As this horrible year grinds to an end, I have a few things to celebrate. My tennis elbow has eased to nothing more than a slight irritation and my shoulder — notwithstanding the odd sickening click — seems to be holding firm.
My son got through second-year LLB unscathed, and managed to keep his apartment in Stellenbosch in decent enough shape for the landlord to return the deposit (plus interest).
Two out of the three avocado trees I planted in the verdant veggie patch are thriving. I have also mastered the art of growing onions, raising a fiendish crop that brings tears to the eyes of whoever is on chopping board duty.
On the investing front, I have been mostly in cash and the odd special situation since the second quarter. I have never been quite so aloof with the JSE, and might still be shy of equities into the new year. That said, electrical and technology conglomerate Reunert certainly delivered the goods (oh please South Ocean Holdings, will you follow suit?).
Reunert’s dividend will remind me that incessant load-shedding does have an upside — though I suspect the solar side of the energy segment is going to get more competitive. I won’t lie, though. Next year’s prospects leave me cold — and very fearful. Gwede Mantashe’s bizarre pronouncement on Eskom (“agitating to overthrow the state”) last week caused me to pull off the road, even though I was hopelessly late for a lunch. I needed to be stationary to properly contemplate the news report, and, quite frankly, it’s far safer to repeatedly bang your steering wheel when not speeding down busy Liesbeek Parkway.
This was the sound of a politician determinedly digging through rock bottom, not the sound of pragmatic pondering to solve a crisis that is seeing small business fizzling with any realistic attempt to create new employment.
With unprofitable tech business Ayo Technology Solutions burning through its cash, Premier is likely to again become the anchor for AEEI
Speaking of rock bottom, I see African Equity Empowerment Investments (AEEI) will be forking out 160c a share to buy out the 6.14% minority shareholder float in Premier Fishing & Brands. That deal values Premier at about R416m and gives AEEI and other entities controlled by founder Iqbal Survé a good angle for the longer term. The market has ignored Premier for the past three years, and recent inconsistent performances would have done nothing to hook up investor sentiment.
Trawling in a different form?
That said, Premier is export-focused with strong positions in south coast lobster and squid as well as offering an opportunity to ramp up its farmed abalone operations. Is it worth more than R416m? Undoubtedly. Those morbidly fascinated by proceedings will be able to chart Premier’s journey as an unlisted counter through the detailed AEEI accounts. With unprofitable tech business Ayo Technology Solutions burning through its cash, Premier is likely to again become the anchor for AEEI — much like it did when the LeisureNet investment blew up about 20 years ago.
Of course, I wonder — remembering the abandoned “Spanish transaction” that involved the disposal of an unnamed subsidiary in late 2021 — whether Premier might trawl on in a vastly different form.
Another buyout offer I am keenly awaiting details of is the tilt at low-key group Acsion. I was turned on to Acsion by one of the deepest value investors I know, but before I could get a really meaty position in this illiquid counter a cautionary, signalling a possible buyout, was issued. I have never been too big on real estate, mostly limiting my exposure at any time to specialist counters such as Spear and Stor-Age. Acsion, holding retail-focused real estate in South Africa as well as Cyprus, is fascinating.
Interim results to end-August might heighten shareholder hopes of a reasonable buyout offer price though, it must be said, my cynicism holds no bounds these days. In any event, Acsion whacked up revenue from its properties by 34% to R515m, with headline earnings up more than 70% to 78.4c a share. The loan to value ratio sat at 7.3%, and the interest rate cover was a reassuring 11 times.
NAV for the interim period increased 13% to R22.28 a share. I am in at an average price of 563c, which makes bailing at the present share price of 894c (and hopefully snaffling some more Reunert and RECM & Calibre stocks) quite tempting. Clearly the share price, especially before the buyout cautionary, was not a fair reflection of Acsion’s prowess, portfolio and prospects. An attempt to buy out minority shareholders, especially if capital raising is unlikely in the medium term, makes perfect sense.
Of course, the poser is where to pitch the offer when the precautionary share price was below 500c and the NAV north of R20 a share. R10 a share certainly has a nice ring to it, especially for us Johnny-come-latelies.
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