The stock price crested 1000 Dollars a share for the first time, having listed just over 20 years at 2 Dollars. Dividends you have been paid along the way? Zip. I recall an older letter from founder Bezos that suggested that if you wanted short term returns, quarter to quarter, you were owning the wrong company in Amazon. In fact, so much so, that Bezos has not been on a single conference earnings call since the company listed. Four a year for twenty years, that is around 80, right? Not one. Nor does he partake in ringing the bell at celebrations at any exchange of any sort! He is too busy trying to help and empower consumers.

When Bezos asks himself questions in the latest annual report, there is something very simple about his questions and answers:

"There are many advantages to a customer-centric approach, but here's the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don't yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples."

Rather than obsessing about what shareholders/analysts want to hear on the conference call (in fact, Musk does his best to sideswipe these folks on these calls), Bezos keeps on trying to continue to commit to the original letter. The part that I was/am referring to is in the 1997 letter to shareholders, when he truly talks about the long term:

"We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions."

AND

"We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case."

In 1997 Amazon employed 614 people. At the end of 2016, there were 341,400 full and part time employees at Amazon. And as Michael said, how many robots? Lots. As Bright said, think about this for a second, Bezos is only 53 years old. He has plenty of road ahead. As does Musk. As does Zuckerberg. All these businesses were worth zero one quarter of a century ago. I get the sense that we are somehow in the middle of the next industrial revolution and instead of names like Cornelius Vanderbilt, Henry Frick, James Fisk, Charles Schwab, J. P. Morgan (John Pierpont), Andrew Carnegie, Andrew Mellon, John D. Rockefeller, Jay Gould and others, we have these titans of the internet and technology era. Page, Brin, the aforementioned Zuckerberg, Musk and Bezos, alongside the many others. Think Gates, Jobs, Ellison as earlier than these guys, in the same way Vanderbilt was ahead of those others.

Investors struggle to see how these businesses can be worth what they are (most noticeably the ones who don't own any shares in these businesses), the valuations will normalise in time and of course the businesses profitability after the grand plan has been implemented. In the case of some of these individuals, Musk, Bezos, Zuckerberg, they would suggest that they are only just beginning. A share price reaching 1000 Dollars is just an event, is my sense. I could not possibly know what is likely to happen next. Recognising that you are in a multiyear shift and in the midst of a disruptive business environment (and the investment opportunities that arise as a result of that) is another. Always hold the line when in doubt.

Linkfest, lap it up

You have seen this piece of plastic thousands of times. The Kwik Lok is the piece of plastic on top of the bread bag. A fellow by the name of Floyd Paxton hand carved (with a pen knife) out of a credit card whilst on a flight home from a business trip. Yes, pen knife, airplane and an expired credit card in his wallet. Kwik Lok makes tons of these things - Most of the World's Bread Clips Are Made by a Single Company. Simple ideas friends are all around us!

This is a debate that I think will intensify in the coming years, "Will automation lead to mass poverty?" - Visualizing the Jobs Lost to Automation. I came across a stat on Monday that said if you have over $2 200 in NAV you are in the top 50% of the globe. So if you have around R29 000 in assets you are better off than 3.8 billion people! Below is how the job mix has changed in the US, more skilled people are needed.

I'm not sure if I could start a business knowing it will be loss making for years. Tech companies need scale to make money and scale only comes by being around for a long time and allowing users to find you - Inside the GIF factory: How Giphy plans to build a real business by animating the internet.

"One thing Giphy hasn't figured out yet is how to make money. But after raising $72 million in additional venture capital funding last fall, monetisation is being talked about more seriously internally."

Surprisingly index investors tend to be less jumpy than expected. I think it comes down to being mentally prepared. Knowing that when investing in stocks, down turns will come around and being prepared for the "pain" of watching your stock portfolio go down is important. Being prepared means that you don't sell at bad times and if possible add during the down times - How Many Will Stay the Course During the Next Bear Market?

Home again, home again, jiggety-jog. Stocks have started lower on balance here in Jozi, The Spar group (with moving parts) reported numbers that were "ok". Amazon at 1000, Alphabet there nearly again (they did a stock split remember).

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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Tuesday 30 May 2017

Dine for the Bottom Line

"The business more importantly over time has taken control over production during the last few years, everything from tomato paste to fries to muffins to cheese. All big inputs where they can control the quality of the products, and more importantly, for the franchise owners not to get worried about the product delivery and stock. "

To market to market to buy a fat pig A ton of major markets were closed yesterday, it was one of those very rare days that all coincided with one-another. The US was closed for Memorial Day, the UK was closed for Spring Bank Holiday, whilst the mainland Chinese markets were closed for the Dragon boat festival. That same holiday rolls over to today, Hong Kong on the other hand is open for business on both days. I recently found out that Japan has a golden week holiday of their own, at the beginning of May.

With little direction from the major financial centres of the world, we were left to our own devices, a weakening local unit as a result of the president surviving another bout of no confidence. Remember the old Black Cat adverts where the kid eats a peanut butter sandwich and then wins the fight? Our number one may have a giant larder stuffed with tubs of Black Cat.

Resources benefitted from a weaker Rand, up seven-tenths of a percent, most of the other major indices were lower and by the end of the session the All Share had given up one-tenth of a percent. Mediclinic taking some heat post their results, the stock was down 2 percent on the day. Remgro, as a large shareholder in Mediclinic, also took a little heat. Hammerson and Anglo American were amongst the winners on the day. Tongaat Hulett, the sugar producer with land for sale in the Durban North area, bounced back after a torrid time of it with the recent drought. That said, the NAV is lower over five years and the share price is flat over that time. Producing a product that may be in demand by emerging markets, there is going to be pushback from the mainstream customers in time, is the best guess.

A couple of years ago the WHO urged all adults and children to reduce their sugar intake - Guideline, saying "A high level of free sugars intake is of concern, because of its association with poor dietary quality, obesity and risk of noncommunicable diseases." Back in 2003 the US Sugar Association wanted Congress to reconsider its funding of the World Health Organization, as a result of recommendations originally made.

I am all for free choices, if people eat vast amounts of anything, there are health consequences (can you eat too much celery?). If the state is funding your healthcare, then the state can decide what you can and cannot eat, as the same report above says: "Noncommunicable diseases (NCDs) are the leading causes of death and were responsible for 38 million (68%) of the world's 56 million deaths in 2012. More than 40% of those deaths (16 million) were premature (i.e. under the age of 70 years)."

So where does the line get blurry? Is sugar really awful and does it have a massive impact on humanity? More studies will give us more information in time. Most developed nations are the eaters of most sugar, per capita, currently the average US person consumes 126 grams per day, more than ten times the recommended dose. If there is broad societal pushback, the price of sugar could come under pressure. See the nearly 100 year sugar price, courtesy TradingEconomics.

Confectionary companies like Nestle have confirmed that they will use less sugar in their chocolate bar - Less sugar, great taste: A scientific breakthrough from Nestle, that meets the demand of the consumer. As the release says - "Nestle is patenting its findings and will begin to use the faster-dissolving sugar across a range of its confectionery products from 2018 onwards." So there ..... Like any commodity company, they have steady demand from an increasing population that is urbanising at a faster rate than at any point in humanity. The weather, politics and increased regulatory pressures are factors not in their favour. I don't know, what do you think?

Company corner

Famous Brands released their annual results for their financial year to end February 2017. These include Gourmet Burger Kitchen, the UK burger franchise that Famous Brands bought for 1,8 billion Rand during the last financial year. They also bought a potato chip (french fries) plant, Lamberts Bay Foods for 73.5 million Rand. There was also the acquisition of half of Mexican Salsa (nearly 5 million Rand) and half of the Italian restaurant (early stages) Lupa Osteria. Other than Lamberts Bay, I have been to all of these, for some "market research". Of course there was also the purchase of 49.9 percent of "By Word of Mouth", a well known, especially around these parts, catering business.

Equally, inside of this financial year, the French bakery PAUL has been opened. And If I was skilled enough, I could throw a cricket ball there from my seat (I would have to stand up). I also happen to know pretty well the fellow in charge of the single PAUL, they are looking to expand that wonderful (no carb clever there sportslovers, it is a bakery) store. Remember that PAUL is a French bakery chain that is "global", there are bakeries in the Americas, across the Middle East and of course in Europe (115 alone in Paris and the surrounds). South Africans are VERY receptive to international brands, not too dissimilar to most foreign markets liking international brands. Provided that they are of a certain quality, they (the consumer) will come. This creates interesting opportunities for employment and skillsets in these parts that fit international norms.

Herewith a breakdown of revenues and profits from all the separate divisions, as well as reasons that profits were 100 million Rand lower (more or less) than the prior reporting period. We can get into that in a minute.

See that piece I highlighted in blue? There is a breakdown of that a little later, which relates to costs associated with getting the GBK transaction and various other transactions done, 50 million Rand in total! And then losses on the currency hedges of roughly 55 million Rand (at the half year stage it was in their favour). Equally, and not small fry, Famous Brands impaired their Nigerian asset (Mr. Bigg's, the pie company) by another 20 million Rand. It can be fair to say that Nigeria has not performed to any expectations, either for the locals or the businesses that bought into what is a huge consumer base. Two-thirds of Nigeria's 180 odd million people are UNDER the age of 30 years. There must be scope for class migration higher in the coming years.

There you see the big difference. I wonder what the value of their half is in the Mr Bigg's business and whether that will eventually be written down to nothing? Not too worry too much, of the 2782 stores, only 125 are in Nigeria. There are only 97 GBK's at the moment. The restaurants that they are opening the most of are Debonairs, they opened one a week last year. Steers and Mugg & Bean, around once a fortnight. Inside of the emerging brands, Milky Lane is being rolled out aggressively.

The business more importantly over time has taken control over production during the last few years, everything from tomato paste to fries to muffins to cheese. All big inputs where they can control the quality of the products, and more importantly, for the franchise owners not to get worried about the product delivery and stock.

Why own Famous Brands? The business is in the sweet spot of more people eating out, the entertainment choices available to consumers is heading in the direction of "experiences". Meeting your friends and family at wonderful venues, be it value for money, higher up the chain or in the "luxury" segment, i.e. Tasha's and perhaps GBK now. Mythos, Lupa Osteria and even Mexican Salsa. The business has displayed in the past strong cashflows, the suspended dividend (for now) will be reinstated when the company is happier that these debts (only 16 percent gearing) can be paid down. We like the space, we are encouraged by the results and we remain buy rated on the stock.

JNJ is made up of three sectors. Pharmaceutical, Consumer and Medical Devices. Pharmaceutical is the biggest sector, making up 46,41% of first quarter sales in 2017. Medical devices come in at second place with 35,42% of first quarter sales. Consumer goods make up the remaining 18,17% of sales. When comparing the first quarter of 2016 to 2017 all of these sectors have grown in sales. The most sizeable change being in the medical devices sector which grew sales by $184 000 000.

The business is going to keep buying different products and companies that are profitable and can boost the areas in which their footprint is currently small. When you look at Johnson & Johnson's size, they have so much distribution power, they have so many relationships with different providers of medical devices, that they're able to take these smaller companies and leverage them and make them more valuable than they would have been as stand-alone.

Pharmaceutical

JNJ's biggest sector by sales and most profitable by margin, with operating margins of 39%. The pharmaceutical sector doesn't include the OTC (over-the-counter) drugs that they make.

Remicade has the biggest sales, making up 9,41% of first quarter sales of the entire business in 2017. Remicade is used to treat many auto-immune conditions including Crohn's disease, ulcerative colitis, rheumatoid arthritis and plaque psoriasis. There are 2,5 million prescribed users worldwide. Sales have fallen between '16 and '17 due to Pfizer releasing a biosimilar. Sales in the next few years depend on how the drug is priced relative to its new competitor.

Stelara is another immunology drug that has sales amounting to $824m (4.6% of sales) in the first quarter. It is an immunosuppressant that reduces the effects of inflammation. It was approved by the FDA for usage on Crohn's disease and sales have increased further.

Xarelto, is a blood thinning drug that is given to patients to prevent or treat blood clots. Since its inception in '11 the drug has gained momentum and sales have grown. It now holds 17.1% of total market share. It continues to take market share away from Walfarin.

Imbruvica, a cancer fighting drug has grown in sales by 56,7% over the last year to $409 million for the 1st quarter. JNJ plans seven new label expansion filings, including four that could add $500 million or more to Imbruvica's annual sales

Darzalex was only launched three months ago, it has already become the most prescribed fourth-line therapy in multiple myeloma, a multibillion-dollar per year indication.

There are many filings in the JNJ pipeline that are expansions on current drugs. What this means is that they are looking to utilise drugs for different uses than they have previously been approved for. Both drugs that treat cancer are in Phase 3. Zygita treats prostate cancer and Yondelis ovarian cancer.

Consumer

This is JNJ's smallest sector and the sector with the lowest margins currently at 20%, which is still an impressive number. It showed valuable sales growth over the last year. The business comprises of a broad range of products used in baby care, oral care, skin care, women's health, wound care and over-the-counter (OTC) medicines. OTC and skin care are the largest sales for the consumer products segment. Some of these products include Tylenol and Neutrogena. JNJ has taken steps to improve the business' profitability over the last couple of years. This includes a new management team, which led it to getting OTC products back on shelves in the United States and implementing new manufacturing quality standards.

Medical Devices

The medical devices sector of JNJ is the 2nd biggest sector but is growing quicker than the bigger Pharma division. In terms of margins it also falls in second place sitting at a juicy 32%. The biomedical realm is a dynamic environment with technology developments taking place all the time. This is a business segment that is very much managed by adding on small acquisitions and getting rid of low performers.

DePuy Synthes, the orthopedic sector of JNJ is the biggest part of their medical-device sales. Hips, knees, spine. There has been some pricing pressure there. It's a highly competitive market.

The other sector that does well is the surgical equipment sector run under the company Ethicon. This is everything from tools to recovery devices.

JNJ Vision has grown significantly in the last year. They bought the medical-optics subsection of Abbott Labs. This rounded out their eye-health offering, particularly within the surgery category of vision care. They are also responsible for the contact lenses brand Acuvue. More people wanting to get laser eye surgery has created good growth for the sector. That vision-care segment was up the most of any medical devices segment, and it now counts for about 13% of medical devices.

The Diabetes care sector had 2,25% of total sales in the first quarter. LifeScan makes blood glucose monitoring systems for home and hospital. This is a sector that is struggling. JNJ is busy looking at options into how they should take this business forward. Some changes might happen in the next year.

Here are some tabled breakdowns for each division:

Pharmaceutical Division Breakdown
Medical Devices Division Breakdown
Consumer Division Breakdown
Company Breakdown

Home again, home again, jiggety-jog. Stocks are up a fraction to begin with. Mr Price is up over five percent, the results are less worse than anticipated. Which I guess is good news at some level, hopefully the consumer really is on the move, even if just a bit.

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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Monday 29 May 2017

Winter is Coming

"Today is memorial Day in the US, remembrance for those folks who died in armed conflict. What it also does is mark the start of summer, the unofficial start in the Northern Hemisphere."

To market to market to buy a fat pig In contrast to Thursday, where there was a whole lot of everything going on, Friday felt pretty empty by comparison. There was little going on, no OPEC, no rush of retailers telling us how bad it is out there (colloquially the same applies), No G7, a few announcements here and there. New 12 month and in some cases multi decade lows for the likes of Sun International and Adcorp. Adcorp, the staffing and labour business is down 71 percent over a decade. Sun International, the share price, is down nearly 58 percent. Tsogo Sun is down 23 percent. To be blunt, if you haven't owned the big cap multinationals that you can, across our exchange, then you have had very average and mixed returns since the financial crisis. SA inc. shares, the smaller ones, have been battered by economic winds of the poor quality kind.

There were also 12 month lows for some of the out of the majors (and lower) mining stocks, RBPlat and Sibanye (busy with a deep discounted rights issue) reaching 12 month lows. Session end here in Jozi, the all share index had given up around one-twentieth of a percent to slip below 54 thousand points, industrials were up nearly half a percent, financials were down around the same amount. Resources sank as a collective over a percent.

Did you know that the three and ten year return of the broader resources index is about the same, down around 40 percent? Over five years you are "only" down one-third of a percent. Over a year you are basically flat, down over three percent. To put that into perspective, the All Share is about flat over a year, up 8 odd percent in three years and over 60 percent better over half a decade. The last decade return for the All Share is nearly 90 percent. There are some sectors that we tend to avoid, basic materials is definitely one. A bet on commodities is a bet against humanity is what I remember one blogger saying.

It was a mixed bag in both the up and down columns of the majors, Investec slipped Friday after a good run (following good results last week), whilst Shoprite, Vodacom and Aspen were at the top of the leaderboards. Vodacom shareholders still smarting from the recent "good news" regarding the rest of Sub Saharan Africa assets sunk into a single asset here in Johannesburg. Shoprite, according to the Twitter thingie, had seen a positive broker upgrade (I think Goldman), whilst Aspen may be closer to some sort of clarity in their EU investigation on excessive price charges.

Brait released an update of their current valuation, and I can tell you that it certainly looks worse than anticipated: "With regards to the full financial year, NAV per share of ZAR77.00 to ZAR79.00 is a reduction of between 42.0% and 43.5% from the ZAR136.27 reported at 31 March 2016 (in Euros, between 32.0% and 33.9% from EUR8.12)." Euros? Remembering that Brait decided recently not to pursue a UK based listing, their "bases" are in Europe, even if a large portion of their assets are not, they are in fact in the UK and of course, South Africa. I suspect that the stock will take some pain, perhaps the "worst" is over. The actual restyle will be around the 13th of June, in a couple of weeks time.

Stocks over the seas vast and wide, in New York, New York, traded mixed all day long. Part of the reason is that US markets are closed today, nobody looking for any "action" ahead of the long weekend, the start to "driving season" in the US. Today is memorial Day in the US, remembrance for those folks who died in armed conflict. What it also does is mark the start of summer, the unofficial start in the Northern Hemisphere. For those of you watching the cycling in Italy and the finish yesterday (mostly finished the day before, cycling buffs will know what I mean), summer has long started there. For us sorry souls down here, who are not used to winter of any sort, the winter solstice is in just over three weeks time, the 21st of June. We are ill equipped for the cold here, for good reason really, it is mostly warm around these parts.

Session end the Dow had lost 0.01 percent, the nerds of NASDAQ were marginally higher, up by nearly one-tenth of a percent, whilst the broader market S&P 500 was somewhere in-between the two. Technically, those two closes higher for the broader market and the tech heavy index count as new all time highs. Making up for the lack of volatility on the broader US markets, Oil has been bouncing around as traders try to figure out at what level demand and supply balance out. Thursday the oil price dropped 4% as OPEC was seen to be doing too little and then on Friday it bounced back 2% as the number of US oil rigs only increased by 2, making 19 straight weeks of gains. At the end of the day as a consumer I would rather see lower oil prices than higher oil prices. From a global perspective there are countries and organisations that would rather have a higher oil price but they are in the minority, globally people are better off if they can spend less on transport and use that extra cash to spend it in a different part of the economy, or start businesses of their own.

Linkfest, lap it up

Cullen Roche talking about why betting against progress in a capitalistic society is a bad idea. Progress might not be smooth but the trend is for society to continually create more with less - Why I am an Optimist. As Buffett says, capitalism is the best way to create wealth, we haven't figured out the best way to distribute that wealth yet though.

As more and more people move from rural areas to the cities, China has had to upgrade their transport infrastructure - Animation: China's Rapid Transit Boom (1990 - 2020). It is amazing to see how the numbers suddenly boom.

Facebook told me over the weekend that I signed up 10 years ago. I remember thinking that My Space was a better service and in the not too distant future Facebook would be history. It turns out that My Space lost touch with their audience and Facebook took over, proving that execution is more important than the idea. Here is a timeline of The Zuck - The fabulous life and career of 33-year-old Facebook CEO Mark Zuckerberg, the fifth richest person on earth

Home again, home again, jiggety-jog. Stocks across Asia are on balance higher than the prior close. This week is jobs week again for the US, the number seems to have become less and less important with the US now sitting at full employment. I suspect that most of the day will be quiet with the US market closed, a Chinese holiday (Dragon Boast festival holiday) and it is also Spring bank holiday today in the UK, direction will be mostly wayward, like a lazy Sunday afternoon drive. There were numbers out of Famous Brands this morning, margins down revenues up. We will have a break down tomorrow.

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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Friday 26 May 2017

Brand Moats for Oats

"The company manufactures South African favourites that are found in most middle income households across the depth and breadth of the country, All Gold, Albany, Tastic, Fatti's and Moni's (did those brothers really exist, like Charles Glass?), Koo, Oros, Black Cat and of course the old favourite, Jungle Oats."

To market to market to buy a fat pig There was a whole ton of stuff going on yesterday. Results from Tiger Brands, which we will deal with in a moment, in the below segment and another slew of company news from the likes of Impala Platinum offering convertible bonds through 2022, to replace an existing program. The Foschni Group (TFG) were out with year end numbers, the stock sold off heavily through the day. The Massmart CEO was putting on a brave face against the backdrop of a tricky environment, the stock sold off really heavily. All retailers were "re-rated" alongside the rather glum sounding outlook.

The Massmart CEO spoke of green shoots being extinguished, in fact as follows: "The nascent signs that some or all of these positive influences were coming to bear were unfortunately washed away by the negative economic impact of political events in late March and April that culminated in two credit-rating downgrades." Green shoots washed away? I have seen pictures of old vines emerging from the dusty bowls of dams dried up in the Cape (Theewaterskloof dam in Villiersdorp), the language being used is almost the same as the pictures. See one below ->

Obliterated, parched, extinguished, the green shoots have disappeared, this is what Massmart CEO said. TFG looked a little better than that Massmart release. The Massmart folks writing that piece may well be up for a Pulitzer, or was it Guy Hayward himself? Check it out - CEO's AGM Statement.

The Easter sales period is always a moving target for businesses reporting quarterly or half year numbers to March, sometimes it is in, sometimes it is out. Sales are flat to lower. Jeepers, it is increasingly difficult out there, a crisis of confidence. So much so that the company has the following to say about the outlook for the balance of the year: "The current levels of political, business and consumer uncertainty make it difficult to provide any useful trading expectations for the remainder of the 2017 financial year, but we do not expect the SA consumer economy to show any noticeable improvement during this time." If you needed reminding ...... The next sales update from the company is expected at the end of June, in around 4 weeks time. Understandably the stock was sold off heavily, down six and nearly three-quarters of a percent by the close of business. Eish.

Another "event" happening was the OPEC meeting during the day. Byron was outraged that such a cartel still exists. I said that it would encourage humans to innovate and find better ways to remove their shackles and reliance on sellers that are intent on keeping a price at a certain level to balance their budgets. It just seems strange that you would "control" the supply to the users. Eventually humans will decide what is cheapest for them. Business responds in this manner, the higher the price, the greater the efficiencies (i.e. your vehicle will use less fuel). This graph below is the projected miles per gallon usage in a motor vehicle.

Whatever OPEC tried to achieve by sticking to quotas, does not seem to be working. At least in my mind. Oil prices tanked over five to six percent. If oil prices go up too much, users will adopt more and more on the EV (electric vehicle) front. As the battery technology improves markedly and that component becomes cheaper and cheaper, consumers will adopt cheaper EVs. As oil prices increased, engines will improve their usage. As fracking technology improves markedly, and the cost per barrel of extraction plunges (as it has), the supply meets the local US demand. Opec loses. Again. Fossil fuels ....... I am not too sure that it is a multi decade investment theme with any certainty.

If that was not enough for you, there was a Reserve Bank Monetary Policy committee (MPC) meeting yesterday - Statement of the Monetary Policy Committee - 25 May 2017. Inflation expectations in the forecasts look like they are "in the range", between 3-6 percent. In fact, the MPC suggest 5.5 percent inflation through 2019, in that sort of range. Growth prospects unfortunately (according to the MPC forecast) looks anaemic at best:

The MPC outlook, the last paragraph is a little like the Massmart assessment:

"The MPC remains of the view that the current level of the repo rate is appropriate for now and that we are likely at the end of the tightening cycle. A reduction in rates would be possible should inflation continue to surprise on the downside and the forecast over the policy horizon be sustainably within the target range. However, in the current environment of high levels of uncertainty, the risks to the outlook could easily deteriorate, and derail the current favourable assessment."

Too much uncertainty that could derail the current favourable environment.

Company corner

Tiger Brands reported their half year numbers to March yesterday. I saw the CEO, who is now a year in the job on the box with the CFO, who has done some hard yards at that business. They were talking about how tough it has been to operate, suggesting that much unrest in South Africa has been logistically challenging at times. i.e., if a bakery needs to send their trucks out to deliver and roads are blocked, that means that there is an extra insuring cost to the company and by extension to you the shareholder. And ironically, in trying to recuperate the costs, staples prices would have to go up a little.

The company manufactures South African favourites that are found in most middle income households across the depth and breadth of the country, All Gold, Albany, Tastic, Fatti's and Moni's (did those brothers really exist, like Charles Glass?), Koo, Oros, Black Cat and of course the old favourite, Jungle Oats. The other major and well known household brands are Energade, Maynards and Beacon, Doom, Ingram's, Purity and Enterprise. Whilst these brands may not be in the larder of the serious banter, or in the fridge of said hipster eaters, for most middle class citizens, these represent the staples alongside protein sources and vegetables.

Group turnover for the period for continuing operations (they are in the process of selling various East African assets, one sold, one pending) increased 7 percent to 16.4 billion Rand. Operating income grew 10 percent to 2.2 billion Rand. The dividend was hiked 4 percent, bearing in mind that the new dividend tax is at the higher rate (20 percent as opposed to the older rate 15 percent). The company, through the watchful eye of CFO Noel Doyle, have managed to contain costs to below inflation (at least at a sales/distribution and marketing level). The main reasons that profits were flat for the period was as a result of a higher tax expense and a marginal loss (from a profit situation) from discontinued operations.

Here is a nice slide from the results that shows all the different divisions, I have tried my best to stick in the various divisions. See the impact of the much stronger Rand on the international business, which is the smallest revenue contributor.

How do we see the medium to long term prospects for this business? I quite enjoyed the part of one-year-in CEO Lawrence MacDougall who said:

"Tiger Brands has defined its core as the manufacturing, marketing and distribution of everyday branded food to middle-income consumers. This already accounts for 70% of Tiger Brands' current sales. These consumers are a growing proportion of the South African market, are more brand loyal, have similar shopping destinations and utilise the media in a similar manner. Food is a large, attractive core that offers strong growth potential, allowing us to build on our resilient positions and good adjacencies."

We continue to hold and accumulate on weakness a quality business. One thing that I can always be sure of is that people will eat food. And keep themselves clean. And drink fluids. I am sure that Tiger will always have a business. Their brands are supreme quality, management is classy and is controlling costs in a tough environment. Buy and hold. There is a new strategy at Tiger, that they will focus on, it seems that they want to boost margins and be less a volumes business. I like that strategy, it will take many years to execute though.

Linkfest, lap it up

Is this a case of the "sins of the fathers" affecting the next generation? - If You Speak German, You're More Likely to Be a Penny Pincher. If you grow up in a household that has a strong savings culture, there is a good chance that you learn that same habit from your parents and then pass it on to your children.

If this comes to fruition it would be welcomed as an Alphabet shareholder. It is about time that the "other bets" division comes to the party given the huge amount of cash that the division chews through each quarter - Morgan Stanley: Alphabet could be sitting on a new $70 billion business

Home again, home again, jiggety-jog. Stocks locally are heading higher, having started lower! Mixed out there. Brazil, how crazy is that? Troops deployed .... phew. Venezuela, almost totally finished. As PM thatcher once said, the problem with socialism is that eventually you run out of other people's money (to spend).

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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Thursday 25 May 2017

Al Moer

"Mediclinic released their full year numbers during the course of yesterday. We all had a very solid look at these, this is the first year that the integration is all comparable. Remember that the company reversed into the Al Noor listing and then converted your shares of Mediclinic to Mediclinic international."

To market to market to buy a fat pig A mixed old day for the market here, financials enjoying a great day as the Rand continued to strengthen through the session, currently as we look this morning at 12.89 to the US Dollar. Resources stocks were sucking wind, down nearly a percent, as a result of the weakening Rand. Amplats, AngloGold Ashanti and South32 were the losers on the day, along with Mediclinic (see below) being the biggest loser on the day. In the winners column were the likes of Standard Bank, Barclays Africa, Nedbank and FirstRand, in that order. Inflation my comrades is abating somewhat.

Slowing CPI (5.3 percent), inflation data, led Mr. Market to believe that the consumer may look in better shape towards the end of the year, perhaps the Reserve Bank, who deliver their monetary policy announcement later today, will indicate there is a chance of a rate cut later this year. Check it out, via the Stats SA website - . There may well be a chance of a rate cut if the trajectory continues (So you're telling me there's a chance), a better chance of Lloyd ever marrying Mary - Dumb and Dumber 'There's a Chance'. Last Harry and Lloyd reference, I cannot help it, that movie had such a big impact on me, it appeals to my quirkiness.

Here below from the release is the falling inflation graphic, a marked downturn perhaps as a result of a lower demand environment and improving conditions from the drought. Food prices, fruit and veg and cereals all down, transport inline with the lower headline print, fish and meat up. All as expected!

Back to Mr. Market before we close out this piece. Sibanye lost just over one-third of their value, the stock started to trade "ex" the rights, those became tradable yesterday. Remember that the rights issue is 9 new shares for every 7 you have existing, at 11.28 Rand, there is a big dilutionary impact if you decide to not follow. Sibanye are going for a big deal in which they will acquire one of the biggest PGM assets in North America. Good for them, I wish them the best.

Pioneer foods and Rhodes Food Group touched 12 month lows, the stocks coming under pressure since their recent results. DRDGold too touching a 12 month low, the oldest listed ZA inc. stock has a market cap of 1.8 billion Rand after 122 years of being listed. You would hope for a bit better than that, right? It matters what company you buy relative to their prospects, you may well argue that people are always going to wear gold jewellery, perhaps the extraction method will be more difficult in time. As it has gotten. There goes.

Over the seas (from here of course), stocks in New York, New York rallied again, even if it was just modest. The Dow Jones Industrial average once again popped over the 21 thousand mark, up just over one-third of a percent by the end of the session. The broader market S&P 500 added one-quarter of a percent to close above 2400 points, whilst the nerds of NASDAQ added four-tenths of a percent to flirt with all time highs. All indices were that close to all time highs. Trump is out meeting the G7, the Pope, NATO and the like, a week ago the searches for Trump and impeachment were crushing the market.

There was the small matter of the Minutes of the Federal Open Market Committee from the May 2-3 meeting. Apparently "investors" are always looking for clues as to what the Fed are going to do next with interest rates. They watch the incoming data the same as all of us, they have to stick out their necks and make economic predictions, often when wrong or right, they are lost in the mists of time. And in three years time, does it really matter as an equity investor whether they were right or wrong? Does it? Not for me anyhow, some people live and die by the Fed and their announcements.

They (the Fed) are going to raise rates and reduce their balance sheet as economic conditions improve. In twenty/fifty years time when people study this period, they are unlikely to disagree with what the Fed did. All the evidence points to them having "done the right thing", notwithstanding all of the chattering classes and naysayers. If I had a buck for every time I heard the Fed was wrong, I would have been made "very right". So there. Watch and listen, please do not act on your long term retirement investments as to how the Fed sees the future. We may have shared this Michael Batnick graph (the irrelevant investor) before, it is worth the share again. Look at it, and then remind yourself that you own companies, not all these "events" that may or may not scuttle economic growth. Short response to this should be to not make investment decisions based on anything other than the company you are buying.

Company corner

Mediclinic released their full year numbers during the course of yesterday. We all had a very solid look at these, this is the first year that the integration is all comparable. Remember that the company reversed into the Al Noor listing and then converted your shares of Mediclinic to Mediclinic international. You will recall that as a shareholder from before, you were bought out at a ratio of around 0.625 new Mediclinic for the older ones that you had, at a conversation Rand price of above 200 Rand a share, regardless of what level you had owned them before.

In other words, if you bought, let us say 100 shares, you got 62 and a half (rounded up or down) and a price of 204 Rand for the new ones. Since that moment, 13 February, the price has on balance trended lower. In part, some of that is currency related, the Rand is 37 percent stronger to the Pound since the day Mediclinic "listed" (in the version as we know it) in London. It really is. Some of that is Brexit related and the subsequent recovery of the Rand. The timing has not been that good.

Equally, the results themselves have been tepid. Part UAE stresses on their business as a result of government finances and by extension healthcare benefits under pressure. Taking a bit more time than anticipated. As you can tell, the company has a growth multiple valuation, and if earnings cannot deliver that immediately, the stock will get a re-rating. That of course is very separate to a good business, which we definitely think that this is. Healthcare is a great medium for long term investors, hospitals even more so.

The amount of costs and mistakes that are likely to be reduced in hospitals as a result of improved and improving technology makes me feel that they are going to become more profitable and not less. Added to that will be that an ageing population will be able to have more procedures, and not fewer, as less invasive surgery continues to evolve. My dad (and I hope he doesn't trash me for this) had a small procedure on Friday that required local anaesthetic, yesterday he walked around 15km on a hike in the Cape Mountains. No probs.

The consolidated group reported revenue growth of 30 percent to 2.759 billion Pound Sterling, underlying EBITDA grew 17 percent to 501 million Pounds. Earnings per share were down 19 percent to 29.8 pence. The dividend declared for this period is 4.7 pence (7.9 pence for the whole year), not the biggest payer. In fact, for the full year it is below one percent. So you do not own this business because it pays you a wonderful dividend. You would own this business for their growth prospects. Underlying earnings per share clocked 29.8 pence, which is 19 percent lower than the prior period, which was 36.7 pence. Why? We shall deal with that in a second. Net Debt, as a result of all the recent deals, ramped up 9 percent to 1.669 billion Pounds.

Here are some interesting slides from the presentation that shows the separate business, which are as follows, in revenues: 48 percent Switzerland, 28 percent Southern Africa and 24 percent Middle East (UAE). From an underlying Ebitda perspective, the geographical breakdown is as follows: 53 percent Switzerland, 33 percent Southern Africa and 15 percent Middle East. Firstly, a five year performance of the Swiss business, Hirslanden:

This is a great business that definitely caters for the richest patients, possibly on earth. They (Hirslanden) have a one-third share of the private healthcare market in Switzerland. And then below, the South African business, in the same format from the results presentation.

The CEO says in the commentary: "We expect a gradual improvement in the Middle East platform as we progress through the 2018 financial year and beyond." That is part of the reason why we expect the outlook to brighten. To lend credence to our thesis above, we are in total agreement with CEO Danie Meintjes: "We continue to see growing demand for quality healthcare services which is underpinned by an ageing population, growing disease burden and technological innovation. This is why we place such an emphasis on our Patients First strategy and continue to invest in our facilities and people. With this focus and our leading positions in core markets, Mediclinic is well-positioned to deliver sustainable long-term growth."

When a share price does badly, ordinary investors think that there must be something wrong with the business. In this case, the share price was probably overvalued. I suspect that integration and regulatory issues (healthcare is made an emotive issue for politicians and ordinary citizens) have impacted their performance. I suspect that they will continue to do deals as they see fit. We continue to be patient, and will encourage investors to accumulate on weakness. This time next year the comparable numbers are likely to look more favourable.

Linkfest, lap it up

Flipkart is the Indian e-retailer that Naspers has a stake in and whose value has slipped from around $15 billion to around $11 billion - Flipkart and Rivigo are India's top "breakthrough" brands. Given the level of informal housing and high level of regulations, the Indian market is very difficult to operate in. If Flipkart can gain scale, having a potential 1 billion clients will mean a valuation much higher than the current $11 billion.

Sticking with Naspers investments, their latest one is set to list in the next 2 months - Delivery Hero set to list before summer break: sources. The company reported a 68% increase in revenue compared to last year, the type of growth we have come to expect from internet companies.

When we look back we can't imagine people not wanting new technologies like cars or computers, but with change comes fear of the unknown and pushback from some areas of society - Pessimism in Historical Perspective.

Home again, home again, jiggety-jog. Stocks down here to begin with, the Rand is stronger and that is having something of an impact. If not much, then a little. OPEC has a meeting today, right now. I couldn't care a less about that, even as a fuel user. Cartels and products that are likely to be used less in the future.

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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Tuesday 23 May 2017

Long-4-Life but avoid construction

"Brian Joffe's Long-4-Life is ten times bigger in market capitalisation than Basil Read. In fact, Long-4-Life is bigger than Basil Read and Group5 put together. Eish. L4L (the share code of Long4Life, which you could mistype L$L) added over ten percent yesterday, a follow through on the news that Kevin Hedderwick (of Famous Brands fame) is the new Chief Operating Officer."

To market to market to buy a fat pig The Rand firmed through the afternoon, emerging markets attracting some inflows. Some suggesting "other" factors too, one can never really be sure when talking about currencies. They certainly do impact on markets. My go to on this is the U.S. Dollar Index, which is trading near the lowest point since last November. It does at some level explain Rand "strength" on a relative basis.

Anyhows, to markets quickly. Stocks locally traded towards the bottom end of the day range by the close, as a result of the dual listed stocks giving some back. We managed a modest gain on the All Share index, stocks moving the needle were the likes of Standard Bank, Nedbank, local industrial business Bidvest and Sanlam, all scoring huge wins on the day. In the minus column were the likes of Glencore (Making a takeover jab at US grain trader Bunge - Glencore-Bunge Deal Would Add G to ABCD Dominating Grain), down nearly three percent on the day. Anything with a slight UK flavour understandably experienced a sell off, Mediclinic and Hammerson sank, as did other Rand Hedges, like Richemont.

There was another 12 month low for Pioneer Foods, the market really disliked their recent results and loss of market share, down nearly another five percent on the day. Sun International also continues to shed value, down another three percent on the day to another 52 week low. In fact, it is worse than that. The share price has not been (Sun International) at these levels since 2005. We are staring at a 12 year low for the leisure business. It certainly tells you something, at some level. In almost exactly the same boat (different industry) is Basil Read, the construction company, also trading at the same levels as they were back in July 2005. The market cap is around one-quarter of a billion Rand.

Brian Joffe's Long-4-Life is ten times bigger in market capitalisation than Basil Read. In fact, Long-4-Life is bigger than Basil Read and Group5 put together. Eish. L4L (the share code of Long4Life, which you could mistype L$L) added over ten percent yesterday, a follow through on the news that Kevin Hedderwick (of Famous Brands fame) is the new Chief Operating Officer. The investment strategy is pretty far and wide ranging, view the stock as a traded private equity fund. i.e. Traditional entry methods are difficult to private equity, this leverages off smart minds and years of experience, which you may, or may not be able to buy. Too small for now to be on our radar, I definitely like the people that are involved. In the words of Lloyd Christmas, I like it a lot. If you are confused, this YouTube clip will help - Dumb and Dumber - I like it a lot.

Across the way, stocks in New York, New York (reachable by tomorrow, thanks to modern technology, Visa permitting) were as a collective marginally higher. The broader market S&P 500 added just under one-fifth of a percent, the Dow Jones Industrial Average a little more than that, whilst the nerds of NASDAQ lagged the broader market by a factor of two. Financials were the biggest winners on the day, up around half a percent by the end of the day. There was a digestion of the Trump budget, as he swoons across the Middle East (Sword dances, a first visit by a US president to the Western Wall) and onwards to Brussels and then onwards to Italy/Sicily for the Group of 7 meetings (and not to catch the Giro). A huge logistics exercise I would think, 9 different places.

Linkfest, lap it up

With the recent 20 year listing anniversary of Amazon and the surge in the bitcoin price, there have been many posts about, "If you had invested x it would now be worth . . . ." The thing that people forget is that you would have had to hold the investment for many years through many draw backs and in the case of tech stocks, watch other tech companies go up in smoke. Here is a look at Netflix, assuming you invested on day one. Would you have held all the way through?

As you have probably guessed by now, Ben Carlson is one of our favourite bloggers. Here is another great piece from him talking about the best way to beat the market is by being patient, have a long term time horizon and having a simply approach - Barriers to Entry in the Markets.

Home again, home again, jiggety-jog. Chinese debt flags have been raised, this time as Moody's cuts the sovereign debt rating, worrying about the indebtedness in that country. See "The Journal" - Moody's Cuts Its China Rating for the First Time Since 1989. That has put to some extent a lid on stock price movements this morning in Asia, Shanghai is down a little, Hong Kong less so (Tencent is off over a percent, that will certainly impact us here), whilst Japanese markets are up over half a percent. US Futures are a smidgen lower, hardly anything to talk about. The UK, and Manchester in particular, is putting on a brave face in what is definitely a less safe world than a while back. My heart bleeds for all peoples displaced, loved ones lost in acts of war and terror. The simple question is why did this happen?

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Humanity will Prevail

"Capitalism may definitely not be a perfect outcome for everyone, it is better than all of the alternatives turned up thus far. Humanity will prevail, I certainly feel that, each and every time an event disrupts and tears apart lives."

To market to market to buy a fat pig Oh dear. What a horrible, horrible thing. Bombing people to further your agenda, be it in war-torn Syria or at a music concert last night simply drains and sucks your energy, and makes you wonder about humanity. You have to keep believing that the majority of people are good and want progress, there are few that want to push their "way". I feel for all the people of conflict and attacks, it makes me very, very mad. I was with a good friend recently in London and we chatted about people enjoying their personal freedoms, walking the streets without fear, these major incidents make people scared. The sad truth is that many, many people around the world live in places where personal freedoms are always under attack.

According to the World Atlas, Caracas is the least safe city in the world (highest murder rate), no thanks to awful socialist policies that have led to a bigger breakdown in society. The annual Mercer quality of living index identified these 27 cities as having the worst quality of life, based on their metrics, here is the BusinessInsider take from earlier this year - The 27 cities with the worst quality of life in the world. Many of these citizens of these cities are impacted on by poor policies from their "rulers".

Capitalism may definitely not be a perfect outcome for everyone, it is better than all of the alternatives turned up thus far. Humanity will prevail, I certainly feel that, each and every time an event disrupts and tears apart lives. Be grateful that you won the ovarian lottery (as Warren Buffett says) and that you do not live in one of these areas - List of ongoing armed conflicts. MTN and Vodacom have businesses in some of those territories. If ever you wondered why people fled these areas to do "lesser" jobs elsewhere, just look at the list and remember.

Session end the local market had ended an unusual session, having been in and out of the black on no less than 5 times during the session. That is not very usual, and bearing in mind that the percentage moved one way or another is not "very big". The Jozi all share index came close to record territory, closing 0.16 percent higher to 54 and a half thousand points by the time the bell rang for closing time. Resources sank half a percent, financials were a little lower, it was industrials that led the market higher, as a collective up just over four-tenths of a percent by the close. Tiger Brands moved higher through the session (up over two and a half percent by the close), their competitor Pioneer Foods closed markedly lower on the day after some iffy results.

I think that I have to share one of the presentation slides from the Pioneer Foods presentation, something that I think that I have not seen before. If I have, then I forgot. Here it is, it looks like the juice factory, the maize meal and bakeries are all getting decimated by a series of tornados, which is some weird cross-over between the movies Sharknado, Godzilla and Twister. Perhaps in the later (or latter) slides they should have dressed CEO Phil Roux as Samwise Gamgee, helping the consumer (Frodo) to destroy the ring (inflation slash drought) at the Crack of Doom at Mordor. From the investor presentation booklet:

There were new 12 month highs for the likes of Naspers and Dischem (all-time highs too), in the losing column amongst the majors was the likes of Bidcorp, Anglo American and Old Mutual, as well as Steinhoff and BHP Billiton. Rhodes Food Group has results this morning, they look OK at face value. There are loads of acquisitions in the background that still have to settle. Spices, pies, condiments, canned foods and the like. I get the investment thesis, which is directly correlated with the growth of middle classes across the region. I am not too sure that pies and canned foods are high margin businesses that will attract higher LSM clients, that is not what the company wants. Year to date the stock is down nearly 14 percent, since listing though (back in late 2014) .... the stock is up 109 percent. Perhaps most of the short term growing has been done. We watch with interest!

Coronation, the investment manager, also a business we watch with interest, have released their results for the first half of the year. Asset outflows, as a result of a poor market, saw total assets down to 576 billion Rand at the end of the March period. I guess that just happens. The prospects column indicated that: "Volatile markets offer opportunities to take long-term positions" and "our portfolios are well-positioned to manage the risk that recent political uncertainty has created for South African investors". Fear not: "near-term volatility and uncertainty may persist, our robust investment approach enables us to make the appropriate long-term decisions for the benefit of our clients." Yip, sounds about right.

Over the oceans, vast and deep, stocks enjoyed another good session as a collective. The Dow jones Industrial Average added just over four-tenths of a percent, the broader market S&P 500 topped half a percent gains overall, whilst the nerds of NASDAQ added over four-fifths of a percent. Energy stocks were the only laggards, technology stocks on balance were "better" than the rest of the market, with top gains for Alphabet, Amazon, and Microsoft. In the "not so good" column was one of our recommended stocks, Amgen, which showed one of their drugs, known as Romosozumab (Romo), did not produce the desired outcome that perhaps some were looking for.

Here is the (very long) release: Amgen And UCB Announce Top-Line Phase 3 Data From Active-Comparator Study Of EVENITY (Romosozumab) In Postmenopausal Women With Osteoporosis. The stock acted negatively, down over two and a half percent on the session. Notwithstanding the lowest price since late January, the stock is up around five percent year to date. Comfortably off the highs reached mid March. With a couple of disappointments recently, Rephatha (the specialised cholesterol drug) being the other in March. I suspect that we are in a stage if their pipeline disappointments relative to their core grouping, revenues may be flat for a couple of years, we think that this represents an opportunity to buy some stock at these depressed levels. The stock trades forward at just over 12 times expected earnings.

Linkfest, lap it up

This looks like a great way to make exercise fun and to set a challenge for yourself - Nike made an interactive track that lets you race an LED ghost of yourself

I would much rather spend money on things like this than tens of millions on art, I suppose it comes down to me not being able to see the story and uniqueness of high end art - Sotheby's to Auction Apollo 11 Moon Rock Bag Used for First Lunar Sample. The bag is likely to fetch around $2 million, not bad considering the current owner only paid $995 in 2015!

These rumours have been around for a while now. If they have made a working product it will be huge for the Apple watch. I see the future of smart watches lying in health monitoring and given that around 10% of the US has diabetes, non-invasive glucose monitoring will be a "must buy" - Evidence is mounting that Apple is working on a glucose-monitoring device

Home again, home again, jiggety-jog. Stocks are marginally higher today to start with, after having started lower to begin with. Stocks across Asia are mixed, Tencent actually ended the session down, what about that?

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