Nampak, Naspers: Investment metrics reveal a poor show – Ted Black

Amateur investors often focus on how a share price is doing, which is natural because that way they will make a return if the stock is gaining value. But shrewd investment professionals delve deeper into the financials. Ted Black, a Return on Assets Managed specialist, has ripped open the books of Nampak and Naspers in order to investigate whether they are really making an economic profit. He highlights that acquisitions are tempting for CEOs, because they drive pay packets, which are often linked to the size of the company. He concludes that for now, the huge success of Naspers still remains dependent on the Tencent acquisition. When it comes to Nampak, its former CEO André de Ruyter – who now heads up power utility Eskom – presided over the destruction of economic profit over the past five years. – Jackie Cameron

Asset productivity (#ATO) & EVA

By Ted Black*

Alec Hogg had two interesting interviews recently – one was with Bob van Dijk of Naspers. The other was with Chris Logan of Opportune Investments who raised the issue of economic profit, or Stern Stewart's "Economic Value Added" EVA measure at Nampak's shareholder meeting. It's a tough one. Few firms beat the hurdle for any length of time.

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