Re-Rate

Update on 29 March 2020 From the initially recommended levels:  MRP declined by 65% to it's recent low. MSM declined by 85% to it's recent low. _________________________________________________________________________________ If there’s one thing that is a constant in financial markets, is that emotions have and will always be a huge driver of prices. That being said, the patriarch of value investing, Ben Graham, once said, “In the short run the market is a voting machine, but in the long run it is a weighing machine.” While companies are run by management teams that are highly competent and businesses display quality characteristics, share prices are often bid up to levels that are unsustainable, creating significant downside risk to those who buy at lofty (sometimes very) levels. One sector of the South African equity market that I have managed to avoid and most importantly protect capital has been the JSE retail sector. During March 2018, at the p...

 Last Close of Salmar: NOK431.60 Tonight (15-January 2019), I decided to tune into the latest episode of Stockwatch, a business television programme that is aired Mondays to Thursdays here is South Africa. Basically, the program features prominent investment industry personalities that discuss the daily developments on the JSE and global markets. At the end of each episode, the professionals recommend 1 share that viewers could consider as a buy (or sell). This evening we had one of the absolute best and top performing hedge managers in SA , Jean-Pierre Verster (Fairtree Capital) recommending Norwegian-based Salmar as a BUY. Naturally I had a look at the share chart, upon which I made the following conclusions regarding the share's technical position. Since listing in 2013, the share has been in a strong upward trend, appreciating from the early NOK50s to it's recent high of NOK519, which was reached in November 2018. Since then the share has retraced in the form of a ...

Just as the ongoing debate rages between whether active or passive is a sound strategy, the tussle also remains between technical analysis & fundamental analysis. Like many market participants, I believe that a combination of the two strategies (among the strategies that exist) could add value when trying to achieve alpha and management risk. One such example is Dis-Chem Pharmacies, where in March 2018 I identified a 'triple top' pattern - this is considered bearish and warns of potential downside risk. At a p/e ratio of 40 times, the share was grossly expensive & could have been used to 'lighten up' on long positions. We then saw the share decline in price by 29% in the following three months. I also used TA to avoid the recent decline in Fedex shares. On 21 September($250) I warned of a 'three falling peaks' pattern. Since then we have seen the price decline sharply (also impacted by weaker results). The price now trades 32% lower at $170. My beli...