WEBINAR: Novo Nordisk tumbles as competition heats up

Every month Alec Hogg reviews the Biznews.com Global Share Portfolio. The portfolio is built on Warren Buffett foundations, and over the long term the market noise doesn't take away from the fact that all the stocks held, are well run companies. Alec takes us through the performance and current position of the portfolio, providing a comprehensive breakdown of how the shares are doing and how the companies, split between the likes of Apple, Amazon, Barclays, Berkshire Hathaway, Alphabet, IBM and Novo Nordisk are performing. – Stuart Lowman.Alec Hogg: Well hi there, sorry we're a little late today, a few little slight technical hitches but it's Alec Hogg coming to you from London and with the monthly update of our global share portfolio. Of course, we're getting to the end of September 2016. We actually launched the portfolio in September 2014. Then we had a little technical hitch, so we relaunched it again in December. In fact, we'd been doing quite well in those three months. The reason was we were expanding the size of the portfolio and we started then with R2m (around about just under $200 000). Since that period of time, the portfolio has improved or has grown, annualised by 22 percent a year, it's up by 38 percent in that period, helped along of course by the weakness of the Rand. With me today is our Managing Editor at BizNews, Stuart Lowman?.___STEADY_PAYWALL___.Stuart Lowman: Thanks Alec, we'll just pick up all the questions as per usual from the guys and girls who are listening. On your right-hand side of the screen you'll see a question bar, just pop them in there and we'll try answering them as they come through..I hope you got your cup of tea there. We have quite a nice group of people listening in. Do send through your questions quite early if you can. That way we'll be able to answer them a lot quicker. Okay, so let's have a look at the portfolio as it lines up and you can see it's been another very solid month for us in this past month. If I go through the individual constituents and how they've performed, we've had a fantastic run again from Amazon.com. A month ago Amazon was trading, that's in the last seminar we had, at $757, it's now cruised through $800, it's $828 a share as you can see there, an incredible rise in the 21 months that we've had the portfolio in Dollar terms of 153 percent, it's unbelievable actually..We started off with Amazon as one of our wildcards with eight percent target; it's now already 18 percent of the portfolio. As a consequence of this, it's restructured the portfolio quite significantly. If you now look at it, we've now got about a fifth of the portfolio is in Vanguard, in the S&P 500 Index, our portfolio has outperformed relative to the index. That's why the proportion there has come down a little bit, Alphabet, about a fifth, Amazon, about a fifth, so you have 60 percent in those three. Then Berkshire and Apple will add another quarter, so you can see that the dominance of those four stocks and the ETF is significant. Just as well because the other three, Novo Nordisk, IBM, and Barclays, who between make around about 18 percent of the portfolio have been under performers as you can see. All three of them are down in price since we started..We are a little bit worried about Novo Nordisk and I'll tell you a bit more about that later, IBM I'm not worried at all about and also a little bit worried about Barclays. Those two stocks are going to be undergoing a thorough reassessment in the next month. I've wanted to go into Facebook for those of you who have been following this portfolio for quite some time. However, Facebook just keeps getting stronger and stronger and maybe we're just going to have to bite the bullet and make that switch in the next month, but anyway for the way things are right now, we had a fabulous last month with Amazon now contributing a $25 000 improvement to the portfolio overall. Alphabet's $14 000 improvement, and for the rest of them they are pretty close to where we purchased them in Dollar terms..The Vanguard S&P 500 Index is up, giving us about $500 000 improvement there, but the rest of them, apart from a slight decline in Apple, about $3000 loss there, you can see that's the way it's constituted. So portfolio very focused at this point, but we always intended doing that and have been quite fortunate in that both Amazon and Alphabet have fulfilled their promise. The intention of this portfolio was to see what we could do in Rand terms and the idea was to take a position for South Africans to invest offshore given that we felt that the economic policies that were being employed in the country were off-beam and would not support the value of the currency in the country's share price, the Rand and that has proved to be extremely accurate..The Rand over this period has depreciated as you can see there at the bottom of this chart bar, from R11.27 to R13.61 against the US Dollar, that's in the 21 months. In the past month in fact, the Rand has appreciated quite a lot but that's because of a US Dollar that is a little bit softer, its' had a pretty good run. The Rand itself has been enjoying the lifting of all ships, which has happened with emerging market currencies and as a consequence of that, it has come back quite a long way, but it's still, since we started the portfolio underperformed really badly and as far as we are concerned that has been the correct option to take money offshore. When you look at the individual constituents of the portfolio, you can see that the only one that's really looking ugly is Barclays PLC..That was because we bought into that stock listed on the London Stock Exchange in April 2016, you may well remember, came two months later. The Rand/Pound just ahead of Brexit was as high as R24 and it's now R17.72. When you are investing Rands and the Rand appreciates against international currencies then obviously it has a negative impact on your global portfolio, but overall as you can see at the bottom there, we started with a R2.3m and that's after a couple of changes in the portfolio and it's now R3.2m, so the portfolio is up by 38 percent overall. Moving onto the individual constituents and I freshened up most of the presentation as you'll find out in a moment, but you can see there we put them in order, Amazon.com from Alphabet and then Vanguard, which is the overall index around about five percent better than the Rand, six percent..The Rand as you can see, profit we've made on just simply taking the money offshore has been 21 percent or 12 percent annualised and the red figure there at the bottom is Barclays which we've now held for five months and we bought it just before Brexit which was not a very good thing to have done with hindsight, but who would have thought that Brexit was going to go the way that it did. Then moving onto the graphical representation you can see if you get to back a winner like Amazon, it does help the portfolio overall, Alphabet has also given it a very good return, so those two, both Amazon and Alphabet outperforming the index and putting the portfolio's performance overall a lot higher. The dividend receipts, we got an extra dividend in this last month that was paid on the 13th of September, you can see it in blue there and that was another $279 that came from the S&P 500 Index..Let's go into each of them. The reason why we decided to go into this exchange rated fund, the Vanguard S&P 500's exchange rated fund was because it was the lowest cost ETF and it tracks the index of the 500 biggest stocks on Wall Street. The graphical representation you can see there, when we bought in and we've gone back to the date of the purchase which was on the 4th of January 2014, it's been quite a volatile period, particularly September 2015 where you had that big decline in share prices from the S&P 500 Index going from, as you can see there, the index tracker going from over $190 a share to just over $170 a share. So even with that big knock and then again in January this year when we had the worst start to the year of any time in history for the New York Stock Exchange, we can see that decline in January taking the price of the index from $190 to $170..That's one of the valuable things about investing in an exchange rated fund or in an overall index, is that you get weightings playing for you and although you do get declines, they are not exaggerated. Therefore, although it was a terrible month, the fall was from R190 to R170, that's not going to put anybody in the poor house. Since then, since February this year when things started turning around again, the S&P 500 Index has appreciated and for those of you who like technical analysis we're getting very close to the point now where it could break through the moving average and that would suggest that even better is in prospect. Anyway, it's right at that cusp period right now..Berkshire Hathaway was one of our core stocks when we bought it. In fact, that's such a lovely picture, just have a look at it a little bit longer. There you have Warren Buffett, the Chief Executive of Berkshire Hathaway playing cards or Bridge, as he loves to do with Bill Gates from Microsoft. Buffett doesn't own any Microsoft shares, neither do we, which is a pity because Microsoft's actually up 34 percent in the past year, nevertheless we're sticking with those companies that we know better. Berkshire itself has had quite an interesting ride. From the time that we bought it, it's been going one way and it's actually been falling. That wasn't part of the intention of course, but it also is that Berkshire is a reflector of the US economy generally and as you can see, right from December 2014 up until March this year, so a good year and bit, the share price at Berkshire has declined..The important thing in investing is that your period that you hold the stocks should be long-term and in this case we have reflected that pretty adequately as you can see and by holding on in March when things were not looking so good we have enjoyed the benefit of the appreciation and Berkshire Hathaway as we now know has recouped virtually all of those losses, had a bit of a funny month this past month, but there might have been an influence there of Wells Fargo. The Wells Fargo story is interesting. In the last month, this bank which is the biggest in America, the most valuable in America and the one that Berkshire owns 9.5 percent of, it's one of Berkshire's biggest shareholdings, it has been found to have crooked clients through the incentive system at Wells Fargo..Five thousand three hundred of its staff members opened 2-million accounts for customers who weren't aware that these accounts were being opened. What they were doing was because of the incentive system to cross-sell more banking products to customers and if you don't do it you don't get bonuses or indeed you might even lose your job, these staff members acted dishonestly when it was disclosed it was followed by an appearance in Washington by the Chief Executive, a Mr Stumpf, who has been roasted in the past week by in particular, Elizabeth Warren who is one of the higher profile American politicians. She was a professor of commercial law, so she knew exactly what she was talking about, but the CEO of Wells Fargo, he's lost $41m in share options..The borders have taken away his bonuses and slapped him on the wrist but has not fired him and the American politicians want to see him getting kicked out. Anyway, this is all in the bands at the moment. Why we need to take note of this is because it is a big stock in the Berkshire Hathaway portfolio and Warren Buffett is increasingly coming into the spotlight, his company being the biggest shareholder in Wells Fargo. What is he going to do about it? So far, he's done nothing, he's waiting, but it'll be interesting to see whether he takes the view that he did with Tesco when he found there was dishonesty and he actually sold out of that stock in its entirety, I'm talking of a $450m loss in this case..What he has been doing though is stocking up more and more on Apple, one of the other constituents in our portfolio and in the past quarter Berkshire Hathaway took it's shareholding in Apple from just under 10-million shares to just over 15-million shares, so if you believe that Buffett hasn't lost it, it's quite a bull point for Apple, of course, not such a bull point on Wells Fargo at the moment. Stu, just from your side any questions coming through yet?.Yes, Alec, just before we get down to Alphabet, Peter Mansfield wants to know how much the SABMiller, AB InBev deal is affecting the Rand to a good or bad detriment?.I have absolutely no idea. I haven't done that analysis yet, Peter, so I don't know if there's money coming in or money going out. I would presume from the shareholding of SABMiller being disproportionately large in South Africa, that it will be money that will come in at some point in time. Perhaps the arbitrageurs are playing that at the moment, but I really don't know and it's a good point though, it's something I'm sure that we need to dig around on BizNews and ask them in the foreign exchange experts..Yes, that's it for now Alec, thanks..Onto Alphabet, it's a lovely picture isn't it, of Sergei Brin and Larry Page, two guys who are wanting to change the world and Alphabet are in, we're in the news again quite a lot in this past month, it is a stock that is still very favoured by many analysts on Wall Street. FactSet which is a producer or provider of information to virtually all American investment analysts and to the asset management companies, it does an analysis of whether analysts believes stocks are worth buying, holding, or selling and it produces a top ten list periodically. The most recent of these lists had nine shares on there that you probably wouldn't know much about, but included in that list is Alphabet or Google as it used to be. That comes at number five, 91 percent of Wall Street analysts believe that the shares should be bought at this point and they have a target price for the stock of $937..As you can see, it's still under $800 at the moment, so it's good to know that the professionals like the stock. We bought the stock into our portfolio in December 2014 and as you can see it did nothing right up until the end of July 2015, but since then it has been doing fabulously well. They're in the process at the moment of making an acquisition of a company called the PG Group and that's only a $625m acquisition, not very big for Alphabet, but what is interesting is that the acquisition is being done at a share price of $17.40; it's a company that is operating in the Enterprise, Cloud. This company was only listed in April 2015, but at the IPO stage, it was listed at $17, so Alphabet hasn't gone in there, bid up, and overpaid for the stock..Obviously, it's seen something in there that it likes and it's in the process of making that acquisition, which will bring it into the Enterprise, Cloud space. There are also changes or tweaks to Google Chrome, which will promote web video viewing and composition. This is quite big news for techies. It's aligned with a similar tweak on Apple's Safari browser and between them; Google Chrome and Apple Safari are now comfortably the biggest browsers that are used on mobile phones to actually view video. Why this is important to Alphabet is because it owns YouTube, of course is the biggest beneficiary for additional video viewing online. This company has however, given us a little bit of bad news in that; it's tied up with Sanofi to attack the diabetes market..Now when we get a little bit later to the stock that we own in the diabetes field, Novo Nordisk, you'll see that, that share price has been tumbling partly on the news, that it now has a huge new competitor and you need to keep your eyes very, very close to that kind of a development, when amazon.com goes into new areas, its' a similar thing. That's Jeff Bezos and here is the share price performance of amazon.com. In addition, like Alphabet, it didn't do a whole lot for a couple of months once we bought into it, but then it has continued to move in the right direction. It had a little bit of a pullback in January this year, but managed only a couple of months later to regain that and again, for technical analysts, you'll be very happy to see that there's a strong underlying moving average based and the share is trading comfortable above it..Jeff Bezos has been quite busy with his battle against Elon Musk on who's going to be the first one to commercialise space travel. His Blue Origin has made further progress in that regard in the past while, but as far as Amazon is concerned it continues to mushroom into various parts of the world. Living in London, you cannot fail to see how this company is transforming industry. You can buy things on Amazon and get them delivered the next day. It's moved into Amazon Music now to tackle Apple there as well and if you're a member of amazon Prime, which is a club that you can buy for, it costs $85 a year; you get Amazon Music for free..Therefore, that's cheaper than Apple Music, for instance. There is a lot going on in the big world and these big bets that are being placed. Amazon though, is one that's winning continuously and the share price of that company in the past month reacting really favourably to, again, a continued assessment or reassessment of how the world is being Amazonised as it were, Stu from your side, anything?.Yes, sorry just on Amazon Alec, Denver says it looks heavily overpriced on a PE basis, whereas Google looks a lot fairer in comparison. He says he prefers Google to Amazon, but which one of the two would you prefer to buy more of now if you could and why, then he asks, "Is Amazon's Moat not under threat from other online retailers?".Some interesting points; firstly, you don't buy Amazon on a PE, like you don't buy Google on a PE either. For those of you who aren't really tuned into investment speak or anagrams, a PE ratio is a price-to-earnings ratio. That is when you take the profits of this year and you work out how many years into the future you'll have to get today's profits to get your money back. It works in an environment where there's little change, but Amazon is transforming the world and you see this in first world societies, increasingly people are buying online..In the UK, for instance there, all of the major retailing groups have put their biggest investment into their online businesses and coming at them on the other side is amazon.com which is investing heavily in not just the traditional things that we know like books and other products, but also into food as well and with Amazon you order something this afternoon and you literally get it delivered to your home tomorrow morning. What they're doing, where their growth opportunities are, is for instance and they did quite a lot of work on this in the past month, is taking over the whole distribution system. You might recall that Amazon has been trying to get drones legalised so that it could, instead of having someone from UPS or FedEx, or the Post Office indeed knocking on your door to give you your parcel, it could actually deliver that parcel remotely through a drone..It's having mixed success with that. In the UK they're quite happy for them to go ahead with certain conditions, in the United States it's proving a little bit more difficult, but what Amazon is doing as well is launching its own version now of a distribution system, a UPS or a FedEx, which is not good news for those major distributors in the long-term because Amazon has become such a huge client of theirs. If you want to understand the Amazon story, I think one needs to read the annual reports from Jeff Bezos. He's been at it since the mid-1990's when he formed the company. It is a process of revolutionising and disrupting retailing. It was only a couple of years ago that Amazon's market capitalisation exceeded that of Walmart. Now it's getting to the point where its revenues are starting to compare with Walmart as well..It was always way, way behind and that's what happens, when you get exponentially you cannot base your valuation of a company that is growing exponentially on PE's, because the exponentially of Amazon which grows, depending on how much they want to show really, between 30 and fifty percent a year, it does quickly add up when you start, you just put that onto a spreadsheet, so Amazon is, if you also, another good idea if you are interested in finding more about this company, is go onto BizNews and go and read the transcript of the Berkshire Hathaway AGM where at least five times Warren Buffett referred to the Amazon story and the Amazonisation of industry of retailing, that's where Amazon is. It's a stock that you have to have in your portfolio..I don't believe that if you've been exposed to it in the first world and you've also been exposed to investment that you would remove it or not have it in your portfolio. We have seen that it had a little spurt lately above $800 a share. It could be worth waiting a little while, but on the other hand, given that the Rand has appreciated so well, I would not hold back from buying the stock into my portfolio today. As far as Google or Alphabet is concerned, it has a more mature model in many ways in that the industry where it gets most of its money from, which is online advertising, is an industry where the supply is infinite. Anybody can start a website tomorrow and as a consequence of that, the value of online advertising as it has been doing for years is trending towards zero..At some point in time, of course, it'll never get to zero, but at some point in time that might flatten out, but it's showing no sign of flattening out at the moment. Where Google, (or let's talk about Alphabet, give it, its proper name) where it's recognised all of this, so it's investing in other areas. It could well hit a home run; it's investing in, for instance, driverless cars, which is a big opportunity. The research opportunities that it's going into in various areas are also potentially going to be another big win for it, but at the moment, they have this stranglehold on online advertising as more content. As more pages come on, they by virtue of the way that the industry is structured, they will continue to grow more in that area, but looking in the long-term, if you were to ask, "Who has the greatest growth potential with existing businesses, you've got to go with Amazon..A big fight as well that these companies are having is in the cloud space, but there Amazon has a huge advantage having gone into it years before Google did. Google's catching up as is IBM, as is Apple even moving into it, but at the moment, the company that's making the big margins and certainly has the lion share of the cloud computing space, where people are, instead of keeping their records on a laptop or in a hard drive on their own computers and it's not just you and I on PC's but it's big corporates as well who used to put it into these big mainframes in the past, that's all going into the cloud and then the operators of those boxes, if you like, that are in the cloud, are the ones who are benefiting from scale and Amazon being the first to market there by quite a long way is benefiting too. That's why investors love Amazon..On the one had it's transforming and revolutionising retail as we know it and as a consequence of that there is a lot of runway on that side and secondly, it's also doing extremely well in the cloud, so those are the two big reasons why I would rather go with Amazon than with Alphabet, if I was forced to choose but I'm not, I've got both of them and I think you should too. Moving onto IBM, this is a stock that we've bought, which is again, a company that has not performed that well, as you can see, since we bought it in December 2014 and today it's really done pretty much nothing. It did however; get down to as low as $120..This is where the long-term philosophy of investing will kick in again because if you like the company at $160 in December 2014, there must have been a good reason for it to like it even more in March this year at $120 and that is the message that I was trying to give out when in fact, I liked Apple even more, but I think we miss-timed that purchase but no matter there. IBM is a very, very cheap business on its net assets, on the structuring, and on where it's going into the future. What it's been doing is it's moving from the old mainframe business to a brand new services business, it's managing to do this pretty efficiently..It's almost like turning a super tanker and it's got a few more years of shedding the weak and low margin businesses while the fresh and high margin new areas start kicking in, so it's quite a job still that IBM is going through, but they do have, they're very well-positioned and if you haven't got a share that you own yet offshore this is probably one that you could be happily buying knowing that you've put your money into a pretty safe long-term bet. Here's the one I'm not so happy about, horrible picture, isn't it, of Novo Nordisk, but many people who are diabetic will be able to relate to that and as you can see, it has fallen off the edge of a cliff in the last couple of months. The reason for this initially was the declaration of a dividend. It's not unusual to see Novo Nordisk falling after a declaration of the dividend, but usually in the past it would fall, because the dividends were really big..This time round the dividend wasn't that big and then once the dividend had been paid there was a reassessment as well, of what exactly its business is looking like into the future. Novo we bought at around about the same level that it's trading at the moment. We've had a wonderful run with it and we were very happy with it for most of that period, but as a structure, you have to be worried about the way that diabetes based companies, because remember Novo Nordisk benefits if people are sick and it also benefitted people in the first world as sick, but as you get big data, that is starting to explain why people get sick and then translating that through to the public, increasingly there's a trend towards people looking after their health more and we'll talk about that in a moment now when we get to Apple. What really worries me here though is the move by Alphabet with Sanofi into this market..It's like having a little trade publication and all of a sudden one of the big media groups of the world comes into your field where you really have had a good business and they decide they like your field and they want to come and scoop us some of the profits that you're making and Novo Nordisk makes a very strong profit, it delivers about a third of all the insulin that diabetics consume around the world. If this is an industry that can be disrupted and surely it can and the disruption here would be a completely different type of approach towards the ingestion of insulin..Therefore, we don't know what technology's going to do to this market, but what we do know that investors are looking at the stock now in a different light and I think we need to as well. I'm going to again, just double and treble check on exactly whether the original reasons why we bought it are no longer valid. They're struggling in the United States as well; they've gone in quite aggressively there and haven't really hit the expectations. They also recently replaced their Chief Executive who have been there a long time and when you see a CEO departing pretty rapidly you also worry that there's maybe more that the board knows than the rest of us know, so I'll be looking at Novo Nordisk in the next little while, Stu, from your side?.There's nothing new to add Alec..All right, let's go onto Apple then and that's a picture of the new iPhone 7 being purchased. Apple was kind of a big story over the past month. The launch of the iPhone 7 was typical Apple style, there were more pre orders than were produced, so you can't get an iPhone 7 now unless you happen to be an executive of a cell phone company or I guesswork for Apple itself. There's a long waiting period, which is one of the ways, I guess that one keeps demand going if you are in that business, but Apple is a fantastic business that really got a big boost last night. It hasn't reflected yet in the share price, but that boost was in the news, the Blackberry is stopping the production of its handsets. It might not sound like much when Blackberry's market share has continued to decline..Blackberry by the way is now only going to be focusing on software and services. I guess they've finally made a decision that they can't compete in this smartphone market, but what is important here is that Apple now is targeting and aggressively targeting getting into the business market. It's an area where Blackberry dominated in the past, it's an area that Apple has been starting to move into, but it hasn't really been able to make those big breakthroughs. What it's done is a deal with Deloitte, that was announced in the last few hours, in fact and Deloitte are going to be sending 5000 of its consultants into its corporate clients to explain to them why they should be getting iPhones for the people who work there. The reason why Deloitte is such a big fan is that Deloitte staff already own 100 000 iPhones between them and Deloitte itself has built 75 apps for the iPhone device..This is a huge potential area of growth for Apple if you can start getting into the corporate market as many businesses have found, rather than in its case, it was primarily in the individual's market. It can start becoming a significant driver to your growth in the long-term, bulk discounts etcetera, but what is interesting about this is that Apple is increasingly doing these smart partnerships. The smart partnership with Deloitte is quite easy to understand. Another smart partnership, which has a South African connotation, is the one that it's done with Discovery Health. Just by way of background on this one, Discovery works on what is called a shared value model. Therefore, if it can save you money, it will make more money and make more money itself and save society or improve the story for society, then Discovery believes it has an innovation that is worth trying..When it comes to insurance and health care the big deal there is to try to get people to themselves become healthier, but of course, it's like smoking a cigarette, if you smoke a cigarette now you don't see what your lungs are going to look like in 20 years' time, so you enjoy the cigarette today. You have the reverse situation when you're asked to exercise. If you're sitting at your desk and you don't really feel like going out for a run because there's another movie to watch or a little bit more work to do, as a consequence of that if there is no immediate adverse effect, you just won't do it. What Discovery have done with Apple and this is a worldwide partnership that they have now launched, is the Apple watch, which you wear as a fitness wearable all the time..Of course it serves as a watch and a computer and lots of other clever things, but what Discovery has found out is if it can get people to exercise more it can save them a lot of money on their health and in their life assurance and there's still plenty on the table for Discovery itself to improve its margins. The Apple watch has sold about 30 000 in South Africa, which was the test case. They launched it in China two weeks ago, this new Discovery business, or opportunity and from what I understand in two days, they sold as many Apple watches as they've done in South Africa in the past year..It was launched in the UK on Monday and this is the kind of partnership, and how it works in the UK anyway is that if you go into the shops here, you would pay £369 for an Apple watch, but if you're a Discovery, (or in this country it's called Vitality) if you're a Vitality member you would only pay £69 and as long as you walk your 10 000 steps a day for the week and do that for the whole month, you actually don't pay anything else. So they will set levels and these are pretty manageable fitness levels for you to do, which will encourage you to become fitter, which will save on your life insurance, your medical risk, and you benefit by getting a free Apple watch, effectively. There is a launch of this Apple watch programme into the United States as well with John Hancock where Discovery has a partnership there..Also, the Chinese partnership is with that country's biggest life insurance company Bingham, they're doing the same thing in other parts of the world as well and I'm not saying that because it's a bull point for Discovery, which of course it is, but it's a very big bull point for Apple because Apple is doing these smart partnerships now in bringing in the Deloitte's, in bringing in Discovery's and it's had similar smart partnerships that it's started with SAP Cisco, in the past as well. This is something that, it's almost like Apple has its ecosystem together and now it's moving into new areas. Very interesting development in the past month too from Apple was the acquisition of a little company in the UK called McLaren..Now you probably know McLaren for its Formula 1 cars, but McLaren makes about 1500 vehicles a year, very high-end, very boutique and the valuation of this company is probably around £1.5bn so it's significant in my terms, but certainly not when you're sitting as Apple is on $230bn in cash. Why did Apple buy McLaren? Well it did a Tesla here. Tesla, Elon Musk's company, the first deal that it did was with Lotus, which is a company very similar to McLaren, it makes a few cars, races in Formula 1, but has some wonderful technology that and patents, which can be used in the whole new driverless car area, which is another one that Apple is looking at, being very, very under the radar, but it's on its way there. One other issue for Apple where there's a flag being waved, a new area it's going into, is in the payments systems..Two years ago, something called Apple Pay was launched from telephones. It's now rolling that out with Sierra, the new IOS, the new operating system. Sierra will include Apple Pay for your laptops and for your desktop computers that are using Apple Macs anyway on that side. That adds a completely new scenario for companies like PayPal who have had that market pretty nicely to themselves. Now we have Apple coming in there and if you want to do online payments, you can do it through your Apple computer by using a fingerprint on your Apple iPhone. I think this kind of tells you that this ecosystem in the same way that Amazon is moving aggressively into retailing and dominating more and more there, you can see Apple starting to do the same thing in its area with the collaboration between phones and computers..Interesting, interesting story and I just love Apple. I think I've loved it from $90 in June, you might recall a few months ago, we bought in a little early. It's come from a lot higher, but we bought in a little area about $130 and then bought a bit later, around about $100 and it got down to $90, but it has improved and to me, even technical analysts will now tell you that Apple's looking a lot more solid going into the future. Final stock that we have in our portfolio is Barclays. That graph shows you very clearly, what happened at Brexit at the end of June. Barclays share price was round about 185P, we bought in at 165P, so we were looking quite sweet and it seemed like a good investment at the time..The reason for purchasing it was because of the new management that were introduced and the fact that they looked like they had done a deal or were in the process of deal and sending the South African subsidiary. As a result of Brexit, the share price tumbled, banks will be most affected, the investors believe, by the EU no longer having Britain in it and as a consequence, the share price went all the way down to the late 120P's. It's improved again. If you're buying a company for the long-term, it's good to hold onto it and this one technical players will tell you, is still quite nicely above its long-term moving average. It's regained in Pound terms pretty much what we paid, but on the other hand, the Rand has appreciated quite significantly against the Pound as a consequence of Brexit and in Rand terms it's been a poor performer, in fact the worst performer in our portfolio and you can see that..I'm going to give you the summary there at the end. Barclays PLC is down 19 percent in Rand terms since we bought it in April. That's the overall performance of the portfolio. It's a 22 percent annualised return. About half of that has come from a depreciation of the Rand, the balance of that has come from an appreciation in our underlying investments. If you go one step further more than half of that gain has been through outperformance, so this portfolio has done us proud already. Even though it is a long-term portfolio there's always been an intention here that when we bought the shares we bought them for keeps but with the rider that if circumstances are to change at the business itself then we need to reassess and that's where I'm looking at Novo Nordisk at the moment..I'm not absolutely certain yet, but there's many things that are saying to me, this is a stock whose underlying circumstances now seem to have altered to the degree that you really need to take a reassessment. Barclays on the other hand had to pay another $325m fine in the United States to settle yet another lawsuit that had been built up by the previous management. I think the managers, those who went in there, Jes Staley and John McFarlane, the Chairman must be a bit tired now of having to settle all of these, but it looks like it might now finally be over and it could move forward, but banks are in a very difficult situation..Barclays is an unusual one in that it is coming from a very low position. In addition, it has a wonderful High Street franchise in the UK. So there are many factors offsetting the fundamental shifts that are hurting bankers, but on the other hand I think that it's another one that you almost have to put on watch, are banks going to be the same in the future, can you expect the same kind of returns, one doesn't know, Stuart, from your side?.No, that's it Alec there's nothing else from my side, so thanks again for all the analysis..It's my pleasure and thank you to everybody who joined us today; we've had quite a nice turnout. I see that maybe just, if you'd like, if there is a question on anything that you'd like to put forward, maybe just, how do you do it, Stu, you put your hand up, remind us again how do you ask a question..There's a question bar on the right-hand toolbar, so if you open that up and you just plot it there it should give you an option to put text in. Just slot your question there and push enter and it'll come through to us and then we can answer. I see it's also a technical area where people have signed issues and stuff, so anything goes as they say..All right, so anything that you would like to ask, that's the place to ask it there and if there are no more questions, we've had our time. Apologies for the slightly late start, there were a few new teething problems that we've had to overcome today, but fortunately, we threw them and it's nice to see that the portfolio is going in a very, it still remains in a very healthy state. Also good for South Africa to see that the Rand has appreciated, but my view on this would be that it is an ideal opportunity now to take advantage of the ability to use the R1m, no questions asked, offshore allowance..In fact, you can put your R1m into Standard Bank, into the Web trader platform, replicate this portfolio and you don't have to even ask for exchange control approval or get any tax clearance, so there are those benefits that you have at the moment. Once you want to go over R1m then exchange control starts kicking in, but at this point you can invest in that web trader account and literally just replicate the portfolio and we'll be able to give you an update on how it has performed in the past month and what has happened to the underlying companies. Stuart, if there's nothing more to add?.There's just a quick thing on the SAB deal Alec, I see 16.1 percent of the register in the UK is South African based and I think the total transaction is close to around £12bn, which could obviously have had an impact on the Rand as we were discussing earlier..Thank you for that information that is certainly a significant amount of money, £12bn. You multiply that by 17/18 where we are and you're talking about a significant capital inflow into the country..Yes, it's R213bn..Okay, well that certainly isn't going to hurt the Rand..Great, thanks a lot Alec..It's my pleasure and thank you to everybody who joined us today.

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