Publications

Latest

August 2017: South African Retail– Race for Space Could Start to Bite

02 August 2017

This August 2017 Quarterly Strategy Note has been written by Damon Buss, our Retail Analyst. Damon’s conclusion is that the “race for space could start to bite” and in arriving at this conclusion, Damon covers: reasons why many South African consumers became wealthier between 2002-2014, how the Property Companies reacted to this healthier consumer and do we have too many shopping centres, reasons the South African consumer has been under pressure for the last 2-3 years, trends affecting global retailers and property companies, whether they will affect SA, the impact of slower space growth could be on retailers, and is this slower growth factored into retail company valuations currently?

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April 2017: The Case for Short Selling in Hedge Funds.

24 April 2017

In July 2016, we launched our Electus Long/Short Equity Hedge Fund. As hedge funds have now become regulated investment vehicles in South Africa, we believe it is important for investors to build up an understanding of these vehicles as we expect rapid growth in hedge funds in the years ahead.

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July 2016: Update on Research and Fund Management and our Business as well as research on SA Casino Shares

27 July 2016

Now that Electus has been operating for a year as an independent FSP on its own FAIS Licence, it is appropriate for us to briefly update you, as stakeholders in our business, on Electus’ Research and Fund Management and Business. As usual, we also wish to highlight key aspects of Electus’ most important and relevant equity research and we conclude with an SA equity market overview.

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2017

April 2017: The Case for Short Selling in Hedge Funds.

24 April 2017

In July 2016, we launched our Electus Long/Short Equity Hedge Fund. As hedge funds have now become regulated investment vehicles in South Africa, we believe it is important for investors to build up an understanding of these vehicles as we expect rapid growth in hedge funds in the years ahead.

Continue Reading

August 2017: South African Retail– Race for Space Could Start to Bite

02 August 2017

This August 2017 Quarterly Strategy Note has been written by Damon Buss, our Retail Analyst. Damon’s conclusion is that the “race for space could start to bite” and in arriving at this conclusion, Damon covers: reasons why many South African consumers became wealthier between 2002-2014, how the Property Companies reacted to this healthier consumer and do we have too many shopping centres, reasons the South African consumer has been under pressure for the last 2-3 years, trends affecting global retailers and property companies, whether they will affect SA, the impact of slower space growth could be on retailers, and is this slower growth factored into retail company valuations currently?

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2016

July 2016: Update on Research and Fund Management and our Business as well as research on SA Casino Shares

27 July 2016

Now that Electus has been operating for a year as an independent FSP on its own FAIS Licence, it is appropriate for us to briefly update you, as stakeholders in our business, on Electus’ Research and Fund Management and Business. As usual, we also wish to highlight key aspects of Electus’ most important and relevant equity research and we conclude with an SA equity market overview.

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2015

2014

2013

September 2013: Going big on mid & small caps

14 November 2013

Electus looks at the huge outperformance of Mid & Small companies over large caps since 1996. Explaining why these companies are such strong alpha generators and why, with effective research and stock picking, they are not as risky as many think.

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June 2013: GEM interference risk and Vodacom overpriced

12 August 2013

We carry two research pieces from our team of analysts. In the first, some light is shed on the complexities of investing in global emerging markets (GEM) and the need for an in-depth understanding of the companies as well as the governing framework within which they operate.

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March 2013: Netcare: A healthy opportunity seized

11 June 2013

In this Strategy Note we explain why Netcare was, and still is, undervalued relative to Electus' long-term valuations and why this business is favoured over other local healthcare companies. We also explore the long-term investment prospects for Lonmin in light of the ongoing labour relations issues.

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2012

August 2012: Electus valuations unearthing opportunities

01 August 2012

Road construction company, Raubex, is unpacked within the context of SANRAL developments and the government's future road construction and maintenance spending plans. This is followed by a valuation of Investec, where he explains why he believes that Investec's share price offers 40% upside potential.

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2011

December 2011: When does a quality defensive business not offer value

01 December 2011

We have a strong preference for quality companies. However, not all quality companies currently pass our stringent criteria for investment - which is why you will not find SABMiller, British American Tobacco and Shoprite in our portfolios. We explain why we aren’t invested in these companies and how we counter their absence.

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August 2011: Excess return is what happens when preparation meets opportunity

01 August 2011

While, over the last 18 months, we have not seen great opportunities in the market to generate large levels of excess return, we believe this has changed. Our extensive company analysis, as well as several other factors, shows that opportunities appear to be increasing. Here we explain why we have recently increased the active equity risk in our portfolios.

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April 2011: Why we prefer companies where management invests directly in their company shares rather than through share options.

04 April 2011

We believe that equity investing should not be complicated and, as such, our investment philosophy is simple: we always strive to buy into high quality businesses at prices that are low compared to their long-term investment value. In applying this philosophy, we have six key factors that influence our company selection. Here we address one of these factors.

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2010

2009

November 2009: The best of growth and value

01 November 2009

We are often asked if the funds we manage have more "Growth" or "Value" characteristics. Our simple answer is that we always want the "best of both worlds" and, to achieve this, we have consistently invested in a disciplined process based on our very clear investment philosophy.

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August 2009: Level of Earnings

01 August 2009

We are often asked if the funds we manage have more "Growth" or "Value" characteristics. Our simple answer is that we always want the "best of both worlds" and, to achieve this, we have consistently invested in a disciplined process based on our very clear investment philosophy.

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May 2009: South African gold shares: Why we’re avoiding them

01 May 2009

The gold market and gold shares are widely followed by market commentators and investors, especially in South Africa. Yet their importance is perhaps overstated - while the gold industry is an important employer in South Africa, it has become an increasingly smaller part of our economy, due mainly to an ever-decreasing amount of gold being mined and exported from our deep level mines. In this newsletter, we explain how we view and value gold, and why we do not like gold shares currently.

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February 2009: South African Banks.... benefiting from certain earnings in uncertain times

01 February 2009

South African banks have managed to avoid the financial crisis occurring in the rest of the world over the last two years, and as a result have managed to outperform our local market as well as significantly outperforming other global banking stocks. While we believe that banks are unlikely to show much earnings growth in 2008 or 2009, in an environment of significant earnings downgrades this might just be enough to continue their relative earnings outperformance.

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2008

December 2008: BHP Billiton

01 December 2008

In 2008, our Strategy Notes focussed on providing more detail on our investment philosophy and portfolio construction process. This philosophy and process remain consistent and are our guiding principles for investing our clients' funds in a disciplined style. In this newsletter, we us a practical example of BHP Billiton, one of the largest holdings in our portfolios, to demonstrate how we put our thinking into action.

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May 2008: Valuation methodologies

01 May 2008

In this note, we look at the level of conviction we have in our different valuation methodologies and how we actually position portfolios based on these conviction levels. We do not buy any share if we do not have an above-average level of conviction in the margin of safety of the share.

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February 2008- Analysing the levels of company earnings

01 February 2008

A Brief Recap of our views in 2007. Of concern was that earnings levels were at cyclically highs and the potential existed for large earnings disappointments. We felt it appropriate to position our portfolios more defensively, hence buying into businesses with more sustainable and defensive earnings streams.

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Latest

Analysis: Standard Bank's new sole CEO - Business Report

14 September 2017

Sim Tshabalala yesterday took over the helm of Africa’s biggest lender by assets, in the process becoming the the sole and first black chief executive of Standard Bank after Ben Kruger stepped down with immediate effect in line with market expectations. Richard Hasson comments.

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2017

Black-owned development fund settlement hits WBHO

01 March 2017

One-off nontrading items hit Wilson Bayly Holmes-Ovcon (WBHO) for a six in the interim period to December 2016. These included a R170m payment arising from the voluntary agreement the construction and engineering group had signed with the government. This saw headline earnings per share plunge 38%. Without this, earnings per share and headline earnings per share would have risen about 10%. Mish-al Emeran comments.

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Whitey Basson’s last gift to Shoprite - Moneyweb

22 February 2017

Shoprite’s interim results, which showed that the grocery and furniture retailer continues to buck SA’s retail malaise, can arguably be viewed as a fitting sendoff for Whitey Basson, who recently ended his 37-year-long run at the company. Damon Buss comments.

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BHP back in the black - Business Report

22 February 2017

Mining giant BHP Billiton returned to profitability in the six months to end December, benefiting from higher commodity prices, cost cutting measures and roughly $6 billion (R78.43 billion) in one-off charges, mainly write downs against US energy assets. Mish-al Emeran comments.

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AdvTech takes on Africa - Moneyweb

31 January 2017

The education provider concludes its first tertiary partnership outside of its home market. The R320 million investment by the International Finance Corporation (IFC), a member of the World Bank, into AdvTech was underlined on Monday, as the fast-growing education provider made good on its promise to grow into the tertiary education sector.

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Woolworths update bodes ill for sector

13 January 2017

There are further signs of trouble in SA’s struggling retail sector, with Woolworths releasing a poor trading update that analysts say can only be a bad omen for the rest of the retailers still to release their Christmas figures. Damon Buss.

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Sales figures point to poor outlook - Business Day

18 April 2017

The rest of the year is bound to be uncertain for local retailers, with many of the problems encountered towards the end of 2016 resurfacing and worsening. This is reinforced by the latest Statistics SA data, which show retail sales in February 2017 declined 1.7% compared with sales in February 2016. Damon Buss comments.

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Imperial sells most of insurer Regent - Business Day

25 April 2017

Imperial Holdings has sold 100% of the ordinary shares and also the tier-2 capital of the Regent insurance group to Hollard but has retained Regent’s value-added products (Vaps) business instead of selling it to MotoVantage in the Hollard stable. Damon Buss comments.

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Implats boss upbeat despite challenges - Business Report

28 April 2017

Impala Platinum Holdings (Implats) shares slid for more than 4 percent in early trade on the JSE on Wednesday after the group announced that it planned to cut back on 1000 workers. The announcement came as the company continued to battle protest action at its Marula mine in Mpumalanga. The shares clawed back to close 2.68 percent weaker at R42.90. Mish-al Emeran comments.

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Settlement deal knocks Raubex - Business Day

09 May 2017

Construction company Raubex reported a 14% fall in its headline earnings per share in the year to February, due to a voluntary settlement it made with SA’s competition authorities for anticompetitive behaviour. Mish-al Emeran comments.

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Tsogo Sun to lose Marcel von Aulock - Business Day

01 June 2017

Tsogo Sun’s Marcel von Aulock is leaving the gaming and leisure group after 20 years. Von Aulock said he had achieved various goals in the business and he needed a break before starting another career. Speculation is, however, that he has suddenly resigned because of differences with Tsogo’s parent company, Hosken Consolidated Investments, over an acquisition. Damon Buss comments.

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Storm and fires threaten outlook for SA insurers - Moneyweb

08 June 2017

The insurers, including Santam Ltd., Old Mutual Plc’s Mutual & Federal and Rand Merchant Investment Holdings Ltd.’s OUTsurance unit, are already being battered by an economy that slipped into a recession in the first quarter, the country’s credit rating downgrade to junk status, continued political turmoil and unemployment at a 14-year high. Richard Hasson comments.

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Hospitals Feeling the Pain - Finweek

22 June 2017

The three largest locally listed hospital groups have all seen double-digit dives in their share prices in the past 12 months. While this is hurting now, analysts say it’s also a good time to stock up for the longer term. Neil Brown comments.

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ABInBev to invest R2.8bn in SA - Business Day

11 July 2017

The world's biggest brewer, Anheuser-Busch (AB) InBev, said yesterday that it planned to invest R2.8billion in extending its plants in South Africa and in two new packaging lines for returnable glass bottles at its Alrode and Rosslyn facilities in Gauteng. Neil Brown comments.

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Building material retailers lose their sparkle

17 August 2017

Retailers have been resilient during SA’s retail malaise but reality has come to bite sales. Building material retailers have impressed with their resilience during tough times over the last two years compared with their hard-pressed apparel counterparts. Damon Buss comments.

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Shoprite eyes wallets of upmarket consumers - Moneyweb

23 August 2017

The retailer is upping the ante by wooing Woolworths’ upmarket customers into its Checkers stores. Retail giant Shoprite, which operates a discount retail model that has been a hit for decades with its core cash-strapped consumers, is turning to upmarket wallets and further Africa expansion to ride out SA’s perennial retail malaise. Damon Buss.

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Woolworths fights many battles - Moneyweb

25 August 2017

Faces heated competition, declining sales. Australian businesses have been slow to prove themselves. Staying resilient during uncertain times was once Woolworths’ hallmark, earning it the status of a darling in SA’s retail sector. Damon Buss comments.

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Share price comeback after scare

28 August 2017

Steinhoff International's share price recovered on Friday after they took a knock on Thursday on reports that the chief executive Markus Jooste was among employees being investigated by German prosecutors in a 2015 case tied to possible accounting fraud. Neil Brown comments.

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Analysis: Standard Bank's new sole CEO - Business Report

14 September 2017

Sim Tshabalala yesterday took over the helm of Africa’s biggest lender by assets, in the process becoming the the sole and first black chief executive of Standard Bank after Ben Kruger stepped down with immediate effect in line with market expectations. Richard Hasson comments.

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2016

PPC looks to continent to augment revenue - Business Day

18 November 2016

PPC hopes to cement its future by bringing in more than 40% of revenues and profit from African countries other than SA by 2017. It appears the domestic industry is ripe for consolidation with four traditional players – PPC, Lafarge, NPC Cimpor, Afrisam – now joined by Nigerian-backed Sephaku and Chinese-backed Mamba cement group. Mish-al Emeran comments.

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Discord over Steinhoff shares - Business Day

03 October 2016

There is mounting criticism of Christo Wiese’s decision to exclude small shareholders from the recently announced €2.45bn fund-raising exercise that sees Jayendra Naidoo’s little-known Lancaster Group pick up a stake in the rapidly growing international retailer Steinhoff. Neil Brown comments.

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Richemont warns of 45% profit drop - Business Day

15 September 2016

Investors are calling time on Richemont's impressive growth of previous years, as the sparkle of the luxury goods sector fades. In a trading update released on Wednesday, the owner of Cartier warned that first-half profit would decline about 45%. Neil Brown comments.

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Replacing a legend - Financial Mail

01 September 2016

Some may say Whitey Basson is something of an acquired taste. But like renowned wines from his home ground of Stellenbosch, Shoprite's front man is one of the region's greatest exports...Damon Buss comments.

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Tiger yet to show its stripes - Sunday Times

22 May 2016

After some harsh lessons on the acquisition trail in Nigeria and Kenya, consumer goods giant Tiger Brands is seeking to consolidate its market position at home - and analysts say competitors could have reason to be wary. Damon Buss comments.

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2015

2014

Market Commentary

10 February 2014

Electus views on Aveng, the Competition Commission and Lonmin. This audio clip was brought to you by The Money Show on Radio 702/Cape Talk.

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2013

Market Commentary

04 March 2013

Discussion on SABMiller, Vodacom and Zimplats. This audio clip was brought to you by The Money Show on Radio 702/Cape Talk.

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Market Commentary

28 January 2013

Electus talks about the rand, Group 5 and PPC. This audio clip was brought to you by The Money Show on Radio 702/Cape Talk.

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Market Commentary with Neil Brown

02 September 2013

Co-head of Electus, Neil Brown, takes a look at the day’s market trading activities and shares his views on WBHO, Peermont, and African Rainbow Minerals. This audio clip was brought to you by The Money Show on Radio 702/Cape Talk.

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2012

Market Commentary

09 July 2012

Discussion of the importance of yield in a low return environment. This audio clip was brought to you by The Money Show on Radio 702/Cape Talk.

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2011

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2017

2016

2015

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2013

Monthly Commentary

31 October 2013

For the month of November 2013, the FTSE/JSE All Share Index (ALSI) lost -1.1%, while the FTSE/JSE Shareholder Weighted All Share Index (SWIX) lost -1.6%. Over the month, the resource sector lost -2.1%, while industrials gained 0.1% and financials lost -3.1%. Large caps lost -1.1%, mid-caps lost -1.0% and small caps lost -0.7%.

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Market Strategy

18 June 2013

For the month ending 31 May 2013, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) rose 8.5% and 6.7%, respectively.

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Market Strategy

16 May 2013

For the month ending 30 April 2013, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) lost 2.5% and 1.7%, respectively.

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Market Strategy

15 April 2013

For the quarter ending 31 March 2013, the FTSE/JSE All Share Index (ALSI) delivered 2.5% while the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 1.6%.

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Market Strategy

15 March 2013

For the month ending 28 February 2013, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) lost 1.9% and 1.1%, respectively.

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Market Strategy

15 February 2013

For the month ending 31 January 2013, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 3.2% and 1.5%, respectively.

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Market Strategy

17 January 2013

For the quarter ending 31 December 2012, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 10.3% and 10.1%, respectively.

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Market Strategy

22 July 2013

For the quarter ending 30 June 2013, the FTSE/JSE All Share Index (ALSI) declined 0.2%, while the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 0.7%.

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2012

Market Strategy

18 December 2012

For the month ending 30 November 2012, the FTSE/JSE All Share Index (ALSI) gained 2.6% and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 2.1%.

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Market Strategy

16 November 2012

For the month ending 31 October 2012, the FTSE/JSE All Share Index (ALSI) gained 4.2% and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) gained 3.3%.

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Market Strategy

15 October 2012

For the quarter ending 30 September 2012, the FTSE/JSE All Share Index (ALSI) and the FTSE/JSE Shareholder Weighted All Share Index (SWIX) both gained 7.3%, and 1.6% and 1.2%, respectively, in September.

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2011

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Electus brochure

05 May 2015

We are fundamental valuation-based equity investors with an active approach to asset management. We seize every opportunity to invest in shares that we believe will deliver superior performance over time. We have a strong track record of identifying these shares through our experience and advanced proprietary research process.

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2017

2016

2015

Electus brochure

05 May 2015

We are fundamental valuation-based equity investors with an active approach to asset management. We seize every opportunity to invest in shares that we believe will deliver superior performance over time. We have a strong track record of identifying these shares through our experience and advanced proprietary research process.

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2014

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2012

2011

2010

2009

2008