New week, new me. I'm hoping that's how the JSE will feel at least, because last week wasn't enjoyable for most people in the market.
It's all part of the journey of course. If you can't stomach the volatility, then your money has to sit in a money market account earning 3.5% a year. You're reading InceConnect, which means you've accepted the intellectual challenge of figuring out how to make money on the markets.
Part of that challenge requires you to learn how to DYOR - Do Your Own Research. This isn't easy, so I've decided to dedicate Ghost Mail to the topic this week. Ghost Mail is my free weekly mailer that goes out every Tuesday. It's the best way to learn the theory that you can apply to the daily news that you'll read here in InceConnect. You can
sign up here to receive Ghost Mail tomorrow.
If you are interested in shareholder activism, you should be keeping an eye on York Timber. The company has historically traded at massive discounts to net asset value, made worse by uncertainty over the future of land ownership in South Africa.
After the CEO sadly passed away, A2 Investment Partners grabbed the opportunity to start buying blocks of shares at a heavy discount to the supposed value of the underlying assets. Initial attempts to gain a board seat were blocked by the York directors, but this situation has now been resolved. After threatening to call a shareholders' meeting in order to be voted onto the board, the two protagonists at A2 have gotten what they wanted: a board seat.
I couldn't help but laugh at the York announcement which noted that "the Board looks forward to thei r skills in enhancing shareholder relations" - that definitely wasn't the feeling until a few days ago!
Afrocentric's share price jumped over 6% in response to an announcement that the company is negotiating with Sanlam Health Solutions to acquire a gap cover business.
Blue Label Telecoms released a trading statement noting that HEPS for the year to May 2021 will be up between 46% and 50%. The more insightful point is that EPS (which includes once-offs) will be nearly 7x higher than last year, thanks to the disposal of Blue Label Mexico and the closure of WiConnect stores. Blue Label needs to just stick to its knitting going forward instead of betting the farm on risky businesses, which have caused the share price to drop nearly 70% over five years.
Industrials group KAP took a 6% knock to the share price on Friday off the back of releasing results. From continuing operations, HEPS grew 1 46% in the year to June 2021. That's hardly an upsetting result, but the market was fickle last week. A dividend of 15 cents per share is a dividend yield of 3.5%.
Today's lead story is goes to Massmart, which has managed to sell its hugely loss-making cash and carry division, which includes businesses like Cambridge and Rhino. Shoprite clearly sees an opportunity there and it will be interesting to see how it all pans out.
There's also an article on Mr Price. The retailer has gained market share and is aggressively growing. Much like KAP, it earned itself a 6.5% share price drop despite releasing a decent announcement.
It can be a painful ride with single stocks. ETFs can be great additions to any portfolio, giving broad market exposure at a low cost. In the latest episode of Magic Markets, I discuss ETF portfolio strategies with Mohammed Nalla. You'll find the link further down.
Finally, Chris Gilmour gives us political and economic insights that give context to these company news stories.
Good luck in the markets today!
The Finance Ghost
