A different Remgro view

Good Morning Voornaam,

Do your own research with Unlock the Stock, as we bring you the opportunity to engage directly with the management teams of PPC and CA Sales Holdings in two separate events next week. Brought to you by A2X, this is a lovely opportunity to ask questions and wear a sell-side analyst hat for an hour. You can register for PPC on 28th March at midday and/or CA Sales Holdings on 30th March at midday.

I'm not gushing over Remgro

I learnt something yesterday. All you need to do to impress the media in South Africa is increase your dividend. As headlines shouted about the jump in the dividend at Remgro, I shook my head at the existence of any cash dividend at all when the discount to intrinsic NAV is so high.

Capital allocation theory 101: if your shares are trading at a huge discount, you should buy them back from shareholders until the discount closes. This is especially true if you split out the cash at Remgro and work out the actual discount to the underlying investments. Instead, we have news of a higher cash dividend.

That's not a reason to get excited. In my books, that simply suggests that the board isn't making capital allocation decisions based on the best interests of minority shareholders.

The value unlock opportunity at Remgro is huge, but only if there is willingness to execute it. Time will tell here. As we've seen at African Rainbow Capital, it's all about getting the timing right on these investment holding companies.

Another major update came from Steinhoff, where shareholders told the company exactly where to go with its proposed debt restructuring. I can't say I'm surprised. The proposal was a gun to the head, asking shareholders to accept shares that would be just about impossible to sell. Instead, it seems that shareholders have rolled the dice to see how things unfold from here. Personally, I think that this thing is worthless and I don't know why anyone is buying it.

In addition to these stories, we had various property updates (Accelerate | Equites | Resilient | Schroder) and news of even better earning s than expected at Bell Equpment. Blue Label Telecoms has had to appoint a new CEO at Cell C (the more things change...you know the rest) and Sibanye-Stillwater continues to anger the universe by being on the receiving end of yet another flood.

They really should've called it Sibanye-Movingwater instead, forcing Mother Nature to move along with her cruel sense of humour.

For all these updates, read Ghost Bites this morning>>>

Doves: some are angrier than others

We've reached a point in the cycle where a 2 5 basis points hike is described as "dovish" by the market - I don't know about you, but I'm glad that I didn't grow up with these doves in my garden. They sound frightening! Still, TreasuryONE points out a 7% drop in the Volatility Index (the VIX - not the kind you use for congestion) and even the rand caught a bid, trading below R18.10. Local concerns are still priced into the rand and will remain a headwind to further strengthening.

The markets are now expecting the FOMC to pivot sooner rather than later, which has brought some calmness to the dollar storm at last. Commodities were also positive, with Brent Crude stabilising around the $76 mark.

Maybe I'm just biased, but I enjoyed this podc ast

Together with Kingsley Williams of Satrix, I thoroughly enjoyed unpacking the concept of cognitive bias and how it negatively affects our ability to make decisions. This has application far beyond our portfolios, as we make decisions in our lives every single day. To learn about concepts like superiority bias, anchoring bias, confirmation bias and action bias, listen to this episode of Ghost Stories>>>

I enjoyed these podcasts, too

In case you missed it this week, the most recent episode of Ghost Wrap is a fast-paced look at news from Transaction Capital, Sun International, G old Fields, AngloGold, Hyprop, Sabvest Capital, STADIO, Caxton & CTP and Balwin. Find it here, brought to you by Mazars.

There's a new episode of Magic Markets for you to enjoy. Episode 117 is a macroeconomic extravaganza with Rachel Ziemba, a highly experienced international professional who has worked at Roubini Global Economics among many other roles. We covered a vast range of topics, giving you a great overview of the sorts of themes that macroeconomists and geopolitical experts look at. Listen to it here>>>

And finally: DealMakers

As is the norm on a Friday, the team at DealMakers is here with really useful summaries of South African M&A and local corporate finance activity for the week. They've announced the results of the DealMakers Africa Annual Results 2022. There's also a technical piece on whether a company can use a donation to avoid the solvency and liquidity test, written by attorneys at ENSafrica.

Ready for the weekend? I know I am. Make it count!

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