To an investor, data and information are essential. Without them we’re simply unable to make decisions. And these days we have a ton of data and information coming at us all day, every day.
This is the easy data, coming directly from the company, via data aggregators, or from media, social media and the like. It’s great, as it means we’re up to date with what matters. It is also a challenge, because it is just too much information for any one person to process. So we have to be selective. I ignore entire sectors, markets and exchanges because I don’t have the capacity to process it all.
The flip side to this avalanche is that there are very useful gems we can find that can help us make better decisions.
For example, Pick n Pay is closing stores, and this will hurt some landlords. A Pick n Pay store is not a space that is easy to re-let to another tenant, especially as Pick n Pay is pretty much always an anchor tenant. These stores are large, with lots of storerooms and often cold rooms, not something many potential tenants would use. The closing of Pick n Pay stores will hurt real estate investment trusts (Reits) with exposure to this.
Another piece of useful information is the recent announcement from Murray & Roberts that De Beers had informed it that it is “reviewing its operational plans at Venetia mine, and that a significant portion of the works under Murray & Roberts Cementation’s contract will imminently be descoped”. In other words, De Beers is cutting back on diamond mining at its Limpopo mine, and this will hurt struggling Murray & Roberts. If you’d been reading the Anglo American announcements about diamond sales and kept abreast of lab-grown diamond sales trends, this is not a major surprise. Now, of course nobody knew at which mine De Beers would cut production, but any Murray & Roberts shareholder certainly should have had this risk on their list.
Another recent example was the Pepkor trading update, in which the company states it has been gaining market share in some categories, including clothing. Well, then, the question is: who is losing market share? The Truworths trading update shows us who, as local volumes have likely been negative.
A last example is the post-election violence in Mozambique, which should have alerted you to possible challenges for Grindrod. This was confirmed by a voluntary Sens announcement from the company.
The trick is knowing how to use the information. In the case of Grindrod it is probably a passing problem (so an opportunity for those wanting to buy a little cheaper), and Reits are likely to solve their difficulty in time. But the Truworths matter is a real challenge.
Treating the data and information like a giant jigsaw puzzle can yield useful snippets we can use. But often we have to dig deep into the data flow to find the gems and connect the dots.
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