What the smart money is doing

Buy: Naspers (NPN)

Naspers presents an attractive investment opportunity due to the current discount to its underlying assets. This is driven primarily by its holdings in Tencent. Additionally, Naspers holds Delivery Hero, which has gained an activist investor, a development that has been met favourably by the market. Naspers recently derated when compared with its sister company, Prosus, and continues to buy back shares to take advantage of the large discount, signalling confidence in the company’s future prospects. Naspers’s diversified portfolio, spanning beyond technology, enhances resilience to market fluctuations and offers growth opportunities. Its portfolio performance and valuation metrics make it an attractive choice for investors seeking value and growth.

Sell: Thungela (TGA)

Thungela faces headwinds in the coal sector, and is heavily dependent on Transnet Freight Rail. Thungela receives a discount to the Richards Bay steam coal price due to quality differentials, affecting its earnings. Furthermore, it maintains a large cash buffer, resulting in relatively low dividends for investors. Recent outperformance compared with Glencore and Exxaro is generally temporary rather than sustainable. Moreover, the company’s earnings delivery has been volatile, adding uncertainty to its investment outlook. Thungela’s reliance on the coal sector, coupled with unpredictable commodity markets, exposes it to significant risk. Investors may find it prudent to reallocate capital to opportunities with stable earnings prospects and less exposure to sector-specific risks.