WORLDVIEW: Having a New Look at one of our SA portfolio’s cornerstones

By Alec Hogg.I just love stocks that reward patience. Because there seems to be so little of it in this speeded up world. My favourite are companies taking strategic bets, the long-term decisions Mr Market just hates. These investments often require conviction and the occasional dose of stamina. But the reward is often handsome..___STEADY_PAYWALL___.A recent example is IBM which we bought in December 2014 when launching the Biznews Global Share portfolio. I loved it that the world's dominant computer hardware business was boldly refocusing into new growth areas. At our purchase price of $162.50, the shares delivered a good margin of safety (my intrinsic value is over $200) – plus we were paying way less than $170.50 at which Warren Buffett had invested $13bn. IBM is one of Berkshire's Big Four holdings..It hasn't all been plain sailing. A year ago, IBM's share price bottomed at $121. That brought newspaper headlines shouting about Buffett's investment "losing" him billions. But the Oracle of Omaha continued accumulating. And yesterday he would be smiling as the shares closed at $179, with lots more to come..A similar story is unfolding at Brait, one of four 15% cornerstones in our SA Champions bundle at Easy Equities. Almost two years ago, Christo Wiese's listed investment company banked a hefty R26bn from the sale of its shareholdings that helped create the Steinhoff/Pep multinational..In classic Wiese style, that money – plus another R2bn – was rapidly re-allocated. This time he chose two sizeable UK businesses with big turnaround potential, bets which account half of Brait's net asset value of R41.8bn (R82.45 per share). The first acquisition was 255 gym, 1.2m member Virgin Active, a bet on a global swing to better health. A month later (May 2015) came value-positioned fashion retailer New Look. Given Wiese's success in this sector, its appeal was obvious, including 867 stores, mostly in the UK. But the sector is also extremely competitive and undergoing significant market shifts..Brait's quarterly results to end December were released yesterday. They disclosed Virgin Active has put the last piece into its UK refocus puzzle, selling 16 clubs outside its target area of London and the commuter belt. The deal was done at "a compelling valuation." Expect Virgin Active to start flying soon..A more interesting swing factor is New Look, where an initial £780m investment has now been written down to £513m. That's surely temporary. Wiese, like Buffett, rarely get his entry price wrong. There's also an IBM similarity as the company is investing in growth sectors, in its case China, online and menswear..Mr Market was excited when Brait did its two big UK deals pushing the shares to almost double the company's net asset value. Now the shares are available at a discount to NAV. Overlay an unrealistically low Pound and the appeal for SA investors is now obvious. I'm delighted it's one of our SA Champions.

WORLDVIEW: Having a New Look at one of our SA portfolio’s cornerstones

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