WORLDVIEW: Unintended consequences for hot stocks of the US’s new emission laws

By Alec Hogg

It was just over a decade ago that I first came across the meaning of the term "unintended consequences". In 2005, Allan Gray, the value investment house always on the lookout for a bargain, decided to take a stake in a struggling small cap computer hardware seller called the AST Group. The company had been struggling, but the firm so liked the turnaround story it offered to provide almost half of the R116m in fresh funds that AST needed.

Unfortunately, it only came out later that Allan Gray's chief investment officer Stephen Mildenhall, with 5.5m, and four of his colleagues already owned AST shares in a personal capacity. Mildenhall told me at the time that as he'd gone through Allan Gray's strict disclosure processes he saw nothing wrong. Indeed, his integrity is unquestioned – he was, after all, shot numerous times in an attempted "hit" because of playing hardball on behalf of his investors with the late Brett Kebble.

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