Plague diary, week 2: The best growth in the past week came from my vegetable patch. At a time when real estate is getting knocked sideways, there is some reassurance in having an agricultural angle. With the entire family home there is always a sentry, armed with an unloaded pellet gun and a less-than-obedient trio of Jack Russells, to fend off the baboon raids that are an irritatingly regular occurrence in Kommetjie.
There is quite a spread of crops, and we are able to make our own salads (even if the peppers are on the sharper side of tangy and the rocket bitter). Still, it feels good to be doing my bit for food security in these anxious times.
I probably can’t — thanks to our sandy soil — diversify into tobacco (though my son seems confident of raising a cannabis crop), which means I will be holding on to my British American Tobacco (BAT) shares for now.
The restrictions on the sale of cigarettes in locked-down SA aside, I still get a warm glow from the recent statement from BAT FD Tadeu Marroco that the group is committed to consistent and sustainable long-term revenue growth of 3%-5%. This, he maintains, can deliver "high single-figure earnings growth" while targeting a minimum of 95% cash conversion and a dividend payout ratio of 65% over the medium to long term.
We have also assembled a home gym. I don’t mind lifting weights, planking and tossing around a medicine ball. But it takes a special kind of determination to fashion a jogging circuit around the property — risking a garrotting on the washing line, slipping on loose paving stones or concussion from an overhanging branch.
I probably can’t — thanks to our soil — diversify into tobacco, which means I will hold on to my BAT shares for now
With the local Virgin Active chain in lockdown, I do wonder how Brait will handle the cash flow from its most reliable profit generator drying up.
Last week I noted I was light on SA Inc stocks. Nothing much has changed, except for a quick in/out at private education stocks AdvTech, Curro and Stadio — which all chalked up big bouncebacks last week. My Adcock Ingram looks a little perkier, and I still have hopes for a recovery at Ascendis. I also started nibbling at niche financial services business Capital Appreciation (Caprec) after some encouraging purchases by one of the executives. Caprec still has a meaningful cash pile even after buying back shares from a key business developer, and I think the company plies an essential niche that will be as relevant as ever when (I’m not going to "if") normal business conditions resume.
Clever Johnny
I also took a small position in Hosken Consolidated Investments (HCI) despite my misgivings about the investment portfolio value shrinking even as its not-insubstantial debt holds fast. I have enormous respect for CEO Johnny Copelyn — especially his ability to be seven steps ahead of anyone else in the corporate chess game. I have to believe Copelyn will play his assets smartly in a time when events beyond the control of management can (and probably will) topple many well-regarded companies.
Other additions to the portfolio were hedge instruments NewWave USD ETN, Sygnia Itrix 4th IR, CoreShares Global Dividend Trax, Satrix Nasdaq and Reinet Investments. At the time of writing the market was taking the (inevitable) Moody’s downgrade better than could be expected.
I’m watching a couple of positions with interest … I’d relish the chance to snap up some Astral Foods and Afrimat shares — two companies led by very capable CEOs. Lean and mean Quantum Foods, which is mainly involved in poultry and eggs, and innovative Libstar, with a strong dairy offering and a supermarket brand manufacturing niche, also stir my interest. Investment company Sabvest’s N shares have slipped below R30. And Remgro — one company that I doubt will recall its dividend — is also drifting towards a price range that demands my attention.
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