HCI validates call to add the deep value play to BizNews Shyft and Ricardo portfolios

Key topics:Massive R647m buyback cancels 5.65% of shares in two monthsManagement signalling deep value via aggressive capital allocationEPS/NAV uplift as treasury shares shrink share countSign 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.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here. .BizNews Reporter.For members of the BizNews tribe who followed our portfolio updates last month, the inclusion of Hosken Consolidated Investments (HCI) was a decision rooted in a classic value investing thesis: back smart, owner-managers who understand capital allocation.Less than a month later, HCI chief Johnny Copelyn has emphatically validated that call.In a SENS announcement released this morning, the investment holding company revealed it has been aggressively "eating its own cooking," concluding a massive share repurchase programme that has seen it buy back nearly R650 million of its own stock in just ten weeks.For students of the "Outsiders" — William Thorndike’s seminal book on CEOs who excelled at capital allocation — this is textbook behaviour. When the market offers you a Rand for 60 cents, the most rational thing a management team can do is acquire that Rand. It is a far surer path to value creation than risky acquisitions or vanity projects.The Buyback BlitzThe numbers released by HCI are staggering in their intensity. Between 29 September 2025 and 9 December 2025, the group repurchased 4.86 million shares on the open market. To put that into context, Copelyn and his team have swallowed 5.65% of the company’s total issued share capital in a little over two months.The average price paid was R133.11 per share, with the company willing to pay up to R136.10 in an intra-group cleanup transaction.Total capital deployed? A cool R647.2 million.This is not a timid nibble at the edges; it is a high-conviction bet by the people who know the assets best. When insiders buy on this scale, they are shouting from the rooftops that they believe the share price — and by extension, the market’s valuation of their underlying assets like Tsogo Sun, eMedia, and Frontier Transport — is significantly disconnected from reality.Cleaning HouseThe announcement also detailed a technical but significant "Intra-Group Repurchase." HCI acquired 1.1 million shares held by its subsidiary, HCI Managerial Services, effectively moving them from a subsidiary treasury account to the parent company to be cancelled.While this specific move is an internal transfer, the net result is vital: those shares revert to "authorised but unissued" status. In other words they are gone. This reduces the denominator in the earnings per share (EPS) and net asset value (NAV) per share calculations. This means for all shareholders — including the BizNews portfolios — the slice of the pie just got bigger without us having to invest a single extra cent. This is the "cannibal" effect that Charlie Munger loved so much; as the share count shrinks, the intrinsic value per remaining share rises.Following the CashThe company confirmed that the R647 million was funded from "available cash resources." In a high-interest-rate environment, cash is expensive. Using it to buy back stock suggests the Board sees an internal rate of return (IRR) on its own shares that outstrips what they could earn in the money market or through external acquisitions.Following this blitz, HCI now holds 7.9 million shares in treasury, representing 9.39% of shares in issue. Perhaps even more exciting for value-seekers is that the company still has a mandate to make further purchases. The remaining general authority allows for the repurchase of another 12.3 million shares.If the discount to NAV remains this wide, don’t be surprised if Copelyn keeps the buyback engine running.The Bottom LineWhen we added HCI to the BizNews portfolio, the argument was that its discount to the sum-of-the-parts was too significant to ignore, and that it was being steered by management with a track record of unlocking value.Tuesday's announcement confirms that management agrees. They aren't just telling investors the stock is cheap; they are writing cheques to prove it. For the BizNews tribe, this is precisely the kind of alignment we look for.

HCI validates call to add the deep value play to BizNews Shyft and Ricardo portfolios

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