Why is Astoria such a Cinderella?
ON FRIDAY Astoria published its estimated net asset value (NAV) per share for the quarter ended March 31, 2018, at $1.20 (R14.42) per share. Astoria is a global investment company registered in Mauritius, which inward listed on the JSE in November 2015, and reports in dollars.
Astoria listed amid the Nenegate turmoil. Initially, there was tremendous interest and the share traded at a premium to the underlying value.
As the rand started recovering, interest waned, and suddenly the investment community found all kinds of excuses to withdraw their investment. It ranged from criticism about their management fees to shares issued to the directors. The stock kept on dwindling downwards from its high over R18 to below R10.
As I wrote previously, the most crucial aspect of an investment trust is the abilities of the persons deciding on the investments.
Astoria has an impressive investment team which is highly regarded in the investment community, a group of individuals with significant experience and successful track records in global equities and fund management.
The NAV in dollar terms is now at an all-time high, moving up slowly, but surely.
In September 2016 the NAV was$1.03, and in 2017 it grew consistently: in March it was $1.06, June up to $1.12 and September $1.16. The current NAV translates to a rand value of ±R14.40, which means that the discount at which you can now buy Astoria assets is 27 percent.
Rand hedge
Astoria is an excellent rand hedge, since all their assets are 100 percent offshore, and you can invest in the world’s best businesses through one JSE-listed share, which will be difficult to replicate by buying directly into the underlying investment. Astoria invests 60 percent of their portfolio in listed shares, and well-known companies like Starbucks, Apple, Facebook, FedEx, MasterCard and Johnson & Johnson form part of the collection.
They invest 20 percent in private equity and 20 percent in private funds.
Clearly, this big bargain doesn’t go unnoticed. Three weeks ago it was announced on Sens that Livingstone Investments now holds 28.11 percent of Astoria’s issued shares. This is quite an interesting turn of events. Being a long-standing Astoria-devotee, it was surprising to see the Livingstone acquisition. Let’s be honest, the interest in offshore investments has entirely waned in South Africa.
Nobody wants to invest in assets that have fallen significantly. Last year, BlackRock, one of the world’s largest fund managers, was going to bring an actively managed Greater European Investment Trust to the JSE in the form of a secondary listing. This would have given South African investors the opportunity to easily invest in a pool of European shares through the JSE. However, they eventually had to cancel the scheduled listing because they could not even raise the minimum conditional £25 million (R423.08m) from investors in the pre-listing private placement.
Livingstone is a subsidiary of RECM & Calibre, a listed investment company headed by asset manager Piet Viljoen, very well known in the SA investment community and highly regarded.
Astoria is not a typical RECM & Calibre kind of investment. They hold stakes in unlisted Goldrush, and deep-value situations like Unicorn Capital Partners (formerly Sentula), Distribution & Warehousing Network (Dawn) and Trans Hex Group.
Primary listing
Are they acquiring more shares? JSE rules require a mandatory offer to be made to minority shareholders if the 34.9 percent interest level is breached. But with the Stock Exchange of Mauritius – where Astoria has its primary listing – a mandatory offer is triggered when the 30 percent threshold is crossed.
Even though the 27 percent discount is attractive, there doesn’t seem to be any synergy for Astoria (managed by Anchor) and RECM & Calibre to work together, since they have entirely different investment styles. Why are they then accumulating shares? We know they have cash from selling their Dischem stake, but Astoria is a much bigger company.
Amelia Morgenrood, BCom (Hons) Financial Planning. Member of the South African Institute of Stockbrokers. Portfolio Manager, Regional Director Faerie Glen Stockbroking & Financial Planning.