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“I’m not a great value investor – but these are areas you simply cannot ignore” David Shapiro
As is customary for a Monday, veteran analyst David Shapiro was the co-host for the BizNews Power Hour sharing his insights and expertise on a few long-standing JSE listed counters, many of which are showing signs of recovery following years of free-fall. Shapiro, who’s ‘takeover portfolio’ has performed magnificently over the past year or so, still sees value in legacy stricken names such as PPC and Tongaat. His thesis is based on management overhauls and a generally more positive macro backdrop. – Justin Rowe-Roberts
David Shapiro on whether PPC is a solid investment at current levels:
I still think they are cheap. All you have to do is compare the asset values, the amount it costs you to buy these businesses relative to where they are and what they represent in the economy. I’m not a great value investor but these are areas you simply cannot ignore. If you hold PPC now, I still think you’ll be on an upward journey. Especially if you look at results, which are starting to point in the right direction.
On the value opportunities (ie PPC, Tongaat etc) on the JSE:
The problem is that we have become index huggers – we are so scared to break away from the norm just in case we get caught out. We’ve got British American Tobaccos, Prosus and yet below that are businesses that have been around for so long, have got good management with new CEOs – look at Woolworths, Invicta, PPC, EOH and Tongaat. Those are the businesses where you’ve got strong new management who are not going to be dragged down by legacy. I think if you want to outperform the rest of the market there are great opportunities here.
On his stance towards Bob Van Dijk, chief executive of Naspers and Prosus:
Give him more time. But he doesn’t have to do anything, Tencent is doing the work for us at the moment. The rest of the portfolio is going to take time and you are not going to lose anything, that’s the point. You’ve got Tencent, it’s doing what it’s doing, it’s growing. The others, in time, will add to the bottom line. You don’t have to become too clever and do the maths, just leave it and stay with where you are.
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