| | | | | | | | | | | | | | | Monday 28 June 2021 | | | | Good morning Voornaam,
Shareholder activism has been an important theme in the South African market in recent weeks.
Over the weekend, I read about the shareholder activism culture in Japan which is in its infancy. The departure of the chairperson of Toshiba, Osamu Nagayama, marks a watershed moment in that market.
This activism wasn't based on value destruction or a potential buyout at a cheeky price. In this case, an investigation prompted by the largest shareholder in Toshiba uncovered alleged collusion with top government officials.
For a country with such a conservative corporate culture and a generally dismissive approach towards shareholders, this departure was a major shift in thinking and a win for investors.
Closer to home, we have another corporate problem brewing. Tongaat Hulett has had an exceedingly volatile period, with a parabolic increase in December (a share price chart that shoots to the moon) followed by a nasty decline. The company has walked a tough road, after an accounting scandal murdered the share price in early 2019.
CEO Gavin Hudson inherited a broken business and then had to contend with a pandemic. Selling the starch business to Barloworld threw the company a lifeline, but the results to end-March are now delayed beyond the JSE's required deadline as Tongaat is renegotiating with its lenders after missing a debt reduction target.
There's never a dull moment in the investment game, which is why diversification is important.
To navigate this world, you need to build up your baseline understanding of the concepts, along with reading the latest news. To help with the former, I highly suggest you sign up for Ghost Mail, my Tuesday morning mailer that focuses on explaining concepts. If you read it, you will have a vastly improved understanding of the stories you read here in InceConnect.
The lead article this morning goes to Steinhoff, which is showing decent growth at operational level but still has plenty of going concern risk. Even if the litigation settlement can be reached, the group has an uphill battle ahead with an unsustainable balance sheet.
Other articles include a trading statement from primary agriculture business Crookes Brothers and an announcement on the proposed disposal of Farmalider by Ascendis Health. If you're wondering why I call the company Descendis, consider that the 49% stake in Farmalider was acquired for R210m in 2015 and is now being sold for just R84m.
In this week's Magic Markets podcast, Mohammed Nalla and I give a yield curve masterclass. If you've ever wondered about the "shape of the yield curve" or why your portfolio moves in reaction to Fed meetings in the US, you'll find the answers to your questions in Episode 31 of Magic Markets.
Finally, Chris Gilmour gives you an idea of the biggest economic and political news around the world, along with a view of the week ahead.
Have a productive Monday - thank you for getting your week off to the right start with InceConnect!
The Finance Ghost
| | | | | | | | | | | | | | | | | | | | | Local and Offshore Market News | | | | | | | Steinhoff is still very risky
Steinhoff's operations are improving but the balance sheet is still a mess and the litigation settlement is far from being a foregone conclusion. Read More |
| | | | | | | MAGIC MARKETS PODCAST: Yield Masterclass
The value of your portfolio can change considerably based on the Fed and the yield curve. In Episode 31 of Magic Markets, we explain why. Read More |
| | | | | | | Growing earnings, literally
Crookes Brothers is one of few primary agriculture businesses on the JSE. The company has announced a substantial improvement in earnings. Read More |
| | | | | | | Ascendis Health is selling Farmalider
Ascendis acquired Farmalider for R210m in 2015 and has now agreed to sell the investment for just R84m. Read More |
| | | | | | | The Week Ahead
The S&P 500 hits another peak, fuelled by positive news from US banks’ stress tests. Read More |
| | | | | | | | | | Company Notices and Announcements | | | | | | | Imperial Logistics Limited >> | | | | | | | | | | | | | | | | | | | |
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