Price worth watching
WITH THE JSE suffering from the advent of irrational investor sentiment it’s perhaps appropriate to ponder a value-laden unlisted investment. VenFin, which has a broad technology-aligned investment mandate, was last week bid markedly lower at 2000c/ shares on the over-the-counter market. At end-June VenFin was trading closer to the 2700c/share mark. The dip in its unlisted shares probably stems mainly from the recent weakness in Dimension Data (Didata) shares.
Didata is admittedly VenFin’s biggest holding – representing 30% (more than R2,3bn as at end-June) of the investment portfolio. But VenFin certainly isn’t a proxy for Didata’s share price. Far from it…
VenFin holds a sprawling investment portfolio – which to some degree is hedged against market volatility by a R1,6bn cash pile, comprising a chunk of hard currencies. The group has a number of fund and direct investments in China, as well as exciting local initiatives such as SEACOM and Resource Energy.
VenFin’s latest annual report notes: “Our cost of capital has increased materially in the volatile economic climate. That has influenced our valuation models and risk appetite. Downside risk has increased appreciably and an investor’s goal for at least the next 12 months should be to preserve capital.”
While VenFin may be adopting a defensive position for the market turbulence expected over the next few months, there can be no doubt that the group will stumble across attractively priced opportunities in the ensuing global shake-out.
Notwithstanding the market correction, at current levels VenFin’s shares substantially discount the last stated net asset value (market prices and directors’ valuation as at end-June) of 3000c/share. With the ruling price below the end-June book value of 2300c/share VenFin could be worth accumulating on weakness.