All posts by Admin

Workshop Invitation

Join us on the fourth Thursday of each month for a complimentary “Introduction to the Financial Markets” workshop. We’ll take you through the basics of the local and international financial markets. We’ll cover how to: place orders, set stop losses and take profits, create and read charts, load indicators, create portfolios and a host other essential financial markets skills.

These interactive sessions are hosted at our offices and are limited to 15 people per month.

WORKSHOP: Introduction to the Financial Markets

Topic: Introduction to the Financial Markets
Date: The fourth Thursday of each month
Time: 18:00 – 19:00
Cost: Free

Venue: 

10 Burnside Island,
410 Jan Smuts Avenue,
Johannesburg,
2196

In this one hour workshop you will:

– Receive a basic introduction to trading.
– Learn how to create an order ticket.
– Learn how to set up your charts and indicators.
– Learn how to set stop losses and take profits.
– Gain the confidence to safely place your first trade online.

Bonus: Receive a free 1-hour personal consultation with one of our portfolio managers in which you can plan, review and make the most of your investments.

Who should attend?

  • Those seeking a basic introduction to financial markets.
  • Anyone considering trading via an online platform.
  • Those interested in managing wealth.

To reserve your seat at this complimentary session either book online or send an email to trade@randswiss.com  with your Name, Phone Number and seating requirements.

Programme:

– 17:30-18:00: Tea and coffee
– 18:00-19:00: Interactive workshop
– 19:00-19:30: Personal follow up Q&A

Friends and family are also welcome to attend, but space is limited and seats will be allocated on a first come first serve basis. So don’t delay – secure your place today! 

Reserve your seats here

I hope to see you there!

Workshop Invitation

It hasn’t been an easy start for equity markets this year, as worries over global growth, Chinese intervention and US monetary policy have shaken investor confidence. The local currency blow out (and political shenanigans over December) seem to have fueled a paralytic depression among South African investors. And yet, as we’ve seen time and again, when it comes to the markets, the best opportunities arise when others are fearful.

Join us on the 24th of February for a complimentary workshop where we uncover whether this is the time to “be fearful when others are greedy” or if we should be buying gold and guns and preparing for the next apocalypse! We’ll take you through the practical investment decisions we’ve made on behalf of our model portfolios and reveal how we’re positioning ourselves for 2016.

WORKSHOP: PROTECT AND BUILD YOUR WEALTH IN MARKET VOLATILITY

Topic: Your 2016 Investment Strategy
Date: 24th February 2016
Time: 18:00 – 19:30
Venue: Sandton CBD – Details to follow
Cost: Free

In this 1.5 hour workshop you will:

  • Unlock key international trends for 2016 and understand their impact on your portfolio.
  • Get an overview of our global and local investment themes for 2016.
  • Discover practical ways you can protect your wealth from a weakening rand.
  • Understand how we’ve positioned our model portfolios.
  • Find out our five portfolio picks for 2016.

Bonus: Receive a free 1-hour personal consultation with one of our portfolio managers in which you can plan, review and make the most of your investments in 2016.

Who should attend?

  • Those looking to create or optimise their own long-term equity portfolio.
  • Those ready to take their financial future into their own hands.
  • Those interested in understanding our portfolio approach.

To reserve your seat at this complimentary event either book online or reply to this email with your Name, Phone Number and seating requirements.

Friends and family are also welcome to attend, but space is limited and seats will be allocated on a first come first serve basis. So don’t delay – secure your place today! 

Reserve your seats here

I hope to see you there!

24% jump on SABMiller: Good time to reduce risk?

SABMiller gained as much as 24% on Wednesday as rumours once again re-surfaced that Anheuser-Busch Inbev NV (or ABInbev for short) had acquisition aspirations.

By the close SABMiller had added around $14 billion (R180 billion) taking the the company’s market cap to a whopping $90 billion. SABMiller makes up around 10% of the Top40 index and the rapid increase managed to drag our local market up around 3.64%. According to Bloomberg, this is the biggest one day movement in SABMiller since shifting its primary listing to London in 1999.

Is this mega deal viable?

The acquisition of SABMiller would be the biggest in the industry’s history and solidify more than a decade of consolidation in the brewing business. It would make it one of the six biggest deals in human history and, if the deal were to go through, “SABInbev” would produce one out of every three beers world-wide.

You’ll hear many a market commentator point to the “overlap” (see picture below) as a reason why the deal is viable and, in fact, likely. Excluding the US and China, the geographic footprint looks like a carefully constructed puzzle.

20150916SAB

The problem comes that both companies are present in the world’s number one and two economies. ABInbev may have the larger portion of US sales, while SABMiller is more prevalent in China, but this duplication will come with competition issues. And it’s not just the regulatory hurdles that indicate there is no “end-game” brewing.

When you actually look at the possible deal terms (and please pop me a mail if you want more detail: gary@randswiss.com) it looks as if it will be very difficult to unlock value for shareholders at these prices.

What have the companies said so far?

Well, actually very little has been said.

Speculation started when both management teams excused themselves from different broker conferences simultaneously.

Apparently ABInBev told the media that it had approached SABMiller’s board about a “combination of the two companies”. It added that there was no certainty the approach would lead to an offer or an agreement, saying it wanted to work with the board of SABMiller “toward a recommended transaction.”

In reply, SABMiller has published a SENS announcement entitled, “Response to press speculation” in which it said:

“The Board of SABMiller notes the recent press speculation and confirms that Anheuser-Busch InBev SA/NV (“ABInBev”) has informed SABMiller that it intends to make a proposal to acquire SABMiller. No proposal has yet been received and the Board of SABMiller has no further details about the terms of any such proposal.”

So, what will happen next?

The best guess is probably nothing.

By their very nature, monolithic deals are slow moving and involve kilometres of red tape and unforeseen obstacles.

Firstly, SABMiller would have to exit its Molson Coors Brewing Co JV in the US and ABInbev would likely have to sell SABMillers’ 49% stake in CR Snow, its Chinese brewing partner. The companies would also have to win shareholder approval, the very thing which scuppered SABMiller’s deal with Heineken last year.

At that stage, experts hypothesised the entire merger with Heineken was purely to make SABMiller more resilient to a take-over from ABInbev. The Heineken family, which owns a controlling stake, chose to preserve its “independent heritage”.

If the SABMiller management were looking to retain control, and make SABMiller a more challenging take-over target, you’d better believe they’re going to demand a significant premium to their ruling share price. Most analysts have this pegged at around a 30% premium to Tuesday’s share price. But I wonder if management will be more reluctant now that the company is already trading 20% higher.

One of the conspiracy theories doing the rounds in dealing rooms, is that SABMiller executives are open to talks around merger prospects specifically because it will prevent a deal. If the the market believes a deal is in the works and buys up SABMiller stock, the likelihood of a deal dissipates, as its unlikely ABInbev would want to proceed with an offer, when faced such expensive SABMiller scrip. The paradox being, the more management embrace a potential deal, the less likely it is to succeed, and the more likely they will maintain control.

On a less conspiratorial note, the sell-side does tell us the deal has the backing of not only SABMiller management but also Altria, one of SABMiller’s major shareholders.

Show how long before we know more?

According to “Rule 2.6(a) of the Code, ABInbev must, by not later than 5:00 pm on 14 October 2015, either announce a firm intention to make an offer for SABMiller or announce that it does not intend to make an offer for SABMiller”. This deadline will only be extended with the consent of the Takeover Panel.

What are we doing at Rand Swiss?

Any deal between the two is likely to be “messy and expensive”. But, exaggerated stock price movements do bring opportunity. The beer market has been fairly stagnant of late. Mega-cap brewers have been losing business to wine, spirits and craft brew competitors. Volume growth has been flat (excuse the pun) and, with SABMiller’s EM market currencies under pressure, we’re using this opportunity to take profit.

Our local model equity portfolio holds an 8% stake in SABMiller and we’re using the 20% spike to unload around half. We still like the company, but with this rapid appreciation it’s time to manage our risk.

We can also see from our order book, our short-term traders have increased short-positions and are betting on a retracement back towards R700. No doubt some traders are balancing out their holdings ahead of the Fed announcement tomorrow.

If you’d like to know more about setting up short-term trading account or building a long-term personal share portfolio contact us on info@randswiss.com or visit our site at www.randswiss.com.


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Cisco: All systems go

Three weeks after incoming CEO, Chuck Robbins, took over from John Chambers, Cisco Systems reported its fiscal 4th quarter results. For the period, Cisco’s sales rose by 3.9% to $12.8bn, while profits increased by 3.2% to $3.2bn. This translated into a profit of $0.59 cents per share, 3 cents higher than analysts’ estimates. Cisco’s results, while quite modest, are reassuring considering that rival IBM saw earnings decrease by 0.7%, as well as a decline in revenue. In response to the results, Cisco’s share price added 2.87% during the normal session and 3.9% in after-hours trading.
Continue reading Cisco: All systems go

Alibaba Group: Above and below expectations

On Wednesday, Alibaba reported its slowest quarterly revenue growth in almost 3 years, sending its share price 5.12% lower to trade at $73.38. After trading at a high of $120 in November, China’s largest e-commerce group is now only trading 7.9% above its IPO price of $68. For the quarter ended June 30, revenues increased by 28% to $3.26bn, missing analysts’ estimates of $3.39bn. However, net profit more than doubled to $4.97bn, or $1.92 per share, mainly due to a gain on the deconsolidation of Alibaba Pictures. Excluding the once off items, earnings per share rose 21% to $0.59, slightly higher than expectations of $0.58.
Continue reading Alibaba Group: Above and below expectations

The ABC’s of Google

Yesterday, Google surged 4.27% on news that it was restructuring the company. In a blog post, Larry Page revealed the company has decided to reorganize itself into a holding company called Alphabet, with the web address “adc.xyz.” Going forward, Google’s current search and advertising business will be held in a subsidiary under Alphabet, still called Google, while spinning off its more disparate interests into separate companies. This will enable the parent company to provide more autonomy and opportunity for a growing range of other interest including drones, self-driving cars and anti-aging research. Alphabet’s company structure will resemble Berkshire Hathaway’s, with each business, including Google, having its own CEO. They will in turn all report to Alphabet CEO, Larry Page.
Continue reading The ABC’s of Google

The Kraft Heinz Co: Bland results

Monday saw Kraft Heinz, the world’s 5th largest food and beverage company, release its 2nd quarter earnings report. This is the first set of results for the group, following the merger between Heinz and Kraft Foods earlier this year, in a deal which was backed by 3G Capital and Berkshire Hathaway. The Kraft division saw diluted quarterly earnings per share of $0.92, on net revenues of $4.52 billion. Meanwhile, Heinz saw net revenues decrease by 4.1% to $2.62bn, from $2.73 previously, mainly due to a 9.4% impact from foreign exchange. In response, the group fell about 2% in after-hours trading. Looking forward, the company will continue with the difficult process of integrating the two behemoths.
Continue reading The Kraft Heinz Co: Bland results

Zynga Inc: Not all fun and games

Yesterday, Zynga, the provider of social video games such as Farmville, released results which came in slightly higher than expectations. For the 2nd quarter, Zynga reported revenues of $199.9mn, a 30% increase over the previous corresponding period, compared to expectations of $153.2mn. With regards to earnings, the company reported a loss of 1 cent per share, compared to analyst expectations of a loss of 2 cents per share. However, it was the 23% annual decline in user numbers to 21mn, which handicapped the share and send it down more than 1% in extended trading.
Continue reading Zynga Inc: Not all fun and games

Tesla Motors Inc: ‘Shocking’ results

Yesterday, the electric vehicle maker beat Wall Street expectations when it released its 2nd quarter results, but lowered its deliveries guidance for the year. For the period, the company reported a loss of $0.48 cents per share on $1.20bn in adjusted revenue, higher than expectations of a loss of $0.60 per share on $1.18bn in revenue. Disappointingly however, was that that it lowered its full-year delivery guidance to between 50,000-55,000 units, after announcing in May that it was expecting to deliver a combined figure of 55,000 Model S and Model X units. In response to the results, the company fell more than 7% in after-hours trading, but pared some of the losses in later trade.
Continue reading Tesla Motors Inc: ‘Shocking’ results