To market to market to buy a fat pig. Listening to the Animal Spirits Podcast on Friday, Michael and Ben were talking about how most people don't know what their financial advisors investments look like. I have always wondered what some of the more prominent market commentators hold. When on TV, it is very easy to talk, especially if you don't have skin in the game. To give you an idea of what I (Michael) personally hold, here is my portfolio below.
As you will see, my portfolio contains companies not listed on the Vestact homepage; some people collect spoons or rare books, I like to collect companies. Part of the process of selecting new companies for clients to invest in, is for one of us to own the company first. What better way to stay on top of a company than to have a stake in their future? Nvidia is an example of a company where we bought it first, then after doing further research, we released the potential of their GPUs (graphics processing units )for AI (artificial intelligence) and self-driving cars.
So there you have it, the companies that I am putting my hard earning money into. If you are a Vestact client and have any questions about my holdings, feel free to send in the questions.
Market Scorecard. US markets started in the red due to Trump's trade comments, and then headed slowly higher over the day. At the close, the Dow was down 0.29%, the S&P 500 was up 0.51%, the Nasdaq was up 1.08%. Earlier in the day the Johannesburg All-share index had closed down 0.31%..
Company Corner
As you were probably made aware of over the weekend, the listeria outbreak in South Africa has been partially traced back to facilities owned by Enterprise, a division of Tiger Brands. The stock is getting beaten down a bit this morning, currently down 8%. Here is the SENS announcement from the company - Tiger Brands To Recall Identified Enterprise Products. This is an extract from the company statement:
"Since the confirmed outbreak of Listeriosis by the Department of Health in December 2017, the company proactively amplified its testing for Listeria of raw materials and finished goods and also introduced additional hygiene monitoring of our processes, equipment, storage and waste areas at our facilities. Although our testing had detected listeria at low levels (<10 Colony Forming Units (CFUs)), which is well within the current industry guidelines (SANS 885), in a batch of one product on 14 February 2018, the presence of the ST6 strain had not been confirmed by our tests. The relevant samples have been sent to an external laboratory for the identification of the strain, and results are expected back on 5 March 2018."
This sounds like something that is going to be expensive for Tiger Brands? Apart from the cost of product recalls and brand damage, there have been 180 deaths linked to the listeria outbreak. There may be legal claims from the families of the deceased? Tiger isn't the only company mentioned as a source of the outbreak, but they may have to foot part of the bill if some some kind of restitution settlement is agreed.
The Value Added Meat Products division contributes about 7% of revenue and only 2.2% of group profits. The Tiger Brands market cap loss this morning is about R7 billion.
We will monitor this situation and keep you posted. For now, we are holders of Tiger Brands shares.
One thing, from Paul
We have all been very patient with MTN. The JSE-listed telecommunications giant has been a core holding in local portfolios since 2003. Here's what the share price looks like over that period.
As you can tell, it was a good one to hold from the get go, until 2014. At that point, the stock traded at over R250 per share. Now it trades at R124, half of the all-time high!
What went wrong? MTN's major business in Nigeria sagged when falling oil prices undermined a consumer boom in that populous nation. Sadly, it was then mugged by the Nigerian government, who imposed a US $ 5.2 billion fine on the company for not disconnecting customers who had failed to validate their IDs and proof addresses by an arbitrary deadline. After much bleating, the fine was reduced to $3.2 billion, to be paid off over a few years, from Nigerian profits. That debacle even has its own Wikipedia page, if you are interested:
In any event, we are still holders and buyers of MTN shares. They operate in 21 countries across Africa and the Middle East and serve over 232 million subscribers. The product that they sell is connectivity. They have the customer base, and smartphones are more and more desirable.
We like the current company leadership too. Former CEO Phuthuma Nhleko is the chair of the board. Rob Shuter is the CEO.
The company put out a trading statement on Friday evening, noting that it expects headline earnings per share to be in the range of 170 to 190 cents per share for the full 2017 financial year. Not as high as we would like to see, but getting there. We look forward to the day when the share price makes new all-time highs.
Linkfest, lap it up
Bright's Banter
Apple Music is now growing faster than Spotify. In the U.S, Apple Music is gaining subscribers at a rate of five percent per month versus Spotify's two percent growth. Spotify still has twice as many subscribers (see graph below), but Apple Music has a built-in advantage as it comes pre-loaded on 1 billion iOS devices.
You get in your car and Apple Music begins playing automatically; Apple Music has helped me enjoy old school hip hop again #staywoke! Apple takes a 30% cut of all subscriptions sold through its App Store. Spotify decided to avoid the charge by preventing new customers from subscribing to Spotify Premium through the App Store. Apple retaliated by blocking the Spotify update.
This does not make me feel comfortable! When you're building a platform, and you unfairly restrain the competition, surely that's abuse of monopoly power?
You will find more infographics at Statista
The Apple vs Spotify fight is symptomatic of a bigger trend in technology startups.
Budding entrepreneurs probably don't try to compete with Microsoft, Amazon, Apple, Facebook or Alphabet/Google. Mind you, they would love to be bought out later by these mega companies!
This sounds like an oxymoron. You can raise billions of dollars as long as you don't compete with he giants, but you want them to buy you out? As Prof. Scott Galloway said in his book "It has never been easier to be a billionaire and never been harder to be a millionaire."
Disclosure: we hold Apple, Amazon, Facebook, Alphabet in our client portfolios.
Home again, home again, jiggety-jog. Talk of quicker interest rate increases in the US, has made the Dollar stronger and the Rand weaker. Looking ahead during this week, MTN and Aspen release numbers, and then South Africa's GDP number is out tomorrow.
Sent to you by Team Vestact.
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