Gupta’s Oak­bay is melt­ing

Financial Mail - Investors Monthly - - Opening Bell -

If you think you’ve had a tough start to the year, spare a thought for the Gupta fam­ily.

Pres­i­dent Ja­cob Zuma’s un­of­fi­cial first fam­ily has been all over the news, cul­mi­nat­ing in xeno­pho­bic threats from the free­dom fighter in chief, Julius Malema that they must “leave the coun­try” and how SA isn’t for sale for “a plate of curry”.

And it’s been just as bad for them on the JSE, with the Gupta-owned Oak­bay Re­sources hav­ing shed two-thirds of its value in just the first few weeks of this year.

Of course, be­fore you start imag­in­ing that this is some­how a well-con­sid­ered re­ac­tion to the flak they’re get­ting in the me­dia, or per­haps even some­one’s savvy strat­egy of short­ing nu­clear stocks, we should point out that the price has fallen based on less than R100,000 worth of trades.

Last year, Oak­bay’s “value” had soared to an im­mense R24bn, based on a sim­i­larly small num­ber of trades. So the fact its value has now fallen to just R8bn is prob­a­bly some­thing you should over­look just as eas­ily.

Con­sid­er­ing it made a R38m bot­tom-line loss last year, af­ter re­port­ing op­er­at­ing profit of R23m, it’s dif­fi­cult to as­sess the ac­tual value in the com­pany.

But ig­nor­ing the political noise (of which there is, ad­mit­tedly, a whole ca­coph­ony right now), Oak­bay is a com­pany that could do well pro­vid­ing sen­ti­ment shifts back to ura­nium stocks.

And it won’t hurt if govern­ment keeps on push­ing for the nu­clear power op­tion.

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