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.

Buildmax

This is a stock that I have been talking about for a while but have pretty much sat with egg on my face since making the call.'

Since June the share price has carried on sliding dropping from 50c to as low as 21c. Considering that in September 2007 and the private equity boys at Brait bought in at about 120c this has been a bit of a disappointment.

Anyways a new SENS announcement went out after the close of trade and this one catches my eye:

Buildmax is making a rights offer of 2.31 (two point three one) rights offer shares for every one Buildmax share held at a price of 12.5c per share. Brait and Coronation - two of the better value finders out there - have made an offer to underwrite the deal.

I guess for those who have a longer term investment horizon, this might not be the worst one to sit on....

Small cap update

Two of the small caps that I have been tipping on this blog, and one I have been keeping half an eye on, have been making some waves in recent weeks and thought I would do something of an update on them quickly.

IPSA
A couple of people I have spoken to this week have been a little cynical on this stock but there was an announcement from them released on SENS which says:

"IPSA PLC (AIM: IPSA), the developer, owner and operator of power generation capacity in Southern Africa, announces that, on 23 June 2010, its NewCogen subsidiary re-started production of electricity under an emergency contract with Eskom. Under the contract the plant will provide electricity to support the South African economy during a period of power shortages which coincides with the FIFA World Cup. While the contract is due to end on 30th June, 2010 Eskom has indicated publicly that it may request an extension at least until the WorldCup Final on 11th July. Meantime NewCogen and Eskom are awaiting formal notification from NERSA, the electricity regulator, that a six year MTPPP power purchase agreement has finally been approved. A further announcement will be made on the MTPPP contract as soon as news is available."

Is it a case of IPSA just trying to get some good PR mileage? Maybe... but the fact of the matter is it literally takes a flick of a switch and the Newcastle plant can be delivering electricity when the country needs it.

It would appear that there has been a shift in thinking and Eskom has adopted the role that independant power producers do have a role to play in the new economy. The share price has not responded particularly positively but I maintain that this could be an interesting small cap to consider.

Interwaste
In April I mentioned that Interwaste was one you should be considering for your portfolio. At that time the share was floating around below 50c. It has gradually been ticking up and is now trading around 70c.

Looking back over the SENS announcements a couple of things caught my eye. Firstly at the end of April one of the directors bought a couple of tranches of the shares which gave me a bit of confidence.

The other thing was the announcement that Funani Mojono had joined the board as an independant non-executive. He seems to be quite well connected within ArcelorMittal and this might well have some spin-offs for the company.

TrustCo
This is a little financial services firm that I have been eyeing for a while. Based in Namibia they have yet to set their Johannesburg listing alight. However earlier this week they announced that they had won their court case with the SABC and were due around R24m from the victory including costs.

It is not a massive sum of money but it certainly provides the company with a way forward.

Might be worth a punt - the liquidity just worries me a bit.

Vunani - see through the BS

I noticed this week that empowerment financial services firm Vunani has completed its second acquisition in the last two weeks buying an additional 31% in Peregrine iQ the fund management business held by Peregrine and a 51% stake in something called the Jala Group.

With that in mind I had given it some serious consideration as a potential investment as a bit of a rebound and thought I would take a closer look:

A couple of observations here:

• Peregrine are a very smart bunch of people and in the back of my head I am wondering why they are allowing Vunani to end up with 51% of this business? These two firms have a funny relationship with one another and I wouldn't be surprised if Peregrine were quite happy to turn Vunani into their patsy for something they don't want.
• Peregrine can't really place much value on a business which supposedly has R11bn in assets under management - the transaction didn't even warrant a cautionary or a disclosure of the level of investment. For a tiny little business like Vunani (in the listed sense) that's odd.

But it is this Jala Group thing that really stoked my curiousity and got me digging around a bit...

Ok so here is the deal - 28 May Vunani says it has bought a 51% stake in this thing called the Jala Group.

• This Jala Group thing - a quick Google search doesn't come up with much except a bunch of media whores reproducing the press release that Vunani put out. More curious is that if you go to the website Jala.co.za the page has already been rebranded as Vunani Technology Ventures... but no real sign that there was ever any kind of cached web presence for these guys 20 or 30 days ago. Seems to ring a little hollow. Wonder if there was anything there in the first place?
• For an IT company with a track-record of just 9 months, this is a bit peculiar. If there is one thing IT companies are good at it is in leaving a track record of their transactions and skills on the various search engines.
• The site itself is designed in HTML. I can't think of any graphic designer who would design a new website - it has to be new because it has all been rebranded from Jala to Vunani in the last month - who would design anything in HTML.
• A quick look at the LinkedIn profiles for the directors makes for interesting reading as well. The guys had updated their employment profiles in April 2010 (i.e. before the market was informed of the transaction). Surely there has to be a disclosure issue here?
• Apart from Maree and McKellar who have something of a track record in IT, the associates seem to be a little lightweight. They have a psychologist for some bizarre reason and then they have Alon Hendel whose claim to fame (according to the website) was launching Tycoon.co.za that light-weight entrepreneurs thing for Moneyweb. No offence but we know how that ended up
• I don't put too much faith into Cipro but a quick search reveals that the Jala Group was registered in June last year and provides "Supply of Stationary and Related Services"
• There is no registered business called "Vunani Technology Ventures" or anything along those lines which has a link to Vunani. I appreciate its a new "re-named" venture but still the business needs to be registered.
• For an empowerment company Vunani Technology Ventures seems to have an awful lot of white faces on its board

But the real kicker for me is the claim that Jala / Vunani Technology Ventures has been helping some of its clients since April 2008. That's odd because the business only came into being at the end of last year.

In other words the Jala Group is not really a business. It is a couple of people who get asked for some advice from time to time and may sit on a few boards but there is very little in the way of assets here. The IP for this business sits in the hands of Maree and McKellar and whoever they are mates with and if they decide to walk away there is very little that would be appear to be classified as an "asset" at the moment.

And THIS is the problem with Vunani - they are so busy cobbling together shit that they don't stick to what they could be good at.

As tempting as it is that Vunani is suddenly coming good the numbers still don't give any indication that they are on the recovery path - rather the acquisitions are a case of bullshit trying to baffle brains.

For the year ended 31 December

• Turnover of R121m plus R15 in other income produced an operating profit of R8m
• Cash negative from operations of R135m out the door
• Net cash - R3m in the bank. If Vunani sneezes or has one bad month its screwed
• It obviously didn't use its own cash resources to pay for either of these acquisitions so does that mean more debt has been taken on a group which has just had to restructure?
• Vunani's debt effectively sunk it - there is a note in its March report saying that if its debt wasn't restructured it was effectively game over. The debt got restructured but then it runs around doing odd things rather than getting its house in order.

At first glance this might have the look of an interesting punt but if you peel back the curtain even a little bit the risk-reward trade-off is not even remotely attractive.

RE:CM and Calibre

For those who buy into long-term value investing there is an interesting product listing today on the JSE that might pique your interest.

It is a closed end fund managed by leading value investor Piet Viljoen from RE:CM and is trading under the name RE:CM & Calibre (RAC) on the JSE.

Effectively the fund will be managed by these guys (who hold a high level of ownership in the underlying fund) and they'll be kicking off with R450m in cash.

The mandate for this fund is more flexible than a typical unit trust and can invest in debt, unlisted investments etc.

Don't expect fireworks from it initially but I will probably try and pick up a few during the course of trading today.