How to do what the big shots are do­ing

Trans­ac­tions by the 10 largest lo­cal gen­eral eq­uity unit trusts will pro­vide in­ter­est­ing in­sights to in­vestors.

Finweek English Edition - - MARKETPLACE - ed­i­to­rial@fin­week.co.za Schalk Louw is a port­fo­lio man­ager at PSG Wealth. By Schalk Louw

some of the most in­ter­est­ing things in my weekly col­umns aren’t nec­es­sar­ily the data and fig­ures I sup­ply, but rather the lit­tle wis­doms that come with them. I re­cently read through some of my old re­ports and I found it quite strik­ing how many times I have men­tioned my two (then very young) daugh­ters in these re­ports. With one hav­ing lit­er­ally only a few months of school left, and the other with one year of school left, I think it’s time to face the fact that they are no longer my two lit­tle girls.

Where they used to ac­cept ev­ery­thing we said, and did ev­ery­thing my wife and I asked of them, I now find my­self in a po­si­tion where nearly ev­ery­thing I re­quest gets ques­tioned. Don’t get me wrong, I’m all for the fact that they ques­tion things, but when we get to ques­tions such as: “But Dad, you just did or said that, why can’t we?”, I of­ten find my­self wanting to quote an­other wise say­ing that goes: “DO AS I SAY, NOT AS I DO.”

The in­vest­ment world isn’t that much dif­fer­ent. Yes, we have won­der­ful in­vest­ment aids at our dis­posal like books, DVDs, websites and so on, that can tell you ex­actly how the big shots are mak­ing their in­vest­ment de­ci­sions, but it isn’t al­ways as easy to do ex­actly what they’re say­ing you should do. We want to be able to do as they do, though, and the good news is that you ac­tu­ally can. Mod­ern tech­nol­ogy has made it pos­si­ble for us to mon­i­tor on a monthly ba­sis ex­actly which shares you can find in a par­tic­u­lar unit trust fund, for ex­am­ple. You can even see ex­actly what was bought or sold by that par­tic­u­lar unit trust fund.

When we take a look at the top 10 largest lo­cal gen­eral eq­uity unit trust funds, it comes as quite a shock to find that these 10 funds alone com­prise more than R140bn in value. Just to put this in per­spec­tive, it is more than R140 000 000 000 in to­tal. These 10 gen­eral eq­uity unit trusts make up roughly 1% of the en­tire FTSE/JSE All Share In­dex’s mar­ket cap­i­tal­i­sa­tion and to­gether they are greater than 25 of the top 40 largest shares listed on the JSE. That is truly mas­sive! I doubt whether I need to ask again whether in­vestors still want to know what the big shots are do­ing then?

Upon closer in­spec­tion, the most in­ter­est­ing trans­ac­tions that took place within these 10 funds for March 2017 were the fol­low­ing:

TFG: Two of these 10 funds sold their en­tire share­hold­ing in TFG. Bid­vest: Two funds started buy­ing Bid­vest shares. Im­pe­rial: One of the funds that started buy­ing Bid­vest shares also started buy­ing Im­pe­rial shares in March this year.

MTN: There was def­i­nitely a dif­fer­ence in opinion re­gard­ing MTN shares this March. Two of the 10 funds sold their en­tire share­hold­ing in MTN, while an­other one of the funds more than dou­bled its share­hold­ing in MTN over the same pe­riod.

In rand value, the most note­wor­thy trans­ac­tions for March in­cluded the fol­low­ing:

The sales of TFG shares were the most no­table in size this March, with a to­tal value of nearly R350m; The sec­ond-largest trans­ac­tion for March 2017 was the R270m Rem­gro shares bought by one of these funds; In third place was the R220m in Stan­dard Bank shares bought by one of these funds; Beyond that, it seems as though one of these fund man­agers merely bought what the other two fund man­agers sold in MTN shares, to­talling more than R140m in value; An­other note­wor­thy trans­ac­tion in March was the sale of nearly 85% of its share­hold­ing in Coro­na­tion Fund Man­agers by one of these funds, to­talling R110m in value.

It’s al­ways im­por­tant to note that these fund man­agers, not un­like any­one of us, can­not pre­dict with any amount of cer­tainty what these shares’ fu­ture per­for­mances will amount to. What they do have, how­ever, are mas­sive re­search teams that keep a very close eye on the mar­kets, so for those in­vestors who are won­der­ing what the big shots are do­ing, these trans­ac­tions can def­i­nitely be con­sid­ered as op­tions.

For those in­vestors who are won­der­ing what the big shots are do­ing, these trans­ac­tions can def­i­nitely be con­sid­ered as op­tions.

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