remgro, which was established in the 1940s by Anton Rupert as a tobacco manufacturer, is an investment holding company with diverse interests, including stakes in Mediclinic, FirstRand, Distell and RCL Foods. On the chart:
Though Remgro provides investors access to a relatively defensive equity portfolio, it gradually retracted in October 2015 after reaching a ceiling at 27 925c/share, correcting from an overextended position on the monthly chart.
When valuing investment holding companies, it is often prudent to view the share price relative to its intrinsic net asset value (NAV) per share. In the year to end June, Remgro’s intrinsic NAV per share fell sharply by 17.9% to R251.48, mainly due to a decline in the share price of Mediclinic, which was affected by the strengthening of the rand against the British pound. At the end of the financial year in June, Remgro held a 44.6% stake in Mediclinic.
How to trade it:
Go short: Remgro has breached a major support trendline dating back to February 2013 and is struggling to rebound. Currently trading in a symmetrical triangle, and with the three-week RSI retaining its bear trend since 2014, Remgro could breach the lower slope of its triangle. A negative breakout would be confirmed below 19 950c/share, with the short-term downside target situated at 16 575c/share.
Go long: A positive breakout would be confirmed above 22 765c/share. Positions may have to be revised once Remgro tests the black dashed trendline – as it may fail to breach that trendline. If not, stay long on continued buying as the upside target of the triangle breakout would be at 26 140c/share. ■ firstname.lastname@example.org
has been rated as one of the top five technical analysts in South Africa. She has been a technical analyst for 10 years, working for BJM, Noah Financial Innovation and for Standard Bank as part of the research team in the Treasury division of CIB.