Buy the ex­perts

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

IN­VESTORS LOOKING TO PICK qual­ity in­vest­ments in the cur­rently un­cer­tain cli­mate need to look care­fully where they place their money. The global fi­nan­cial mar­kets – South Africa’s in­cluded – may have seen some respite over the past few weeks but the credit cri­sis is far from over and ne­ces­si­tates skilled stock pickers.

While the blood­bath over the past cou­ple of months re­sulted in enor­mous value de­struc­tion, those in­vestors sit­ting with cash (and who look care­fully be­fore they buy) stand to ben­e­fit mas­sively from the cur­rent val­u­a­tions over the long term.

The fact pri­vate eq­uity player Brait SA has seen its as­sets un­der man­age­ment de­cline 12% in the in­terim pe­riod to Septem­ber, shows even the ex­perts can’t al­ways ac­cu­rately pre­dict the mar­ket. A “dis­ap­point­ing” per­for­mance has seen R1,5bn with­drawals from the ma­ture Brait Ab­so­lute Fund, which brought cur­rent as­sets un­der man­age­ment to R10,2bn in the in­terim pe­riod to Septem­ber. It still earns man­age­ment fees on that.

Brait it­self has suf­fered from the rout, with its price com­ing off 53% from its 2900c/share this time last year. That came dan­ger­ously close to its net as­set value of 1407c/share. Head­line earn­ings de­creased 46% to R72,7m over the pe­riod. That gives Brait a healthy for­ward earn­ings mul­ti­ple of less than eight times. The 51% in­crease in in­terim div­i­dend gives it a for­ward div­i­dend yield of 11,71%.

CE An­thony Ball says it’s ahead of its in­vest­ment sched­ule on the R6,1bn Brait Fund IV, with about half the amount still looking for a home. In the cur­rent eq­uity en­vi­ron­ment that will go a long way. The com­pany in­vests clients’ monies in mainly in­fra­struc­ture and in­dus­trial as­sets while it also takes pro­pri­etary mi­nor­ity stakes along­side those clients.

Both I-Net Bridge and McGre­gor BFA agree the share is a buy at the cur­rent 1530c/share. In­vestors who buy at that level will be get­ting the pri­vate eq­uity in­dus­try ex­per­tise that has made Brait one of SA’s largest play­ers while get­ting ex­po­sure to the mil­lions of US dol­lars ir­re­vo­ca­bly com­mit­ted to the Brait IV fund.

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