Tuesday, 15 May 2012 - 20:00
Charts
Long Term View: Regular Review At Seed we have an investment process that is both simple and robust. By not overly complicating the process we attempt to consistently make investment decisions that will more often than not result in investment returns in excess of the targeted benchmark. We want to get the odds in our favour as often as possible and focus on the process rather than the outcome.
Before making any investment we ask ourselves three important questions:
1. Are we making this investment with a long term (i.e. at least 3 – 5 years) mindset?
2. Is there intrinsic value in this investment?
3. Is there a risk of permanent capital destruction in this investment?
An investment will only make its way into our portfolios if the answer is ‘Yes’ to the first two questions and ‘No’ to the third question.
Our portfolios are generally managed within strategic and tactical asset allocation frameworks, i.e. each portfolio has a stated benchmark and then mandated weighting limits for each asset class (e.g. benchmark local equity weighting of 50% with a maximum of 70% and a minimum of 30% in local equity, etc). We then make tactical decisions away from our benchmark (underweight or overweight) based on our research.
During a recent report back we were asked what our time horizon is for making these tactical asset allocation decisions. Referring back to the three questions we ask when making any decision it was quite simple to point out that we make all investments on a 3 – 5 year horizon. A key aspect that we had to point out was that while we make our decisions with a 3 – 5 year outlook, very few of our investments go unchanged over this period. On a monthly basis we update the valuations of each asset class, i.e. determine whether there is still intrinsic value in the investment, to determine whether we need to change the asset allocation of the underlying portfolios.
When valuing an asset class our assumption is that fair value will be reached in a straight line over 3 – 5 years. Markets naturally don’t move in a smoothed fashion and it is interesting to note how much the expected return from each of the asset classes can change over periods less than 12 months based on market movements. We take advantage of these opportunities to increase and decrease the weightings to the various asset classes.
The chart below is an extract of our equity valuation tool. The horizontal axis is the ALSI’s starting PE with the vertical axis the subsequent 5 year annual return. It is apparent that lower starting PE ratios equate to higher expected returns and vice versa. The red spot corresponds to the ALSI’s level in December 2010, and the yellow spot is at 30 September 2011. In the space of 9 months the market moved from being in overvalued territory to a level that was showing good signs of value.
By updating our valuation chart on a monthly basis we were able to take advantage of the opportunity presented in early October by increasing the allocation to local equities across all of our portfolios and in the Seed Flexible Fund in particular.
We trust that this gives some insight into the process followed at Seed. As has been discussed we also take a long term view, but ensure that we perform regular reviews.
Take care,
Mike Browne
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Tue, 15 May 2012
Top News
South Africa's rand extended losses to hit the year's weakest level against the dollar on Tuesday as risk sentiment soured further, though bonds held steady on support from good German growth numbers and a better than expected domestic auction. Full story
South African stocks inched lower on Tuesday, as gold miners such as Gold Fields were hammered by a drop in the price of bullion, although losses were limited by a rise in heavyweights Naspers and MTN Group. Full story |
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New French President Francois Hollande called for a European pact for growth to balance out German-driven austerity measures in his inaugural address on Tuesday, hours before taking his challenge to Chancellor Angela Merkel in Berlin. Full storyA splintered Syrian opposition voted on Tuesday to keep a secular academic exile seen as a consensus builder as its top figure to further a quest for recognition from wary big powers in its struggle to unseat President Bashar al-Assad. Full storyUkraine, threatened with a political boycott of the European football championship it co-hosts next month over the jailing of opposition politician Yulia Tymoshenko, on Tuesday put off a ruling on her appeal until the tournament is under way. Full story |
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Markets | Consumer shares led a modest
rebound on Wall Street on Tuesday, after the S&P 500 fell for
four of the past five sessions,. . . Full story | | European shares fell to their
lowest closing level since the start of 2012 after attempts to
form a Greek government collapsed, hitting heavyweight. . . Full story | | World stocks declined and the
euro fell to a four-month low against the dollar on Tuesday
after Greece said it would hold new. . . Full story | | Britain's top shares extended
losses on Tuesday, led by the mining sector as the cloud looming
over the euro zone darkened after Greek. . . Full story |
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| Gold eased below $1,560 an ounce
on Tuesday after the failure of Greek politicians to form a
government sent the single European currency. . . Full story | | U.S. stocks traded flat on
Tuesday, erasing strong gains in the premarket session after
news Greece will hold new elections put the debt-stricken
country's. . . Full story | | U.S. stock index futures
sharply pared gains on news Greece will hold new elections after
political leaders failed to reach agreement on a. . . Full story | | European shares gave up earlier
gains to fall to their lowest level since the start of 2012
after Greek politicians failed to agree. . . Full story |
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SA Business | South Africa's Reserve Bank has approved the provision of a committed liquidity facility from which lenders in the country can draw from to meet Basel III liquidity coverage ratio requirements, it said on Tuesday.. . . Full story |
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| British short-term loans provider Wonga said it had chosen South Africa for its first step in international expansion after trials showed the country's consumers liked its online service.. . . Full story | | The rand pulled back from a four-month low against the dollar on Tuesday as stronger-than-expected growth numbers from Germany lifted sentiment, but the currency remained hostage to political uncertainty in Europe that has been constraining risk appetite.. . . Full story |
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Company News | Further to the announcement on 7 February 2012, Old Mutual announced that it has completed the sale of Dwight Asset Management. . . Full story | | Afdawn advised shareholders that the company expects an increase in the earnings per share ("EPS") and headline earnings per share ("HEPS"),. . . Full story | | Shareholders are referred to the salient dates announcement released on SENS and published in the press on 2 May 2012 in. . . Full story | | Shareholders are advised that Ms K N Dhlomo has resigned as a non-executive director of TFG for personal reasons, with immediate. . . Full story |
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| Great Basin announced that its interim consolidated financial statements and Management Discussion and Analysis for the quarter ended March 31, 2012. . . Full story | | Accordingly, a review of the financial results for the year ending 30 June 2012 by management has indicated that the earnings. . . Full story | | Anglo announced the appointment to its board of Anne Stevens as a non-executive director, with immediate effect.. . . Full story | | Gijima advised shareholders in the company of the launch of an internal people optimisation strategy aimed at improving efficiency and reducing. . . Full story |
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Company Results | Revenue increased to R5 billion (R4.5 billion). Gross profit declined to R775.2 million (R900.4 million) and operating profit decreased to R531.5. . . Full story | | Revenue for the interim period ended 31 March 2012 rose by 16% to R4.9 billion (2012: R4.2 billion), operating profit decreased. . . Full story | | Revenue interim results for the period ended 31 March 2012 fell to USD751 million (2012: USD938 million). EBITDA dropped to USD75. . . Full story | | Revenue increased by 11.1% to R12.7 billion (R11.4 billion). Gross profit was up 12.4% to R5.3 billion (R4.7 billion) and operating. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 33486.08 | -47.48 | -0.14% | JSE Top 40 | 17:00 | 29548.07 | -28.99 | -0.10% | JSE Gold | 17:00 | 2222.23 | -57.96 | -2.54% | JSE Financial | 17:00 | 25007.79 | -98.63 | -0.39% | JSE Industrial | 17:00 | 38060.90 | 141.42 | 0.37% | JSE Indust 25 | 17:00 | 32098.77 | 165.61 | 0.52% | JSE Resource | 17:00 | 47583.10 | -345.94 | -0.72% | DJ Futures | 20:00 | 12675.00 | 14.00 | 0.11% | DJ Ind | 19:45 | 12681.73 | -13.62 | -0.11% | SP 500 | 20:00 | 1336.44 | -1.91 | -0.14% | Nasdaq | 20:00 | 2911.18 | 8.60 | 0.30% | FTSE 100 | 17:35 | 5437.62 | -27.90 | -0.51% | DAX | 18:06 | 6401.06 | -50.91 | -0.79% | CAC40 | 18:06 | 3039.27 | -18.72 | -0.61% | Nikkei | 08:26 | 8900.74 | -73.10 | -0.81% | Shanghai | 09:26 | 2374.84 | -5.88 | -0.25% | Hang-Seng | 10:26 | 19894.31 | 159.27 | 0.81% | All Ords | 08:42 | 4316.30 | -35.60 | -0.82% | NZSE 50 | 07:46 | 3534.92 | -20.44 | -0.57% |
| | Name | Time | RP | Move | % Move | Gold | 19:59 | 1554.10 | -2.42 | -0.16% | Gold/Rand | 20:00 | 12881.78 | 70.19 | 0.55% | Gold/R kg | 20:00 | 414149 | 3122 | 0.76% | Silver | 19:59 | 27.9460 | -.2040 | -0.72% | Platinum | 19:59 | 1438.50 | 5.00 | 0.35% | Palladium | 19:59 | 596.00 | 8.30 | 1.41% | R157 | 17:06 | 6.49 | -.01 | -0.15% | R204 | 17:06 | 7.38 | -.01 | -0.14% | Brent Crude | 19:56 | 111.85 | .60 | 0.54% | Rand / Dollar | 19:59 | 8.2889 | 0.0883 | 1.08% | Rand / Pound | 19:55 | 13.2364 | 0.0622 | 0.47% | Rand / Euro | 19:55 | 10.5604 | 0.0393 | 0.37% | Rand / NZD | 19:58 | 6.3934 | 0.0195 | 0.31% | Rand / AUD | 19:55 | 8.2560 | 0.0812 | 0.99% | Yen / Dollar | 19:58 | 80.2640 | 0.4420 | 0.55% | Euro / Dollar | 19:55 | 0.7846 | 0.0052 | 0.67% | Dollar / Euro | 19:59 | 1.2739 | -0.0086 | -0.67% | Pound / Dollar | 19:55 | 0.6245 | 0.0035 | 0.56% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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15/05/2012 | 130 | 191 | 80 | 401 | 315,570,504 | R21,722,076,112 | 104651 | 3535890 | 14/05/2012 | 91 | 261 | 53 | 405 | 196,689,890 | R11,540,231,698 | 91794 | 3462836 | 11/05/2012 | 187 | 150 | 77 | 414 | 221,124,619 | R11,934,872,759 | 93887 | 2824782 | 10/05/2012 | 220 | 118 | 65 | 403 | 246,225,049 | R13,449,576,348 | 120021 | 3010267 | 09/05/2012 | 139 | 201 | 89 | 429 | 262,503,829 | R13,794,513,512 | 113334 | 3012661 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 29,548.07 | -28.99 | -0.10% | Industrial | 38,060.90 | 141.42 | 0.37% | Mid Cap | 48,005.12 | -165.59 | -0.34% | Small Cap | 35,727.37 | -132.41 | -0.37% | Resource 20 | 47,583.10 | -345.94 | -0.72% | Industrial 25 | 32,098.77 | 165.61 | 0.52% | Financial 15 | 9,427.08 | -45.49 | -0.48% | Financial & Ind. 30 | 35,593.08 | 87.02 | 0.25% | All Share | 33,486.08 | -47.48 | -0.14% | Oil & Gas | 27,391.16 | 356.42 | 1.32% | Mining | 30,476.99 | -338.49 | -1.10% | Gold Mining | 2,222.23 | -57.96 | -2.54% | Platinum Mining | 53.29 | -.59 | -1.10% | GENERAL MINING | 7,839.65 | -62.52 | -0.79% | Oil & Gas Producers | 14,727.72 | 191.64 | 1.32% | Basic Materials | 26,126.08 | -257.20 | -0.97% | Chemicals | 14,849.42 | -38.84 | -0.26% | Forestry & Paper | 13,440.23 | 29.14 | 0.22% | Industrial Metals | 29,274.47 | 113.56 | 0.39% | Industrials | 32,388.01 | -223.08 | -0.68% | General Industrials | 88.78 | -.09 | -0.10% | Consumer Goods | 33,305.76 | 197.19 | 0.60% | Automobiles & Parts | 5,638.50 | .00 | 0.00% | Household Goods | 180.02 | -1 | -0.62% | Health Care | 42,594.72 | 49.70 | 0.12% | Beverages | 112.26 | .50 | 0.45% |
| | Index Name | RP | Move | % Move | Food Producers | 60,573.55 | -189.55 | -0.31% | Personal Goods | 470.82 | 5.40 | 1.16% | Consumer Services | 65,520.14 | 338.77 | 0.52% | General Retailers | 53,895.62 | -240.24 | -0.44% | Travel & Leisure | 3,763.97 | 20.03 | 0.53% | Media | 99.85 | 1.81 | 1.85% | Support Services | 2,409.05 | 1.18 | 0.05% | Telecommunications | 67,130.48 | 473.30 | 0.71% | Financials | 25,007.79 | -98.63 | -0.39% | Banks | 48,183.56 | -309.96 | -0.64% | Non-life Insurance | 42,647.61 | -68.91 | -0.16% | Life Insurance | 19,591.84 | -60.49 | -0.31% | General Financial | 2,273.00 | -24.08 | -1.05% | Technology | 28,781.43 | 43.09 | 0.15% | SHARIAH TOP40 | 2,954.10 | -8 | -0.27% | FTSE/JSE SHARIAH ALL | 3,075.77 | -9 | -0.30% | COAL MINING | 24,809.58 | 9 | 0.04% | FTSE JSE Fledgling | 5,413.64 | 10 | 0.18% | FTSE/JSE Alt X | 1,215.06 | 47 | 4.02% | SA LISTED PROPERTY | 419.21 | | 0.26% | CAPPED PROPERTY | 339.69 | | 0.20% | RESOURCE | 26,244.65 | -194 | -0.73% | DIVIDEND PLUS | 192.99 | -2 | -0.82% | FTSE/JSE RAFI 40 | 6,957.29 | -13 | -0.18% | Capped Top 40 | 15,606.86 | -10 | -0.06% | Capped All Share | 16,940.63 | -23 | -0.14% | JSE TABACO | 5,265.28 | 74 | 1.43% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | ANG | ANGLOGOLD ASHANTI LIMITED | BUY | 11 May | HAR | HARMONY GOLD MINING COMPA... | BUY | 11 May | ACL | ARCELORMITTAL SA LTD | HOLD | 11 May | HSP | HOLDSPORT LIMITED | BUY | 10 May | NED | NEDBANK GROUP LTD | HOLD | 10 May |
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Results Expected** Expected | Company Name | Fin. Date | 16 May 2012 | CAFCA | March 2012 (Interim) | 16 May 2012 | DATATEC | February 2012 (Final) | 16 May 2012 | RICHEMONT | March 2012 (Final) | 16 May 2012 | SALLIES-C | December 2011 (Interim) | 16 May 2012 | SANTOVA | February 2012 (Final) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | MAZOR | 12-05-15 | 12-06-01 | 12-06-11 | R 0.0160 | CORONAT | 12-05-15 | 12-06-01 | 12-06-11 | R 0.9500 | STEFSTOCK | 12-05-15 | 12-06-29 | 12-07-09 | R 0.1200 | CAR | 12-05-15 | 12-06-08 | 12-06-18 | R 0.0800 | NETCARE | 12-05-14 | 12-07-13 | 12-07-23 | R 0.2200 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | OCTODEC | 12-04-19 | 12-05-11 | 12-05-21 | R 0.7120 | PREMIUM | 12-04-19 | 12-05-11 | 12-05-21 | R 0.6000 | REBOSIS | 12-04-25 | 12-05-11 | 12-05-21 | R 0.4300 | DCENTRIX | 12-04-17 | 12-05-11 | 12-05-21 | R 0.1953 | PBT | 12-04-25 | 12-05-11 | 12-05-21 | R 0.0345 |
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Upcoming AGMs** Code | Company Name | Date | Status | CNL | Control Instruments Group Ltd. | 15/05/2012 | Confirmed | GDO | Gold One International Ltd. | 16/05/2012 | Unconfirmed | BRN | Brimstone Investment Corporation Ltd. | 16/05/2012 | Confirmed | BRT | Brimstone Investment Corporation Ltd. | 16/05/2012 | Confirmed | RES | Resilient Property Income Fund Ltd. | 16/05/2012 | Confirmed |
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