BN Portfolio Update: Why we are swapping Lesaka for HCI; Google, Meta & Bitcoin views

In this month’s BizNews portfolio webinar, we announce a strategic change: the complete exit of Lesaka to fund a new position in Hosken Consolidated Investments (HCI). While Lesaka represents a bet on future earnings and complex acquisitions, HCI is currently the JSE’s "deepest value play," trading at a massive discount to its underlying assets. We break down the mathematics behind the switch, highlighting how HCI investors effectively get a "free option" on the massive Venus oil and gas field in Namibia, alongside a booming tourism portfolio through Southern Sun. The discussion also covers the stellar performance of Alphabet, a defense of Meta despite its recent dip, and a long-term perspective on Bitcoin’s volatility..Easy Equites ZAR Basket Easy Equites USD Basket.If you don't have an EasyEquities account, click here. .Get access to live BizNews webinars and share portfolio updates by joining BizNews Premium. Register here..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Portfolio Update: The "free option" trade – Why we’re Swapping Lesaka for HCIIn this month’s BizNews portfolio webinar, held on Tuesday, 25 November, we announced a structural change to the BizNews portfolio. After careful consideration of the risk-reward profiles, we are selling our entire stake in fintech group Lesaka to fund a new, high-conviction position in Hosken Consolidated Investments (HCI).The case for HCI: The JSE’s deepest value playThe primary driver for this trade is a rare dislocation in value. HCI, currently trading around R135, is priced at a discount of more than 50% to its underlying assets.The catalyst for this move lies in the mathematics of its holdings. HCI owns significant stakes in listed entities like Southern Sun, eMedia, and Frontier Transport, alongside unlisted assets. However, the market is assigning virtually zero value to its crown jewel: a massive stake in the Venus oil and gas field in Namibia, held through Impact Oil and Gas.Based on HCI’s own investment of R450 million last year to increase its stake in Impact - a transaction that forced a fair-value accounting consolidation - the implied value of this asset is approximately R5 billion. When you combine this with HCI’s stake in Southern Sun (worth roughly R3.5bn) and its other listed investments, the sum of parts vastly exceeds HCI’s current market cap of R11.5bn.Essentially, investors buying HCI today are paying for the listed assets and getting the massive potential of the Namibian oil fields - a jurisdiction far more stable than Mozambique - as a "free option." Furthermore, Southern Sun is enjoying a post-COVID tourism boom, with occupancy levels reportedly at their highest since the 2010 World Cup.In contrast, Lesaka represents a bet on "tomorrow’s profits." While the company is ambitious, its acquisition-heavy strategy carries significant execution risk. We prefer the deep value and tangible asset backing of HCI.Tech titans: Alphabet soars, Meta stumblesThe portfolio’s top performer remains Alphabet (Google), which is now the largest holding and showing a 61% profit. The stock has surged 18% in the last month alone, bolstered by a $3.5 billion vote of confidence from Warren Buffett’s Berkshire Hathaway.Conversely, Meta Platforms has taken an 18% haircut recently. Despite the drop, our thesis remains intact. Meta owns unreplicable assets - WhatsApp, Instagram, and Facebook - and is successfully pivoting toward Artificial Intelligence. There is also intrigue around reports that Meta may shift some chip procurement from Nvidia to Google, potentially shaking up the semiconductor landscape. As with the "guerrilla game" in tech, once a network effect is established, it is incredibly difficult to displace.Crypto Bitcoin has had a volatile month, with the ETF in our portfolio down notably. However, this position was established as an insurance policy against global turbulence. Having grown from a 2% allocation to 7%, we remain comfortable with the volatility, viewing it through a long-term lens.This month’s update underscores our philosophy: agility in the face of changing valuations and a commitment to owning exponential technologies while securing deep value where it exists.

BN Portfolio Update: Why we are swapping Lesaka for HCI; Google, Meta & Bitcoin views

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