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An unusually quiet April provided welcome relief to investors after the turbulence of recent months, and Corion’s David Bacher explains why the long-neglected property sector shot to the top of the JSE’s leaderboard. In this monthly recap, the author of the Corion Report also looks at Alec Hogg’s selections in the Fantasy Fund Manager competition, explaining why he avoided some of those that the BizNews editor likes – and offers (better performing) alternatives.
Relevant timestamps from the interview:
- 01:25 – David Bacher on the month of April
- 02:52 – On why South African stock prices are regarded as “cheap”
- 04:35 – On the notable stock moves in the Corion report
- 05:45 – On the SA Equity Returns in the Corion report
- 07:03 – On property stock
- 07:33 – On the movements of resource stocks
- 08:27 – On industrial stocks
- 10:02 – On top performing SA general equity funds
- 11:33 – On the PSG equity fund
- 12:30 – On equity fund inflows
- 13:51 – On the Amplify SCI Wealth Protector equity fund
- 14:25 – On equity fund outflows and why not to worry about Allan Gray
- 15:25 – David Bacher reviews Alec’s Fantasy Fund Manager portfolio
- 18:55 – On the biggest developments in April and the Fantasy Fund Manager initiative
David Bacher on whether it’s time to invest in property stock
Property shares have come back quite significantly. We’re certainly seeing some value in certain property shares and in our portfolios at Corion where we’re looking for yield, we have been increasing our allocation to property from what was a very negligible exposure to something a little bit more meaningful.
I think investing is neither you’re all in nor all out. You know, you’ve got to increase your exposures when you think the valuations are more compelling. So that’s what we have been doing. Yes, there are some dark clouds in the property sector, vacancies are up, etc. But that is, in our opinion, reflected in the price movement. So investing is not just looking at the environment, it’s also [about] the company [and] looking at what you are paying for that company.
On investing in resource shares
I think you’ve got to look underneath [at] what’s driving those resources. The index that represents the resource index is heavily weighted to Anglos and Billiton. So you’ve got to ask: what [are] the drivers of those shares? As I said a little earlier, those commodities haven’t bounced as much as the platinum and gold shares. From our side, we are seeing those companies come back to much more attractive levels. So from being reasonably underweight, we’ve started to close that gap too…
When you’re buying resource shares [note that] few things in investments are certain, but probably one of them is resource shares are volatile. And you can look very, very good, and you can look not so good at a certain time period. So you have to take a bit of a longer-term view. So a strategy of buying companies with high dividends generally does work over the long term. But over the shorter to medium term, anything can happen.
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Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.