Brian Joffe’s investment company Long4Life — which has core investments in sportswear and outdoor retailing as well as beauty parlours and beverages — is becoming intriguingly unpredictable.
It seems like Long4Life hardly had time to digest its recently acquired 15% stake in restaurant franchiser Spur Corp before it started offloading shares.
Last week, Long4Life sold off 10.4-million Spur shares, reducing its stake in the cash-generative business to just 3.6%. Joffe’s venture has previously said it’s not afraid to take short-term opportunistic positions in listed companies, and we saw this with Clover Industries.
But I can’t imagine that snagging 15% of Spur and then reselling the bulk of that stake was a hugely profitable exercise.
The Spur share price over the past six months is up around 9% — but down almost 10% over the past three months. So why did Long4Life capitulate? I can only speculate.
If Long4Life were indeed determined to take control of Spur, I might imagine a preference for funding such an exercise with scrip rather than deplete its cash pile. So Long4Life might have approached Spur’s major shareholders with a share swap option. Perhaps this was not appetising to the major institutional shareholders and, rather than embarking on hostilities, Long4Life thought it prudent to back down.
Significantly, longtime Spur shareholder Coronation Asset Managers stepped up to the plate and appears to have acquired the bulk of the Spur shares sold, which takes its holding to an influential 27.42% (from 17.09%). Readers may remember that back in October 2016 Coronation (briefly) had the luxury of contemplating an offer from Spur’s empowerment shareholder Grand Parade Investments to buy between 16.4-million and 19.5-million Spur shares for the princely sum of R40 a share. Coronation, from the current share price, obviously sees long-term value in Spur, and presumably a succulent yield as well. Some might argue that though Spur has been a solid meat and potatoes investment over the long term, Long4Life might have brought new flavour to the mix.
Still, Joffe can’t be too unhappy at bringing back between R240m and R250m onto the balance sheet. With Long4Life’s share price down about 15% over the past six months, what better way to mobilise the extra cash than to enthusiastically pursue further share buybacks?
Economics of an AGM
Asset management house Sygnia hosted a lively AGM last week with the absence of nonexecutive director Mcebisi Jonas — the former deputy finance minister and investment envoy for SA — causing some kerfuffle. Shareholder activist Chris Logan argued that Jonas’s absence was out of line considering some of the commentary around the political economy in Sygnia’s annual report. As a journalist it would have been enlightening to hear him elaborate on Sygnia CEO Magda Wierzycka’s contention — in the annual report — that it is unlikely that SA will retain its investment rating. "As it takes countries an average of 15 years to regain credit-worthiness after being downgraded to junk, in such a scenario the rand is likely to weaken further in the face of forced outflows from SA."
While Jonas might have made some succinct points, Logan and Sygnia chair Haroon Bhorat nevertheless engaged in a robust (to put it politely) economic debate.
It’s worth noting that Jonas earns an annual stipend of over R1m, which is considerably more than Sygnia’s other nonexecutives. Shareholders did not bring this up at the AGM (not even the representatives of empowerment group African Equity Empowerment Investments, who sat quietly through proceedings). But shareholders that demand full value from their interactions at AGMs might get a little testy next year if there is no cameo by Jonas.
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