Exponential volatility

Some investors like to take a conservative approach in assembling a portfolio that is utterly soporific, while at the other end of the spectrum you find the buccaneers who thrive on volatility, and are constantly searching for shares that go up and down faster than Stormy Daniels’s underpinnings.

These thrill-seekers could do worse than to take a shufti at Ecsponent, whose share price trundled along for ages doing nothing of note until this year, when it suddenly started to fly around like a chicken in a hurricane.

It’s perhaps a little unfortunate that in its results highlights the company chooses to crow about the rise in its share price to 65c at the end of the reporting period, since it doesn’t take the sharpest of observers to spot that it has nigh on halved since then.

The group has its fingers in several financial services-related pies, the most substantial of which is an operation providing secured credit to its commercial client base, largely in the SME sector.

The company talks a lot about diversification, which it is aiming to achieve across geographies, sectors and currencies by building up a portfolio of long-term investments in private and listed equities with high growth potential. An example is Capitis Equities, a black woman-owned venture capital company; Ecsponent bought 19% of the equity and bunged an initial investment of R156m into its fund, with another R244m to come if shareholders approve. That’s no small bet for a firm with a market cap of R356m, and it’s clearly not for widows and orphans.

It suddenly started to fly around like a chicken in a hurricane