By Alec Hogg
I’ve been astonished at the seemingly ever sliding share price of Moneyweb. Having started the company and still being a significant shareholder – by my modest standards anyway – I know the business is as sound as any media company in this environment. With around R25m in the bank, no debt, a flush controlling shareholder, a great brand and a solid business model, it’s incredible to see the highest price anyone is now prepared to offer for the shares is less than the cash value.
Maybe this is all my own fault. Moneyweb shares are what they call tightly held. Those in issue are owned by relatively few investors, what analysts accuse as being “illiquid”. Before leaving the business in October 2012, these worthies often encouraged me to make the stock more marketable. To get more shares into more hands so that they would trade more freely and the price reflect the true value of the business.
I resisted because of an intuitive belief in what Warren Buffett articulated best. In his 1988 letter to Berkshire Hathaway shareholders Buffett said: “Our goal is to attract long-term owners who, at the time of purchase, have no timetable or price target for sale but plan to stay with us indefinitely. We don’t understand the CEO who wants lots of stock activity, for that can be achieved only if many of his owners are constantly exiting. At what other organisation – school, club, church, etc – do leaders cheer when members leave?”
So next time you get a trader complaining about the marketability of a good company’s shares, hit them with that. Promised you Buffettisms, didn’t I?
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