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Finweek English Edition - - FRONT PAGE - Visit fin­week.com for Si­mon’s weekly stock punts. BY SI­MON BROWN

BRAIT

HCI

SHO­PRITE HOLD­INGS

AN­GLO AMER­I­CAN PLAT­INUM

IS THE MAR­KET MISS­ING SOME­THING?

The HCI story is mov­ing faster than I can type but there is a big­ger is­sue and that’s the con­cern of share­hold­ers, or lack thereof. We saw it with PPC and now again with HCI: a mas­sive board­room bust-up that can only be neg­a­tive for the company and while large share­hold­ers may be con­duct­ing con­ver­sa­tions be­hind closed doors, share prices hardly move. In the case of PPC, there was some sell­ing but hardly any in the case of HCI. In both cases, ei­ther the board is right or it ’s got it to­tally wrong. Ei­ther way, this is a mas­sive deal for the com­pa­nies, and yet the mar­ket seems not to care.

STAY­ING FAR AWAY

Stay­ing with HCI – court doc­u­ments sug­gest the “gross mis­con­duct” of ex­ec­u­tive chair­man Mar­cel Gold­ing was be­cause he bought R24m worth of El­lies shares with­out au­tho­ri­sa­tion. I have no spe­cial in­sight into that, but we did see El­lies jump almost 40%, which prompted me to tweet “stop and think a mo­ment”. In short, the buy­ers are re­ally just go­ing on hope and greed. The re­al­ity is that the num­ber of shares could be 6m from some re­ports but court pa­pers men­tion he was near­ing the re­portable thresh­old and that’s 5%, or around 15m shares. A huge dif­fer­ence but, more im­por­tantly, what if th­ese shares start get­ting sold? Sud­denly we have a mas­sive over­hang com­ing to mar­ket and that is a real risk to the share price. The re­al­ity is that we have no idea how this will play out and that’s ex­actly the is­sue. Un­known risk is lurk­ing and while money could be − and has been − made, how does one man­age un­known risk? Sim­ple: you can’t, so I’ll stay far away.

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