Asset Manager Q&A

Asset Manager Q&A

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What stocks would you buy with R5 000

For amounts below R100 000, I would buy a unit trust which would provide exposure to a diversified group of stocks. The important points to consider are the manager’s long-term track record and in the current environment I would want the fund to have at least 20% exposure to offshore stocks.

R10 000?

Same strategy as above.

R50 000?

Same strategy as above.

R500 000?

  • Large caps – MTN, Sasol, Anglo American, Goldfields
  • Small Caps – Supergroup, Gijima, Bell, Eqstra, Business Connexion

R1 million?

Same as for R500 000

Which stocks/market do you regret not investing in?

  • MTN at R4 in 1996
    (currently R142)
  • Shoprite at R5 in 2003 (currently R132)
  • Tencent (35% owned by Naspers) in 2004 at HKD4 (currently HKD156)
  • Google at USD100 in 2004 (currently USD600)

What stocks/markets are you keeping an eye on?

  • The Eurozone is currently the focal point – sovereign debt stress continues with no resolution in sight
  • The recovery in the US has been weak and the ability to reduce debt levels remains a concern – key indictors to watch are housing prices and unemployment levels
  • Emerging markets have generally performed very well over the last 10 years – valuations and currencies are worth monitoring. Also keeping a close eye for stresses in the Chinese economy.
  • In general offshore stocks are currently far more attractive than domestic stocks. There are two broad buckets of value – the first is large global quality stocks such as Roche, Reckitt, Cisco that are trading on low PE multiples of around 10 times. The second is beaten down contrarian opportunities such as Billabong, Supervalu and Gazprom.

What are your goals when investing?

Strong capital growth over a five year period and a reasonable level of dividends in the interim – as a value investor, I buy stocks that have typically underperformed and are disliked by the market – the valuation multiples must however also look attractive.

What was the best investment decision you have made to date?

Two that stand out are:

  • Buying Naspers at R36 in 2003 (currently R360)
  • Buying  Metorex at R1,80 in 2009 – it is currently in the process of being bought out by a Chinese company for R8,90.
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