The other side of our Reinet bet - Piet Viljoen says “avoid”

In yesterday’s portfolio update, I swapped the Ricardo ZAR holding in SABVest for Reinet. Nothing wrong with the SABVest performance - Chris Seabrooke’s operation continues to deliver. But Mr Market has radically rerated the stock. We have done well with SABVest over the years, but it now trades within 7% of its stated net asset value. Not much of a margin of safety. By contrast, after selling its two major assets, Reinet now sits on the equivalent of R600 a share in cash (Euros nogal) plus another R100 a share in investments. The share price is now around R460. So at the current price you’re buying a Euro for 70c. With another 10c from investment elsewhere, the actual cost is 60c. That’s irresistible to my way of thinking. But in the markets, nothing is that obvious. Piet Viljoen, however, has a contrary view. He wrote about Reinet and another of the Ricardo holdings, Remgro, last month. - Alec Hogg .By Piet Viljoen*.I write about investment holding companies a lot. There are a few reasons for this:I listed, and managed one, not entirely successfully. So, I understand how hard it is to run such a business.These types of companies tend to evoke irrational reactions from investors, which is fun to write about.Their investments and investment strategies are diverse and interesting to analyse.In the past, I have written about two very well-managed and successful investment holding companies, Sabvest Capital and HCI, both of which are significant holdings in the MWI Value Fund. Both are managed by skilled capital allocators (Chris Seabrooke and Johnny Copelyn, respectively), resulting in a NAV (net asset value) per share that has outperformed the All-Share Index handsomely over time.Today, I want to discuss two less successful investment holding companies, Reinet and Remgro. These companies are effectively the Rupert family’s onshore (Remgro) and offshore (Reinet) investment vehicles.As a result of their association with the Rupert family, both companies enjoy an understandable level of prestige amongst investors. The Rupert family has successfully built Richemont into one of the world's pre-eminent luxury goods companies, a remarkable entrepreneurial achievement. This company has created significant wealth for many investors over time. Here’s a well-written history of the company of which the Rupert family can justifiably be proud.A ten-bagger over the last 17 years (in Swiss Francs) is a significant achievement:.Personally, I think Richemont is right up there with the best companies in the world. Sadly, the same cannot be said of Remgro or Reinet.Remgro’s year-end is June, and over the 15 years to June 2025, it has grown its NAV per share by just over 7% p.a. – after adding back the value of all investments it has unbundled to its shareholders over the years. It has also paid a dividend of between 1% and 2% of NAV in most years, so the total annual return generated by management has been less than 9% p.a. This compares with the All-Share Index’s (ALSI) annual total return (i.e. including dividends) of almost 13% p.a. over the same period.Remgro is only up 4X over the same time frame that Richemont has ten-bagged. The 11 dead years from 2014 to 2025 really hurt their performance:.I think it’s fair to say Remgro has not fared well under current management. I should add here that management itself has made out like bandits. But who said life is fair?Reinet has a March year-end and recently reported its results. It invests entirely offshore, and its balance sheet is denominated in Euros. So it has a “hard-currency tailwind” – or at least the perception of one – something for which South Africans have an irrational affinity. Yet its results have underwhelmed, despite this so-called tailwind.Over the 16 years to March 2026, Reinet has grown its NAV per share – converted into Rands – by just over 11% p.a. Adding back a 1% or so annual dividend gives a total return of around 12% p.a. The ALSI has returned almost 13% p.a.Reinet was originally listed in 2008 at R19.39 per share, but then underwent a 10-for-1 consolidation in 2017, implying an equivalent listing price of R193.90. Today's share price of R473 is not much more than double that! (Dare I say it – beware of exciting IPOs?)I can only get the history since the consolidation in 2017, but its share price has less than doubled over the past ten years, a poor performance:.Over the past 18 months, Reinet sold its two largest investments, BAT and Pensions Guarantee Corporation. Cash now accounts for over 80% of its NAV. The remainder is a mishmash of disparate, uninspiring investments. Understandably, given Reinet's track record, investors are upset that no action is being taken to distribute this cash. You can see their current mood in the chart above..Read more:.Reinet NAV falls 3.7% on FX and private equity marks, but cash climbs to €2.1bn.My take: Any rational investor should prefer buying the index to buying shares in either of these two investment holding companies. Both currently trade at significant discounts to their NAVs, penalising shareholders who vote with their feet. Mr Market is telling the management of these companies to give us our money back – you’ve had your chance, and it hasn’t worked..*Piet Viljoen is the founder of Re:CM and portfolio manager of the Merchant West Value Fund.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 every morning on 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.

The other side of our Reinet bet - Piet Viljoen says “avoid”

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