TAKE A ‘BEARING’
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.