LONDON — We manage two “bundles” on the EasyEquities platform, offering the Biznews community a low cost, small ticket entry into tightly focused portfolios of US and South African shares. The vehicles, where investors can acquire a fractional slice from as little as R250, are popular, attracting millions of rand from over a thousand small investors. The performance of the two portfolios has been extremely different, mirroring the different trajectories of the two economies. Since its launch last November, the US Exponential bundle has appreciated by 32%, three times the gain of the overall US market. But since its launch in January 2017 the SA Champions portfolio has flatlined, underperforming the modest 9% gain of the JSE All Share index. – Alec Hogg
Features of the past month:
Amazon.com – Now accounting for a hefty 35% of the portfolio, Amazon’s already sky high reputation continues soaring. After a stellar set of quarterly results where profit rose fivefold year-on-year to $2.5bn and revenue surged 39% to $53bn off the already high base for the quarter, Jeff Bezos’s creation keeps gathering momentum. Over half the profit was generated by the highly profitable cloud offering Amazon Web Services delivered a 79% jump in earnings to $1.6bn. As a result of being years ahead of competitors in the Cloud space, Amazon holds 52% of the market, far ahead of its nearest competitor Microsoft (13.3%). Good news, too, from its recent $13.5bn acquisition of Whole Foods where the recently launched “click and collect” facility is being taken up at “one of the fastest rates yet for a Prime benefit” according to the Financial Director Brian Olsavsky.
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Microsoft – A solid set of financials showing annual revenues exceeding $100bn for the first time, was followed by the surprise news that CEO Satya Nadella has sold a third of his shareholding, banking $36m. Especially as he’s hardly cash strapped, having been paid $20m for his services in 2017. That sale of stock provides pause after a 38% surge in the share price since bought into the portfolio last November. The spin machine was quick to label the sale as “a structured plan to diversify” but if the CEO is selling such a big chunk of his investment, a clear message is being sent to those of us who know a lot less about the business than he does. Microsoft has had a wonderful run. But it may be time to switch into something more exciting – Twitter is down 26% and Netflix has lost 17% since we passed them over for Adobe in the last transaction we conducted in June. At their new levels, both are attractive.
Apple – On August 2, the company which listed in 1980 at a share price of $22 won the much-publicised race to become the first worth a trillion dollars. It has been the world’s most valuable company since 2012. Apple’s price broke above $200 a share after another strong set of financial results for the quarter to end June and now accounts for 4% of the entire S&P 500 index. The next big event for Apple watchers is September’s traditional unveiling of new products.
Naspers – The share price of the JSE’s 20% gorilla continued its recovery from the troughs reached in March despite criticism around the pay of CEO Bob van Dijk. But it appears that much of the anger was misplaced as reports took his annual salary as the entire asset base accumulated during his Naspers career rather than the relatively modest R32m ($2.2m) cash payment he received in 2017. Van Dijk has responded to critics with the news that the group is continuing to explore ways of unlocking the huge discount of its share price relative to the value of underlying assets – he is considering spinning off subsidiaries into separate listings outside of South Africa.
