Feb 27

Investment Fashions

How investment fashions change, not so long ago the Rupert family not only claimed that diversification was the secret to all investment but the markets themselves seemed to demand it, even from the most bizarre operations, those that surely needed focus.

Then “all change” and it was focus, focus, focus, stick to your knitting, know your onions and all that jazz! Well BIDVEST show that fashions come and go and basically a good idea backed with good management is more important than a fad! This vastly diversified, and fast becoming global business, came in with great results 22% up and still on a PE of 13 it looks like value, well done Brian just shows that fashion is not everything something our MP’s dress sense seems to demonstrate at each opening of Parliament.

“To be or not to be”, Jacob Zuma or Gordon Brown that is. The smart guys within the ANC seem to be seeing off Jacob’s attempt to be leader and not just because he is not a Xhosa; just as the smarter guys (honestly there are some) within the UK Labour Party want to see off Gordon Brown and not just because he is a Scot! It’s a tricky time for 2.I.C.’s (Second In Charge) of late but my money is on neither Zuma or Brown being head of their respective parties the next time each country faces an election. Basically that will be good for the Investment markets in both Johannesburg and London.

While on the subject of “The Big Smoke” (England’s capital city) it is now official that London has usurped New York, or rather Manhattan, as the centre of the financial world.  More financial business passes through the old city of London than any other City on the planet; London is the “New Rome”. Vastly cosmopolitan and money driven and just like Rome, a place apart from the rest of its own country. Property prices are now basically 8 – 10 time earnings and two of its boroughs have the highest property values in the world! How long can this modern day money fest last? Well Rome managed several hundred years, but as we know things move a little quicker these days!

A quick stock review of some JSE movers and shakers throws up Richemont with sales up 15%, this easily beats their peer group up only 9%. A new joint venture with Ralph Lauren also looks like a “fashionable” winner.

There is big activity on the go, as well as over the horizon, in listed property stocks. The PIC snapped up CBS and rather oddly (stupid or a double bluff?) stated they have more money than Cresus to spend on the same sector! Alan Grey is still under cautionary and is possibly being sniffed by Redefine or Growthpoint. The banks show First Rand and Absa with profits growth in the mid twenties and also nice to see the directors are buying!

It was encouraging to read others saying, as Insider said last month, that the FSB had started well with the licensing of financial services but now needs more money, rather than those perennially promised bigger teeth, to implement the policing of these so called regulated companies. To many it all seems blindingly obvious, especially if you deal with the FSB on an operational or day today level in 2008. Let’s give them the funding Trevor, as well as a leader like Pravin Gordhan. You cannot, after all, ban smoking in pubs and restaurants and not police it (oh sorry we did!) or the use of cell phones in cars (OK we did that too!) without giving those policing these laws funding!

Zero tolerance? Dream on lets start with anything under 75% tolerance and work downwards with some kind of plan. It might just stop the likes of J Arthur Rank, sorry Arthur J Brown being able to buy a licence off existing asset managers, as he allegedly did so easily.

Finally, can anyone please tell me how “Virgin” does it? No don’t be rude, I mean the Branson outfit! They came to SA about ten years ago promising to reinvent everything and at the same time make it cheaper, two years later they had seemingly”Vanished”, or is that simply another Virgin product? Now they are back with Sir Richard kissing elephants, show girls and everything else that will get attention, AGAIN.

Virgin are allegedly, offering a credit card, which is simply a rebadged ABSA and a phone card which is a rebadged Cell C! So how, or why, would these two established business’s allow a rival to undercut them and really offer a genuinely better product? I honestly don’t know the answer or maybe, yet again, I’m a bit dim, so please send me your answer by hot air balloon, speedboat or spaceship. As usual I may just have missed the point and will therefore willingly agree to join Sir Richard on the next Virgin Kissathon, as punishment of course!

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