Jannie Mouton, affectionately known as the ‘boere-Buffett’ has ushered in another big day in the world of South African business, as PSG Konsult listed on the Johannesburg Stock Exchange this morning, garnering about R10bn worth of interest. Jannie is behind a bevy of good news stories in the realm of pioneering entrepreneurialism in South Africa, and if there is anything to the notion of investing in stocks according to the men who lead their companies, then Jannie is definitely a man to follow. This is corroborated by the ever-insightful, David Shapiro, from Sasfin Securities, who keeps a level-head when assessing the ongoings in South Africa. Not only does David have insights into the markets, he also weighs in on Zuma’s State of the Nation address, expressing what seems to be the overwhelming perspective of a disappointed the nation. – LF
ALEC HOGG: Let’s have a look at how the markets are performing right now. Well, let’s get a more in-depth look at how the market is trading today. David Shapiro from Sasfin Securities…it’s a Wednesday…it must be David. Eighteen: why is 18 a lucky number, David?
DAVID SHAPIRO: In the Hebrew alphabet, its chai – its life – so number 18 is chai, which stands for life.
ALEC HOGG: I’ll tell you a little story.
DAVID SHAPIRO: Octodec – the late Alec Wapnick – octo dec: eight – ten…eighteen.
ALEC HOGG: Well, Brian Joffe…he and I once had a racehorse together and I bought it. I said ‘Brian, would you be interested in racing a horse with me’ and he said ‘absolutely’. I bought it and he was going to take 18 percent, but he liked it so much, he took 36 percent.
DAVID SHAPIRO: Well, you normally give gifts – what would you call it, in lots of 18 – so if you give a wedding gift, you’d give R900.00, R1800.00 etcetera.
ALEC HOGG: Well, 13 is a lucky number. Eighteen is the other lucky number. It’s a lucky day for PSG Konsult – R10bn. It’s incredible what Jannie Mouton’s done, isn’t it?
DAVID SHAPIRO: He’s done fantastically and if you consider that’s where he started… I used to sit on the JSE committee with Jannie and he had this real earthy type of approach to life, almost like a folksy Warren Buffett.
ALEC HOGG: Hulle noem hom die ‘boere-Buffett’.
DAVID SHAPIRO: Yes, the ‘boere-Buffett’. You know the story of how his partners kicked him out and he started this business, but he’s done phenomenally well and he always seems to choose the right businesses. Whether it was Curro or whether it was Capitec, PSG Konsult, if you can consider the reach that they have throughout the country – and that he’s built up – it’s really a super business.
ALEC HOGG: He also has a good guy running it. You know Francois Gouws, who was running UBS in London (the equities side) – the top, top man. They somehow managed to bring him back to South Africa to run PSG Konsult. I saw them this morning, because they were here at the JSE with the listing and they’re very bullish about what they’re going to do with this business.
DAVID SHAPIRO: I’m sure. When you live in Stellenbosch, I think it gives you that time to think. We don’t do it in Johannesburg. Can you imagine just sitting under those mountains in that kind of climate, just worrying? It gives you freedom to expand your thoughts, rather than being rushed around here. A lot of Mafia down there have done incredibly well. You have to hand it to them.
ALEC HOGG: My friend Nick Binedell says the centre of power has moved to Stellenbosch – certainly the capital power in the country. The political power: we had an exhibition of it last night – rather stolid, I guess.
DAVID SHAPIRO: I listened…all one hour and twenty minutes of it. I think if Zuma would have spoken a little faster, he could have gotten it down to 40 minutes, but he seemed to labour over every word. Whether he’s still feeling ill or wasn’t quite comfortable…
ALEC HOGG: But he’s 72. We mustn’t forget that. He’s not a chicken.
DAVID SHAPIRO: In all fairness, I grant that it’s not his home language and it must be very difficult to read or to talk in another language. I actually interviewed Sarkozy once and he really struggled in English. The interview was done in French, where he could express himself/talk, and there was an interpreter coming through even though he was good in English. I feel sorry for him in that respect, but the message – we’ve heard it before. I didn’t get excited. I tried to interpret it. I tried to say ‘okay, so what’s new’. I think its all delivery that counts and I think we’re tired of the promises.
ALEC HOGG: It’s a credibility issue now. I just saw it on Biznews. We put the speech up last year. Many people were interested in the speech. There was a lot of interest. This year on Biznews…a couple of hundred people actually bothered to go and read what was going on. It was almost as if it was a non-event because ‘now, show us the money. Don’t talk about fracking. Show us the money’.
DAVID SHAPIRO: They’ll talk about fracking. They’ll talk about nuclear power. They’ll talk about energy, but let’s see it. Medupi should have come on-steam last year. We’re one year/a year-and-a-half down, so people are saying ‘hold on a sec. When we get these things going, when we get labour under control, and when we get everybody around a table…’ They’re trying to resurrect Nedlac now under Cyril. They also tried to put pressure on cabinet ministers to deliver. We’ve heard it before. Let’s see the results. The one thing they did say is that on Mandela Day, 67 minutes of cleaning up, and it’s something we can do. I think we need a lot more than 67 minutes. This is generally, collecting litter.
ALEC HOGG: But the point is, just stop littering.
DAVID SHAPIRO: That’s the whole point.
ALEC HOGG: Get the blooming taxies off the pavements. Stop them from peeing on the side of the road.
DAVID SHAPIRO: It’s a big issue with me.
ALEC HOGG: Yes, you don’t want to look at that side. You want to look at the bright side and the bright side is the Chinese are in town. They’re in Britain at the moment, doing interesting things. Here in South Africa, if you’ve been following on the last few days, a little stock called Wesizwe Platinum has been jumping every day. Today, it’s again one of the best movers. I think it’s doubled in the last week. It hasn’t even tilled the soil yet, but it is Chinese-owned and it might suggest there’s something happening.
DAVID SHAPIRO: I hope so. I’ve been watching it as well every day, creeping up, and it’s unusual in a climate where most of the platinum mines have been under pressure. We need finance. I think one thing we’re going to be short of is finance.
ALEC HOGG: The Chinese have enough of that.
DAVID SHAPIRO: They have plenty. We also have to get the mining right. It’s already, as you say, tilling the soil or turning the soil, but it’s a matter of now making it into a mine where people are going to work.
ALEC HOGG: What happens if AMCU become the dominant union at the Chinese-owned mine?
DAVID SHAPIRO: I don’t know. I don’t think they’re going to treat them the same way as Anglo did at Impala. There’s a shaft. Just shove them in.
ALEC HOGG: Mr Shapiro, Pallinghurst, Brian Gilbertson’s company’s had quite a good run as well in the last few years.
DAVID SHAPIRO: It’s surprising that a lot of these juniors have been picking up. In fact, it applies to the whole market, Alec. I’ve been quite surprised at some of the gains that we’ve made in companies that you think would actually be held back by the developments in the country. I’ve looked at Hulamin, Tongaat, and Telkom: all of these turnaround situations. I hope they’re pointing to a better future and I hope they’re pointing to a view that things are going to turn around.
ALEC HOGG: Not just money sloshing around, so people could be reaching for bargains.
DAVID SHAPIRO: It could be, but why would people pay those kinds of prices?
ALEC HOGG: Telkom, with hindsight, was like Old Mutual at R4.00. It was an absolute sitter and with the way that Jabu Mabuza and his dream team have gone about things there, it’s interesting. What about Alexander Forbes? That last bit of news there…it was listed, it de-listed, and now you have Edward Kieswetter of SARS, running it.
DAVID SHAPIRO: A superman. In fact, I spoke to someone yesterday who actually said how he’s turned that company around. If you look at PSG Konsult…if you look at what we’ve seen in MMI, Old Mutual, and Sanlam, these companies are doing very well.
ALEC HOGG: Coronation?
DAVID SHAPIRO: Coronation. I think they should list. I think there’s an appetite for them, for financial services at the moment. It’s a well-run company. I think they’re probably going to extract a lot of value if they actually list it.
ALEC HOGG: I chatted to Piet Mouton, the MD of PSG and asked him ‘why is it that PSG lists these companies’ because they listed Curro, they listed Capitec, they listed Zeda, and now they are listing PSG Konsult. He says ‘it’s like you Usain Bolt. If you put him into training, he’s never going to run as fast as he would if he’s in a stadium with lots of people watching him’. Listing, if there’s anything for Alexander Forbes…if their shareholders there… Rather than selling it off, if you put the guys in front of the stadium, if you let them come into the studio and come talk to us here, they seem to perform a little better.
DAVID SHAPIRO: Yes, they’ll be able to measure their performances against peer groups etcetera.
ALEC HOGG: I like that analogy, don’t you? Not bad for a guy from Stellenbosch, hey. I can speak slowly, like Zuma. When you’re out there in the crowd…
DAVID SHAPIRO: When you’re listed, it draws people’s attention to your performance.
ALEC HOGG: You played football.
DAVID SHAPIRO: I played high-level soccer.
ALEC HOGG: And when you played when there were lots of people watching, did you play better?
DAVID SHAPIRO: Of course, you did. That’s why you’re always better at home in front of your own crowd, because they push you on, so it does help.
ALEC HOGG: David Shapiro is with us in the studio every Wednesday. You can catch him again and of course, David’s program ‘On the couch’ is not to be missed – part of our CNBC Africa line-up. He is with Sasfin Securities.
