The Old Firm: Hogg and Shapiro celebrate Buffett’s birthday, Mouton’s R1bn gift and more

LONDON — It’s 20 years since David Shapiro was my first guest on the first daily business radio show broadcast ever broadcast on South African radio. For the next decade and a half, we spent every weeknight chatting about the day’s events, building a friendship and enjoying a rapport that remains as strong today as it was when we started. It is appropriate that we resuscitate “The Old Firm” today – on our hero Warren Buffett’s birthday (his 87th) and the morning after the “Boere Buffett” Jannie Mouton quietly transferred 40% of his wealth, R1bn, into a charitable trust. I think our conversation on subjects from Trump and America through to SA business, Bidvest and the UK flows as readily as ever. Eavesdrop for a while and see whether you agree. – Alec Hogg

Well, in Johannesburg one of my good friends, David Shapiro, joins us now. Dave, it’s about time we started talking to each other again man.

Yes, I miss you. Alec, it’s 20 odd years ago that when you first started on radio, that we started broadcasting in the basement of the SABC and I still miss those days. I say it openly. I still think that we miss your journalism. When I say your journalism, I mean we miss your radio journalism. I think that there’s a very big gap there. I think Bruce does a very good job on 702, but I think as far as punching stuff that you used to get through in that 30 minutes or even an hour, I think we miss going for the big issues in a concise program. It’s wonderful to talk to you and rather than little sound-bites that we find on radio at the moment. It’s very nice sometimes, to have an open conversation and discuss issues.

Yes, well Dave, there is this thing called podcasts and it’s taken the world by storm, so un-radio, as Gareth Cliff calls it, that’s what we should be doing every week,

You’re right and that’s why I agree. That’s why it’s so nice to do it and to be able to actually go back and listen to those podcasts. Having come back from America, everything today is streaming. Everything from watching sports to watching your TV program. It’s a very interesting development that’s taking place.

It is extraordinary but I’ll just remind you that that first broadcast was in April 1997, so you’re spot on. It’s exactly 20 years this year that we went on air for the first time. There was no business radio before then and of course, now there’s lots of it. It’s great that we could have made that little contribution. But a guy who’s made a bigger contribution to my life and yours is Warren Buffett, and it’s a ‘Happy Birthday Warren.’ I would ask you to sing David, but I’m a bit worried about your…  Happy Birthday to you…

You can sing it rather.

David Shapiro, Sasfin

You were never a member of the choir.

It’s very relevant and the fact that he’s 87 today and that you’re commemorating his birthday, I think it’s very relevant at the time now. What always strikes me about Warren Buffett, and he says it at every one of his meetings, is that he was born in 1930. He always says that if he had known what was happening at that stage he wouldn’t have come out of his mother’s womb, yet today he lives significantly better than his parents, or anybody lived in those days and says the same thing. In the next 20 to 30 years people will live significantly better than they’re living now and that’s a very strong message, when it comes to talking about financial markets because we lose sight of that. We’re always dominated by what happens on a minute-to-minute basis.

Caught up by the drama because we’re addicted to it, I believe, anyway.

Exactly, yes.

https://twitter.com/itswarrenbuffet/status/901416535406686208

Warren has made a huge impact in many people’s lives and got us thinking more differently. But it’s also a big day for the ‘Boere Buffett’ and I picked up something on SENS last night, appropriately the day before Warren’s birthday. That Jannie Mouton has switched 40% of the shares he owns in PSG, with R1bn, into a charitable trust.

Well, I think he’s following his hero’s example. Buffett is giving all his money away and why it is so significant is that you can…  How much wealth do you need when you really look at your life? I always say you need a bed with clean sheets, a shower that gives you hot water, and a toilet that flushes. Everything else us superfluous. I think your life can be very simple and you can live on enough and I think once you get more than enough I think he’s doing the right thing, old Jannie. He’s probably putting it in a charitable trust that he can improve the lives of other people and I think it’s a great example that Warren Buffett set that other people have followed and it’s good to see Jannie taking that same example. I’m assuming that he’s going to do that but I think he is that kind of person. He’s a very decent man, Jannie Mouton, I’ve got huge respect for him and for the business that he’s built him. So, good for him and I hope other people do the same.

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc Photographer: Daniel Acker/Bloomberg

The release says he’s putting the shares into the Jannie Mouton Foundation, a charitable organisation, which supports various philanthropic initiatives. So, it’s spot on there. What has he done that has been so different? Remember, he was fired by his stockbroking firm. You would have known Jannie while he was at SMK. Was he very different those days to the man you see today?

He’s the last person I would have rated as being as successful that he is. I was on the JSE Committee with him and he was amongst ‘The Club’ and it was a very waspish organisation, the Stock Exchange Committee those days, we’re talking about the mid 80’s to the late 80’s. Jannie, typical fashion, used to come in with those grey shoes and grey belt made of ostrich skin but he was always forthright. He was always probing, asking questions, and a very decent man. I think he was opportunistic. He got a very lucky break at a time in the 90’s, where a lot of financial institutions went public, like BJ, Peregrine, and [??? 0:06:02.0] and so on. There was a demand for those kinds of assets during the 90’s and his timing was good. But anybody who’s read ‘Outlier.’  

And then they fired him.

Outlier and then they fired him, yes.

Oh, sorry.

But remember Outlier as well, when I think they spoke about the opportunity that Bill Gates had. He got access to a computer at a time where computers were just going, which gave him the advantage over other people. I think Jannie, his timing was good but he’s made full advantage of it and built up some wonderful businesses below him. If you look at Curro, if you look at Capitec. Something that struck me, which I was just doing some numbers. Capitec today is bigger than Investec in terms of market cap and growth prospects, etcetera. It’s got some room and time to catch the other banks but you just see the advance that these companies have made. Good luck to him, he’s done incredibly well.

That’s extraordinary and the other secret to his success was the fact that he reflects, and just a little bit of something I haven’t spoken much about but when I left MoneyWeb. It wasn’t under the happiest of circumstances and it was interesting to see. I know you were in touch and we chatted over that time but one of the very first people to call me was Jannie Mouton. He phoned and said to me, “Alec, one door closes another opens. Take some time out – do what I did.” We had a long conversation and he explained to me, and he even went down to the books that he’d read. He said, “Give yourself an hour a day, at least, for the next month before you do anything or think about anything.” He then gave me these books, ‘The Artist’s Way,’ I remember was one of them. There were quite a few Buffett books as well. After reading through that list of reading material he was in a position where he could clarify his thoughts. He also says, in his book as well. He says, “Take the top 5 things that you really want to do with your life.” And Dave, I go back to have a look at my notebook from 2012, and every morning, for a month at least, I think it was longer than that. I would write down the 5 things that I wanted. Of course, tomorrow you change them and 2 of them get knocked off, and another 2 come in but by the end of the month you’ve clarified that. It’s almost like your own mission statement. He did that and man, has he achieved exactly what he set out to do. Sometimes we don’t reflect enough.

Jannie Mouton keeps his favourite books in his office for easy reference.

We don’t do that. I often do that when I go for a morning run and you love to reflect on where life is and where you want ahead and I’ll be 70 in November. Entering, and when I say, ‘the last chapter’ the last kind of productive years. I still feel as productive as I was 10 or 15 years ago but you think of life differently as well, from other points. For me, at the moment, family is priority. I’ve got kids all over but one thing… We used to go for a conference in Omaha, we used to go the Value Investor Conference and I remember it was John Templeton’s niece. She spoke there and she said that every day at 10h00 or 11h00 he would go and sit on the beach. He lived in the Bahamas or those islands there, and reflect, regardless of what was happening in the world. He would always go and reflect on where he was in the market and reflect on things and then come back to the office. Never flustered and never doing things without thinking and we don’t do enough of it and investors certainly don’t do it.

Read also: Jannie Mouton: 20 lessons from building PSG, my R44bn business

As I mentioned earlier, we tend to be influenced by what happens on a minute-to-minute basis, North Korean missiles and yes, sometimes they might be important but I think at the end, I have learnt an enormous amount from Buffett and the way that he approaches. And from people like Templeton and other people, who have been successful. When you read how they conduct their lives and I’m sure, as you have with Jannie Mouton. We don’t spend enough time and the worst thing, the absolute killer is the cell-phone and social media and those kinds of things. When I say it’s a killer from a point of view, is that chuck it away for an hour a day or something like that. Just move away from it and stop being forced to read everything that comes through on a minute-to-minute basis.

Templeton used to pray before he made an investment, how cool is that? He was deeply religious and he has a foundation that awards money to scientists who go beyond what the Nobel Prize is offering. They integrate the whole Einstein’s teaching, the spirituality, on top of that etcetera. He’s very interesting and we could talk about Templeton all day but I want to talk about you and your recent travels. You’ve got a daughter that lives in the US now. I know you and Linda visit often. Were you there for any special reason recently?

Yes, my grandkids just came back from camp and I just had to do something. I had a small apartment there because I go there so often and I just needed to attend to 1 or 2 little repairs. I normally go at this time of year although I am going to run the New York Marathon for my 70th birthday. I’m making my whole family run with me so, I’m going back in November. But the point is that I was there for 2 weeks and what struck me was the damage that Trump has done to America. I say damage from the point of view that, and again I don’t think we have enough time to discuss Trump, the character, but he’s one of these dividers people who splits a country. He’s not a leader and what struck me, as I went to Washington and I was taken there kicking because I didn’t want to go but my daughter made me go and I absolutely loved it.

Flag map of the United States of America

What struck me about Washington more than anything else was that when I went into the Jefferson Monument and you spend a bit of time and you read what he says. The Martin Luther King Monument, the Roosevelt Monument, the Lincoln and all these great leaders and you wonder why none of that greatness has rubbed off onto Trump. He’s surrounded by it. He lives in the White House. It’s all within touching distance and what he should do every day, we talk about an hour. He should actually walk around Washington and reflect on what great people have done. They all had their failings, all these leaders, but still they were unifying forces in America and I think what he’s doing at the moment, is the complete opposite.

The Charlottesville issue has isolated him or polarised the country into two different forces. Although I think the anti-Trump force is a lot stronger at the moment, than the pro. In other words, there’s white supremacists’ views that he approached, almost equivalently giving them both sides or blaming sides. I think split the nation, a lot of people don’t even want to meet him. Now that repair, he’s got to try and repair that and he’s got to try and repair America. I think that, to me, is a very worrying force because unless he can get some serious tax reforms going or reform the country. I think it’s going to be a difficult time for America. A difficult time in the sense that it’s not going to reach the kind of goals that he set out or that people expected.

Former Finance Minister Pravin Gordhan

It’s an interesting point that on leadership being unifying because if you then translate it back to our own country, to SA, we’ve got a very divisive approach that’s been taken by the Zuma administration. Business is a bit wishy-washy for my liking so, I’d love to get your insights into this. The support that was given to Pravin Gordhan was fantastic. Chief executives took time off work, shareholders obviously, paid for them to fly around the world with Gordhan to give a message of unity, to give a message of please don’t downgrade us to junk rating. Anyway, Gordhan was fired, as we know, in the midnight cabinet reshuffle. His successor is now in the chair and business is once again engaging with this fellow, Gigaba, who clearly was put there for very strange reasons to begin with. Where do you sit on this fence, David? I know some companies have to engage with government but where do you sit on this?

I think that sometimes business has to interfere. They try not to interfere and they try not get involved in politics but during apartheid years they were very wishy-washy. No one really spoke out and if they did it was very soft. Most of them paid tribute, we’re finding out in a number of letters that have been discovered now of how business leaders supported the Progressive Party or the DA, as it is today. On the other hand, were giving donations to the Nationalists and paying tribute to their leadership so you have business in the middle. Nobody wants to lose anything but I think business has let us down in a big way.

I think whenever we saw Paul Harris try to speak out, and even Andrew Kemp had tried to speak out recently, and business came down them or their own firms and it’s something that bothers me that only now when it’s starting to hurt their pockets do they start making noises. But the banks have been very submissive. A lot of other companies have been incredibly submissive. Yes, they’ve written pieces but they haven’t gone out there and really, driving their message across and it’s very serious.

What they’ve done, Alec, is yes, it’s helped us. If you look at the market today the JSE does not reflect the SA economy. It reflects about 30% of the SA economy. Businesses have been quietly emigrating for last 20 odd years, emigrating their businesses, so investing offshore. What you’re doing is you’re creating jobs and opportunities outside and not inside. Now, I don’t blame them because they’re protecting their own shareholders but I think that they could have been a lot more open in their criticism. Now, what have we got? We’ve got a situation here, which I think is pretty serious.

Is there anything to learn from America, Dave, the way that the American business reacts to Trump?

Yes, American’s seems to be institutionalists. You can hate the president but what happens, you’ve got a special investigator, Robert Mueller, you’ve got all these kinds of institutions that act almost immediately to any kind of scandal or to any kind of situation and I think that’s what protects them. The other thing they’ve got is, my little apartment in America is across the road from the university called Fordham, it’s about number 3 in New York. You’ve got Colombia, New York University, and Fordham. It’s a respectable university, a beautiful campus. It’s in inauguration week, and who’s there? The Chinese, all the Chinese just Chinese. I go to the New York Institute of Technology down the road from me as well, inauguration – all the Indians.

So, what happens is they have these wonderful institutions that attract outsiders. It’s almost like an export industry there. Throughout America you have incredibly good schools or universities and that so, I think they stand out in their institutions and in their schools. I think the beauty is that their institutions all work and they have a very good educational system. Yes, they’re challenged. They’ve been challenged by the Chinese in terms of technological developments. I think the Chinese are going to give them a good run and we’re going to see it throughout the world. There are going to be areas that challenge America but overall, that economy works. What I always like about America, is they’re orderly, everything is orderly, it all works.

People watch a television screen showing U.S. president Donald Trump during a news broadcast on North Korea’s ballistic missile launch at Seoul Station in Seoul, South Korea, on Wednesday, July 5, 2017. The U.S. confirmed a rocket launched by North Korea on July 4 was an intercontinental ballistic missile, with Secretary of State Rex Tillerson calling it a “new escalation of the threat” to the U.S. and its allies that would be brought before the United Nations Security Council. Photographer: SeongJoon Cho/Bloomberg

I drove down to Washington. The highways, everybody stuck to the speed limit and kept within distance. You don’t see the in’s and out’s and carrying on. Everybody obeys the orders, if the robots are red they stop. Those kinds of things and generally, they’re clean, they have pride in their nation and you see it coming through in a very big way there.

There’s a good reflection of that multiculturalism in the UK as well. You see it everywhere. You see people, I think 13% of Britain’s are black or non-white, if you like but there would never be a suggestion that these people are doing anything bad or not British. You would see people coming from various parts of the world, who speak English. I’m South African, but they would speak like English people and if you look at them from the outside, you’d say, ‘that guys from Shanghai or that guy is from Bombay or Mumbai,’ or wherever. And it’s an interesting situation where, in these successful societies and the US, despite Trump, is pretty successful as is the UK. You have this unifying factor and it’s almost like people know. Whereas, in SA we’ve kind have lost that, haven’t we?

Yes, we’ve lost it. They don’t want us. When I say ‘us’ – I get the feeling they don’t want me. I’m very happy to put all my effort into growing this country and yet, nobody wants me. They don’t want my input. That’s the feeling I get. If they do, they’ll listen to me or they’ll give you time but they won’t listen to you. So, any input that we have just seems to be pushed aside. There are too many rules. There’s too much ideology and believe me, I married into a family that fought for ideology and fought very hard for a different SA and gave up their lives for it. Yes, where we see where we are today, relative to what they fought for, we’re not there. By ideology – it was a free SA, in which everybody participated. Not where it favoured just an elitist bunch and there certainly wasn’t any suggestion of the kind of racism that we see now, which is the reverse type.

Pedestrians walk through the More London office space as Tower Bridge is reflected in the glass window of an office building in London, U.K. Photographer: Simon Dawson/Bloomberg

Alec, the one thing that when you do come back to SA, you’ll appreciate the beauty and you appreciate just how blessed this country, in terms of the natural resources that we have here. It’s a sensational country and yet we just don’t know how to reap the benefits of what God gave us.

Well, it happened in France. No one gave France a chance and all of a sudden, France is going back on more of a unifying track. The Brits, despite Brexit, are kind of waking up and getting more sober about this and realising, hang on – it’s so much better to be cooperating than be in competition. Trump, with his hateful approach towards various people is being slapped down. And who knows, maybe we’ve learnt in SA, a really good lesson from the spiteful politics that has dominated during the Zuma era, and maybe a whole new era is coming. I believe that because the one thing you do see from the outside is you see South Africans as a nation, as a people, don’t have to stand back for anybody in the world. The most wonderful people on earth.

That I agree with. I think the vast majority of people, I think, want a peaceful existence. They just want to have a job, then which they can put a roof over their head. Have the dignity of receiving a salary that they can buy food, send their children to school, and so on. I think most people… Their aspirations are not that great, they just want a simple, peaceful life.

Dave, what about business’ role in this? You said before that business has got to get involved but battling to come to terms with the politics, or battling to come to terms with the economy?

You could. It wouldn’t really make economic sense, as you pointed out because obviously you’d be buying at a higher price, when you could be buying in the market at a lower price. But there’s nothing to stop you calling to convert sooner, the maturity. There are, so built into the terms there is a short-closed period immediately after issue, which we call a ‘no call period’ but effectively, once you’re through that period, you’re able as a holder to convert it anytime you want.

So, it’s a five-year term. Presumably, anybody buying into this company or buying these bonds would think that Mediclinic share price will appreciate by more than 30% in five years, hence the benefit.

Battling to come to terms with the politics. I think the politics is not allowing us to flourish. There’s too many rules. We don’t lay out a red carpet for investment. When you come into this country you’ve got to tick too many boxes. They tell you who your shareholders will be. They tell you where you have to buy your goods and who you have to employ. People don’t prosper like that. The one thing that I love to do is read history and I love business history and I love understanding how businesses become successful and, in many cases, it’s 2 or 3 friends sitting around a table or pottering around in a garage uninhibited and they grow businesses with people around them, who they feel comfortable with. The board exists of friends. It’s not necessarily a bad thing and we don’t do that in this country there are too many things that you have to follow so, it puts you off. It puts you off from actually, developing businesses. We’ve got all the talk and we know exactly what to say but I come back to saying that if you want to get the country right you have to start… First of all, you’ve got clean leadership but except that, but right at the bottom, you’ve got to clean the country up. You’ve just got to make it a safe place to live. If it’s safe, the schools are good, and the hospitals are good – things like that then businesses would prosper because you’ll want to live here. You’re going to want to live here and you’re going to want to take advantage of all the benefits of this country, which is still a magnificent country and we don’t do that. We make it difficult to even do those little things.

Dave, great picking up again and particularly here, on Warren Buffett’s birthday. We’re going to be talking a lot more often, in the weeks and months to do, as we used to do for many years, on national radio. Even here, Dave, it’s incredible. I bump into people and they say, ‘how’s David Shapiro?’

Lovely, well you made me go onto Twitter, remember? My Twitter handle is @davidshapiro61, so that was 9 years ago, because I’m nearly 70. I remember those days. You made me get my first Kindle and I’ve still got my Kindle.

I think we bought it for you, didn’t we, as a present?

That’s right, of course.

Oh, David, it’s really good talking to you.

We’ll talk again.

Keep the forthright approach towards it. Just one last point before we go, I know you’re a good pal of Brian Joffe. I’ve been trying to get hold of Joffe to find out what the heck happened there at Bidvest. Was that an amicable parting or is he just wanting to go?

I can’t get into it. I bump into Lindsay Ralphs here, and he seems quite amicable. I think maybe time has healed certain differences that there might have been. I used to pick up a little bit of talk but it seems that maybe they have patched up things and things are okay. I asked Lindsay when I bumped into him, I asked, “What’s Brian doing and what’s this new venture of his?” Lindsay seemed to suggest that he also wanted to know. I will catch up with Brian and try and find out but I don’t think it is something that he discusses.

Very sad. There was a SENS announcement, literally under the radar – Brian Joffe has left the company. He’s no longer a non-executive director, with immediate effect. I looked at that and thought come on guys, that is very low. Here’s a man who started a business that employs 170 thousand people and you can’t say thank you, anyway, such is life.

It’s very odd and there’s other oddities because at this time of the year there was always this big party that they used to add and I’ve attended, I think 20 of them, or from the inception. They used to honour all the fellows within the Bidvest Group. It was a wonderful occasion, it was like a Hollywood production and Brian was good at that and it just suddenly stopped. All that, that Brian did, he just kind of faded out of the scene and it was rather odd. Listen, the share price is doing okay and he left some very good management there but the tributes, as you rightly say, haven’t been that great. He’s just left. I also thought there would have been more but anyway, one day I’ll get the story.

Yes, one day you’ll get the story and we’ll talk about it. David good chatting and catch up again soon.

Okay, cheers Alec.

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