‘Old Mutual took their eye off the ball’ – Steven Nathan

BizNews community member Ingrid Luyt wrote to BizNews founder Alec Hogg this week seeking any information regarding the dismal performance of Old Mutual. Her question was posed to Steven Nathan, founder of 10X investments, when he co-hosted the BizNews Power Hour. Nathan shared insights into what Old Mutual has been going through, stating that Old Mutual has lost value in SA and made disastrous deals offshore. Below are Ingrid’s email and quotes from Nathan’s response thereto. – Nadya Swart

Hi Alec,

I’m wondering whether there has perhaps been any discussion regarding the dismal performance of Old Mutual or it’s share-price? Having finally fished my RA from their clutches at maturation in 2019 (at roughly half the value projected upon purchase of the policy) I am equally dismayed to find the shares I’d been tracking since they were issued in 1999 @R11 per share… which I hung onto through thick and thin and which appeared to top in November 2015 at R45.33 and have since plummeted back to around R11 per share. Not only that, but I now hold fewer shares, the balance apparently “converted to Nedbank shares” for which no share certificate has ever been issued and Nedbank (with whom I have banked for 45 years) have repeatedly failed to answer queries related thereto.

It’s a mystery and any info would be appreciated.

Ingrid Luyt

Steven Nathan on Old Mutual’s underperformance:

You may recall there was an article done in 2018 where it kind of compared Sanlam versus Old Mutual – because they demutualised within a year of each other. And the analysis there showed that Sanlam had returned 2,000% – which means it went up 20 times – and Old Mutual’s return was 480%. So, it had gone up just under five times. So, Sanlam outperformed by a factor of four over almost 20 years.

Old Mutual has been a big, big under performer – but maybe not as bad as people would think, because – if you just compare the share price; it listed at, I think, about R6 in 1999 – today, it’s R11, R12. So over 22 years – that’s not a great return. It’s a very poor return. Your money would have done better in the bank. You are missing those unbundlings, but it has been a really big under performer. 

On Old Mutual’s demutualisation:

What Old Mutual said at the time is that we’re too big for South Africa. In fact, Trevor Manuel at the time – which is actually quite ironic because he was the Minister of Finance – had to give special permission for them to have a primary listing in London because they were going to externalise capital. Now, Trevor Manuel’s actually the chairman of Old Mutual – so they’ve come full circle there.

But I think Old Mutual was wrong strategically because they felt that they were too big for South Africa, that they’d done all they could in South Africa, and their future growth was coming offshore. So they took their eye off the South African ball, which Sanlam and Discovery and others didn’t. So, they lost enormous brand value in South Africa, and then went offshore and they made some pretty disastrous acquisitions. 

On Old Mutual’s unbundling of Quilter:

So, they really took their eye off the ball. And unfortunately, the irony is that their best performing offshore asset being Quilter – which is a financial advice asset-gathering business in the UK that they unbundled – has actually done really well. But they’ve actually given that away. So, there’s really been lots and lots of missteps from Old Mutual.

On Old Mutual’s strategy going forward:

It isn’t apparent what they’re going to be doing differently going forward. I’m sure they have a strategy, but I don’t think it’s apparent to the market yet that the future is going to be much better than the past has been. 

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