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?


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

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