Nikkei 225 reached a new all-time high after 35 years
- Historical context: peaked in December 1989, 82% drawdown by March 2009.
- Factors contributing to the 80s crash: Yen protection, low rates, speculative bubble.
- Current challenges: aging population, economic complexities, recent inflation.
- Investment options: Sygnia JP (SYGJP) - JSE-traded, and Investec's structured product.
Warren Buffett's Annual Letter
- Warren Buffett's annual letter to shareholders released.
- AGM scheduled for May 4th, details about screening yet to be announced.
- Historical and informative; available on BerkshireHathaway.com.
City Lodge Results
- City Lodge results: Revenue up 10%, dividend up 20%, HEPS up 10%.
- Occupancy at 61%, pricing power at 65%.
- Challenges in margins due to increased focus on food and beverage.
- Comparison with other hospitality stocks: Sun International, Southern Sun.
MultiChoice Canal+ Offer
- Canal+ acquires 35.01% of MultiChoice voting rights, triggering a mandatory offer.
- Takeover Regulation Panel ruling.
- Speculation on Canal+ offer price, potential sweetening of the deal.
Bitcoin and Bitcoin Halving
- Bitcoin trading around $59,884, near all-time highs.
- Upcoming Bitcoin halving in April and its potential impact.
- Local perspective on Bitcoin and its role in the market.
- Bitcoin in ZAR trading over a million, emphasising its volatility.
- Discussion on Bitcoin's market cap compared to traditional stocks.
Pick n Pay* Update
- Pick n Pay's disappointing update: debt doubled, sales going backward.
- Market's negative reaction reflected in the stock price.
- Potential exit strategy if weekly close falls below 2022.
* Simon holds ungeared positions.
Budget 2024 panel.
For the last many years AJM Tax has done a post budget panel which includes Simon Brown and this year was no different. Hosted in Cape Town the panel was;
- Karyn Maughan, senior legal journalist at News24
- Dr Albertus Marias, Director AJM Tax
- Azhar Varachhia, Managing director Alpha plus Capital
- Simon Brown, Just one Lap and MonewebNOW
Below is the AJM Tax one pager of budget highlights.
Pick n Pay* Chart Analysis
- Resistance zone around 26, potential to touch 26.70
- Higher highs, higher lows, horizontal resistance
- Target: 30 bucks to fill the gap
- Comments on Pick n Pay's potential under Sean Summers
- No need for a rights issue, potential market spook if it happens
- Simon's position: Started building, considering more
- Current status: Down 1.7%, trading at 25.30
Pick n Pay close 13Feb24 (daily)
Transaction Capital and WeBuyCars
- Transaction Capital planning to list WeBuyCars
- Unbundling process expected in March
- Valuation: 7.5 billion rand
- Key information: Founders' put option on Transaction Capital is off the table
- WeBuyCar's strong performance in January with a record 14,000 cars sold
- Market Cap of Transaction Capital: R6.5 billion
- Opportunities and challenges in SA Taxi business
- Overall assessment: Looking not too bad
- Current stock level: 850c
- Expectation of pro rata shares for Transaction Capital holders
- Timing details expected in the circular
Gold Price Movement
- Gold weaker despite US and UK inflation data
- Current gold price and chart analysis
- Simon's position in Anglogold Ashanti*
- Observations on unexpected weakness in gold price after inflation data
Gold daily chart 14Feb24
Canal+ Offer for MultiChoice
- MultiChoice facing a 105 rand Canal+ offer
- Market sentiment: Canal+ likely to come back with a better offer
- Current stock price: 104.63
- Speculation on possible offer prices: 120, 135, or even 160
- Market confidence in Canal+ making a mandatory offer
Global Market Trends and Dollar Strength
- Dollar strength in global markets
- DXY trading at 104.87
- Money flowing into the US due to fear and concerns
- Impact on Rand: Trading at 19.07
- Market skepticism about inflation concerns
DXY (US$ index) 14Feb24 (daily chart)
Inflation Analysis
- Recent US and UK inflation data
- Market reaction to inflation numbers
- Central bank concerns about reaching inflation targets
- Jerome Powell's cautious approach and potential rate cuts
- Local inflation expectations and potential rate cuts in South Africa
- The challenge of getting back to the inflation target
Disney results:
Last week's big story was about tech, starting with Disney, a stock recommended here back in September at ±$80.
- Key financials: Linear networks revenue up 9%, Direct-to-consumer up 12%, Parks up 16%
- Direct-to-consumer still incurred a loss of $400 million
- Consumer products, content sales licensing, and ESPN performance discussed
- Overall, not a knockout result but not terrible; I remain a satisfied shareholder
Big move in streaming sports! ⚾️🏀🏈
Disney, Warner Bros., and Fox are joining forces to create the ultimate sports streaming app, merging ESPN, TNT, and Fox Sports (WSJ).
ESPN alone was 18% of Disney's latest quarter revenue.$DIS $FOX $WBD pic.twitter.com/xSPBko0cMO— App Economy Insights (@EconomyApp) February 6, 2024
Meta (formerly Facebook) Earnings:
- Advertising revenue up 24% year on year to 38.7 billion
- Other segments discussed, including Reality Labs (MetaQuest)
- Net profit $14 billion, up 35%; stock surged 20%
- Mark Zuckerberg's dividend income from the declared 50-cent dividend discussed
- Positive sentiments about Meta's performance, particularly in comparison to other tech giants
Canal+ Offer for MultiChoice:
- Canal+ made an offer for MultiChoice at 105 Rand per share
- Market reaction, initial excitement, and stock movement
- Simon's caution about potential risks and timing of the deal
- MultiChoice's response: Board concluded the offer significantly undervalues the group
- Canal+ continued to buy MultiChoice shares, now owning 35.1%
- Discussion on the mandatory offer threshold and potential scenarios
- Regulatory considerations: Foreign ownership rules and competition commissions
- The price of the mandatory offer must be equal to;
(i) identical to, or where appropriate, similar to the highest consideration paid by the bidder for those acquisitions and
(ii) accompanied by a cash consideration, at not less than the highest cash consideration paid if the shares that carry 5% or more of the voting rights were acquired for cash.
- The price of the mandatory offer must be equal to;
- Simon's conclusion: Canal+ likely to succeed, potential challenges, and market dynamics
Breaking News: Canal+ Offer for MultiChoice:
- Canal+, French TV business, offers 105 rand per share for MultiChoice minorities.
- Synergies between the two businesses.
- Legal considerations regarding foreign media ownership.
- MultiChoice closed at 75 rand; market likely to respond positively.
Market Updates:
- Hyprop reports positive festive trading for its tenants.
- Transaction Capital plans to list WeBuyCars in March; potential value unlock.
- Evergrande declared bankrupt with over 300 billion dollars in debt.
- Hong Kong economy expanded 3.2% in 2023.
- China overtakes Japan as the world's top car exporter.
Cristal Challenge Stock Picks:
Richemont*: Luxury brand with potential in a recovering economy.
[caption id="attachment_41062" align="aligncenter" width="849"]
Richemont weekly chart close 31Jan24[/caption]
Calgro M3*: Debt under control, potential dividend, well-managed company.
[caption id="attachment_41063" align="aligncenter" width="849"]
Calgro M3 weekly chart close 31Jan24[/caption]
AngloGold Ashanti*: Gold as insurance; geopolitical concerns.
[caption id="attachment_41061" align="aligncenter" width="849"]
Anglogold Ashanti weekly chart close 31Jan24[/caption]
Zeda: New listing, unbundling, potential growth.
[caption id="attachment_41065" align="aligncenter" width="849"]
Zeda weekly chart close 31Jan24[/caption]
Mr. Price*: Positioned well in the retail sector, positive trading update.
[caption id="attachment_41064" align="aligncenter" width="849"]
Mr Price weekly chart close 31Jan24[/caption]
Closing Remarks:
Reminder to sign up for email alerts before live sessions.
Host: Simon Brown
* Simon holds ungeared positions.
Host: Simon Brown
Date: 1 February 2024