Hedges have their limits
Sasol* published updates regarding the oil and currency hedges it has entered. While hedges are a great tool, investors must understand that they are very limiting in their longer-term impact. Sure, these hedges will protect a fair bit of the company’s earnings for the next year, but the point is that they expire in time. So, any hedge can only protect profits for a limited period before it expires and market prices again take control. That said, I do like hedges, but if oil or the rand has moved markedly by the time they expire, the new hedges will be at these new levels and as such investors shouldn’t get too excited about them.