Nick Kunze, senior portfolio manager at Sanlam Private Wealth
Buy: Glencore
Glencore was formed in 1993, after a management buyout of founder Marc Rich. Originally a trading company, Glencore entered mining through acquisitions, most notably through its partnership (and later merger) with Swiss miner Xstrata. We like Glencore’s commodity basket, especially its large exposure to green energy metals (copper, zinc, nickel and cobalt), coupled with highly cash-generative coal assets. The trading business also offers more cash flow stability and unique M&A insight compared with its pure mining peers. Glencore provided a solid trading update in October, with copper and coal volumes ahead of expectations and key volume guidance kept unchanged. Copper volume guidance has been tightened around the bottom end of the range and coal guidance has been raised to the upper end, with risks of exceeding guidance should the third-quarter run rates be maintained. Demand for copper is being boosted by the construction of grid infrastructure for the green transition and to power AI data centres. These need between 27t and 33t of copper per megawatt of power, more than twice the requirement of conventional data centres. Glencore is uniquely positioned for this copper demand, and the stock is a buy at current levels.
Sell: British American Tobacco
British American Tobacco (BAT) has historically been a core holding in most portfolios looking for a solid cash-generative and decent dividend-paying business. With the stock at about R950, the share is now fully priced, trading at a forward earnings multiple of 12.2. BAT issued its pre-close trading update on December 9, broadly reiterating its 2025 guidance of 2% revenue and 2% adjusted profit growth. BAT also reiterated its midterm guide (revenue up 3%-5% and growth in adjusted earnings before interest and tax at 4%-6%), and expects to deliver at the “lower end of the range” for 2026. Given the sluggish growth forecast and high earnings multiple, we see better opportunities elsewhere in the market.
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