By Alec Hogg
The world’s greatest investor, Warren Buffett, tells us investing works best when you buy into your selected share at a discount. And the bigger that discount, the higher the margin of safety – a shock-absorber against unexpected bad news.
Yesterday’s financial results from PSG show those buying into entrepreneur Jannie Mouton’s vehicle today will pay 88c for every $1 of its assets. PSG’s “sum-of-the-parts” (SOTP) is now worth R252.81 per share compared with the market price of R223. That’s an attractive discount for a stock which often trades at a premium to its SOTP, such is the esteem investors hold the man behind Capitec, Curro and other big winners.
But by comparison, SA’s global media group Naspers is an absolute steal. At its current share price investors are today paying less than 60c for each $1 in value. And that dripping roast becomes even more appealing when you factor in the pending transactions in a couple of Naspers’s big investments – in China, where Tencent is to IPO its music business; and in India, where US giant Walmart’s is preparing a fat takeover offer for Flipkart.
Naspers has its critics, mostly those concerned at how it intends using $10bn cash recently raised by selling down the Tencent stake from 33% to 31%. Having looked into the relative returns of the assets where the fresh cash will be invested, I’m not among them. And to apply another Buffett credo, am inclined to become seriously greedy where others are so obviously fearful – especially with Naspers stock offering such a hefty discount.
