The Effective Investor - Franco Busetti

I am reading the book "The Effective Investor" by Franco Busetti at the moment and really enjoying it.

One of the real reasons I am enjoying it, is that it is written for a South African investor, by local investment professionals. You recognise the companies, the challenges (e.g. the Rand) and the strategies in general.

On top of this there is none of this gratuitous "institutional" feel to the comments that I find often makes "investing" aloof.

You can find the book at Kalahari HERE for R350 or you can click on the image and it will take you to the item in their online store.

For the Standard Bank fans out there

Hahahahahahahahah this e-mails is going around made me laugh:

Feedback on JSE trading course?

Has anybody tried this course from Sharenet out?

One of my family members is keen to find an introductory trading course to learn to trade shares on the JSE but I am not sure what these are like. Feedback?

You should be able to click through to the Sharenet site for more info via the banner below.

Let me know - ta!

Too easy

I have just logged into my e-mail and seen dividend notifications for my holdings in Sasol, FirstRand and Discovery as well as a re-investment notification for my Z-Govi holding and it reminded me how much of investing is simply method and repetition.

For sure there is little glamour in simply clocking up the dividends but you have to ask yourself - why work if you don't have to?!

I had a look at the performance of the Satrix Divi Exchange Traded Fund (ETF) product over the last year and I see that you have enjoyed a return of around 33%. Worst case scenario is an annual dividend yield of 4.5% which is not the worst return around and if you are looking for low-cost dividend investment strategies then this might be a product to consider adding to your portfolio.

Speaking of good dividend payers, has anybody been watching the rise in the Brait shareprice? It seems to have had a bit of a kick over October rising from R21 to above R24. This is one of those stocks I've kept in my portfolio primarily for its dividend yield which is sitting at about 6%.

The company did release a trading statement recently saying that earnings would be up sharply for the six months.

Basic eps and heps: 72.8 ZAR cents
Diluted eps and heps: 72.7 ZAR cents

This puts it on a PE multiple of around 14 times earnings and if you buy into the idea that Brait is the "smart money" then this looks attractive, particularly if the private equity portfolio is at the bottom of its cycle.

Another reason which might be contributing to the rise in the Brait share price is the similar rise in the Buildmax counter, in which Brait is a significant investor. Buildmax has risen from 27c to touch 40c this month and it looks like a turnaround plan is in place.

Happy trading investors.

Small cap update - 2 October 2010

Hello fellow traders...

I see it has been a good few months since I last updated this blog which probably does not reflect that well on me.

What DOES however reflect quite well on me is the TrustCo share price over that period.

Let's take a look at some of the small-cap shares that have caught my eye over the last few months and where they are at now.

TrustCo
This share has really done nicely. Since I last blogged it, has risen from the 20's to touch a high of 65c with a lot of media attention. Directors have bought a whole whack of shares as well which has helped the story along.

In September, the company announced transactions with Econet and the International Finance Corporation (IFC) both of which should have an impact on the business.

Still think there is value in it if you are patient.

Interwaste
Share price wise this company has largely gone sideways over the last few months, but it is still up a bit since April.

On the plus side the financial results have shown something of a turnaround from the previous financial year and they have gained a number of new clients - the benefits of which should probably come through in the second half of the year. Guidance from management is that the second half of the year is traditionally stronger as well so let's see what comes through for the full-year.

One thing which needs to be watched a little closely is the cash position of the business.

The company overdraft facility has risen from R4.7m to nearly R30m for the six months ended June 2010. There is also negative cashflow as the business has made some serious capital investments.

For the 12-months, the net cash position had declined to -R21m.

Buildmax
This has been such a mixed bag sometimes I wonder.

The share is up from 27c to 31c and it looks like some serious corrective action is being taken to try and turn this business around.

New management are in place, rights issues have been sorted.

I'm gonna hang on to this one.

IPSA
Little to write home here. The share has gone nowehere.

However this announcement at the end of August will give shareholders some cheer:

"IPSA PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that its wholly-owned subsidiary, Newcastle Cogeneration (Pty.) Limited has entered into a power purchase agreement ("PPA") with Eskom, the South African electricity parastatal, under the medium term power purchase programme ("MTPPP"). Under the new PPA all electricity output from the plant would be sold to Eskom for the period to 31 March 2015, and is based on 13 MW of capacity."

Again lets see what this translates into operationally.

RE:CM and Calibre
I got my hands on a few of these pref-shares last month and will try and get a few more as time goes by. I like Piet Viljoen in terms of his style of value investing and would like to think he can add value through this vehicle.

The share listed at R10 and has floated somewhere between R10 and R11 but there has been really limited liquidity so that is something that makes this tricky to watch.

Viljoen said that investors should expect "slow and steady" to start with so if you have a long-term investment horizon, then I'd probably be adding a few more of these to the portfolio as well.

Some others to consider
Three other stocks I have nibbled at in the last few months are Nigerian oil and gas group Oando, private equity fund Brait and Paladin Capital.

There seems to be some action happening at Paladin as the share price has risen more than 20% in the last few weeks. However this puts it well above its net asset value which is not always that easy to justify buying at the moment.