Finweek English Edition - - Companies & markets - MARC HASENFUSS

IT’S NOT OF­TEN THAT you find an in­vest­ment hold­ing com­pany trad­ing at a pre­mium to net as­set value. But that’s the case with Fo­ord Com­pass, which ac­tu­ally trades at a con­sid­er­able pre­mium to NAV of 834c/share. The pre­mium is ac­corded to Fo­ord Com­pass on the ba­sis that the share-pick­ing skills of the brains trust at Fo­ord As­set Man­age­ment will gen­er­ate a more than sat­is­fac­tory sus­tain­able re­turn and pro­vide de­cent in­come to boot. OP­POR­TU­NI­TIES If the mar­ket loses mo­men­tum this year, Fo­ord sits with a strong cash po­si­tion to take ad­van­tage of buy­ing op­por­tu­ni­ties. An off­shore po­si­tion has also been es­tab­lished. • The group has ac­cess to a strong re­search team that of­ten un­cov­ers un­der­val­ued gems (Wesco be­ing a re­cent ex­am­ple). There will be a dis­tri­bu­tion twice yearly to deben­ture hold­ers – though the group has cau­tioned in­vestors to tem­per ex­pec­ta­tions on the level of pay­outs. • The group is now us­ing quar­terly up­dates (avail­able on the www.fo­ord.co.za web­site) to keep share­holder abreast of NAV and other de­vel­op­ments. RISKS • The marked pre­mium to NAV is a worry to some in­vestors, es­pe­cially since Fo­ord Com­pass doesn’t re­veal its un­der­ly­ing port­fo­lio hold­ings. If the mar­ket runs hard again this year, Fo­ord – by virtue of an over­weight cash po­si­tion – could un­der­per­form other in­vest­ment ve­hi­cles (unit trusts, Sa­trix, etc).

* Hasenfuss holds deben­tures in Fo­ord Com­pass.


Source: I-Net Bridge

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