Stuck in the doldrums

The company starts its interim results announcement with an analysis of its performance versus the JSE all share index (Alsi) since it kicked off in 2010, and, to quote many a lower-league football manager over the years, it’s been a game of three halves. Performance lagged the Alsi hugely until September 2014, when RECM entered a purple patch. By March 2017 it had a decent lead, but since then it’s been in the doldrums. It ended the period ahead of the index by a nose at best.

This is not a disastrous performance, but it’s a long way short of what investors would have been hoping for from a manager with the reputation of Piet Viljoen. Of the current portfolio, 50% by value is in Goldrush, a gaming business that owns bingo licences, operates limited-payout machines and owns retail sports betting operations and an online sports betting site. This operation is performing well, though the more ethical investor may be a little squeamish about getting into a business that taxes the woefully inadequate at maths.

The only other material position, at 21% of total assets, is in Astoria Investments, which has suffered from an increasing discount to its underlying value, and RECM is looking to buy out the other shareholders if the Mauritian regulators give the nod.

The company sounds punchy about the prospects of its positions, with the exception of its dabbles in mining and construction, where it sticks up the hands and accepts the mighty pasting that these blunders have been given by the market.

Let’s hope the market picks up and the investments fulfil their potential.