You Have Multiple Choices


Market Scorecard

US equities fluctuated between red and green the whole day yesterday, finally finishing slightly lower. Fed Chair, Jerome Powell, appeared before Congress to give them an update on where the Fed saw the economy, and what their plans are for monetary policy. Essentially reiterating what he has already said to the market, interest rates will stay at the current level for an extended period.

Moving to African politics, it looks like Muhammadu Buhari has won a second term as Nigerian president, as announced by the Nigerian electoral commission. I haven’t seen any speech from the opposition accepting defeat though. Until then things won’t be settled, especially given that there are allegations of vote rigging. The Nigerian Naira is slightly weaker on the news.

Yesterday the JSE All-share closed up 0.65%, the S&P 500 closed down 0.07%, and the Nasdaq closed down 0.07%.

Company Corner


One thing, from Paul

I’m really looking forward to the listing of Multichoice on the main board of the JSE today. There is no set pre-listing price for the new share (code MCG), it will have to find its own level in the market. I also expect that the Naspers share price will not go down by much.

This is part of the process that the Naspers management team has come up with to try to unlock value from the chronically under appreciated holding company. As you know (because we never stop telling you) Naspers ought to be trading much higher, based on a sum-of-the-parts valuation of its underlying assets.

I wrote to the 428 holders of Naspers in our client base last week, suggesting that they hold onto this one, and see how it trades in the weeks and months ahead. Here is an excerpt from that message:

There is a view out there that subscribers are abandoning DStv in large numbers for services like Netflix. These braai-side experts suggest that the business is in decline, and will end up as an ailing cash cow. This is not true. From March to September 2018 the number of DStv subscribers rose to 7.2 million in South Africa. The growth is mostly coming from the mass- and mid-market segments (DStv Access, Family and Compact).


Read the whole argument for holding Multichoice here: Multichoice is Coming to Your Portfolio. What to Do?.

Our 10c Worth


Byron’s Beats

Yesterday Shoprite released their results for the half year ending December 2018. We already knew from the trading update that the numbers were going to be tough. I had the opportunity of chatting to the CEO Pieter Engelbrecht on CNBC yesterday evening.

I felt a bit sorry for him. After Whitey left, Steinhoff happened, the local economy got worse and Angola imploded. On top of that, they had strikes at their biggest distribution centre and a massive redo of their IT system which didn’t go through as smoothly as anticipated.

After chatting to him I felt more confident that things were under control. They have started dealing in hard currency in Angola and are confident that the government there are working hard to diversify that economy away from oil. Part of that strategy includes working directly with Shoprite to formalise retail.

I asked him about the conditions in SA in the first few months of this year. As an analyst, it is always good to hear what the guys in the trenches have to say. He said that the start of the year has been good and they were feeling optimistic that a turn around was possible. Although he was cautious that he only had two months to work with.

Here is the interview if you would like to watch it.


Bright’s Banter

Weight Watchers or WW, a provider of dieting programs seems to be struggling with its pivot into fitness, health and wellness. The company which has the iconic social media genius DJ Khaled and the powerhouse that is Oprah Winfrey as its face and investor; released its numbers yesterday and they looked a little thin, to say the least.

WW revenues came in at $330 million which missed expectations but had a small beat on profits. The company saw its net subscribers fall to 3.9 million in the fourth quarter from 4.2 million in the third quarter. What’s worse is that earnings guidance was less than half of what was expected!

The company was down 60% last year, losing approximately $600 million for Oprah and after the poor guidance, the company is down 32% in after hours trade. Don’t be afraid though because Oprah is still up $100 million on her initial investment.

Linkfest, Lap it up

This is the first confirmed sighting of a Black Panther in the African wild since 1909 – Rare black leopard captured in new images from Kenya

When emotions are involved our rational thought is hampered – Romance scams cost more money than any other type of consumer fraud, says the Federal Trade Commission.

Vestact Out and About

Byron chatted to Bruce yesterday on 702 about Elon Musk and the SEC – Elon Musk gives US Securities and Exchange Commission the finger.

Signing off

Multichoice opened at R95.50 this morning, and Naspers only fell around R73 a share, meaning that some value has been created for shareholders. Note though that Tencent is down 0.9% in Hong Kong this morning, so that would also influence the Naspers share price today. The Multichoice share price is now at R111 a share, as the market tries to figure out what it is worth. It will probably be volatile for a few more days as the big players either build a position or sell off their current holding. Data out today is home-sales in the US, and Jerome Powell continues his appearance before Congress.

Sent to you by Team Vestact.

Email us

Follow Michael, Byron, Bright and Paul on Twitter

078 533 1063

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s