Leading the way
BEING INVESTED in both Paladin and its “empowerment” subsidiary Thembeka Capital, I’ve been quite entertained and enlightened by your magazine’s recent reports and speculations about corporate action in the PSG stable in general and at Paladin Capital in particular. With Finweek leading the way, “Moutonology” may even develop into a respectable school of investment theory.
Regarding Paladin’s recently issued cautionary – as well as its CEO’s reported indication of interest in the security industry – could the cautionary not possibly relate to a buyout of little Amecor, which operates on the technological side of the security industry? Probably because of its extremely illiquid and small cap nature, this impressive operation seems to have been completely ignored by the “experts”. It has good annuity income, consistently produces lovely cash payouts and solid dividends, has developed good niches in a growth industry and is currently dirt cheap.
Interestingly, Amecor also operates in the alternative energy sector, an arena in which Paladin has a small interest. Even more interestingly, Amecor has also very recently issued a cautionary.
On Thembeka Capital I must express some disappointment with this investment, especially when you compare it to the excellence of African Bank’s unheralded Hlumisa empowerment scheme (a report on the fantastic achievement of this scheme is long overdue). On the face of it, with the black public having bought in at R30 in 2007 and with “intrinsic value”, given where the underlying PSG, Capitec and JSE prices are sitting – now probably in the region of R90 – the investment returns appear handsome.
However, the apparent “value” is currently more virtual than actual. The shares hardly trade and black shareholders having to meet the real world needs for expensive basics, such as housing and education, are compelled to almost give their shares away. I try not to look at the quoted price anymore, it’s too sad; but the last time I checked it was around R40.
It’s cold comfort for black public investors who can’t access or leverage off their own capital that PSG has on paper scored good empowerment points and that Thembeka could one day become a R10bn empire. To prevent any unfortunate (as it were) perceptions taking root may I suggest a swap with the more tradeable Paladin shares be given serious consideration.