Marc Hasenfuss: Market Watch

21, has maintained a sell rating on Remgro, suggesting a target price of R247.

Renaissance estimates Remgro’s intrinsic value at around R280/share, which is fairly easy to quantify considering the bulk of the investment portfolio (most notably Mediclinic International, FirstRand/RMB, RMI, Distell, RCL Foods and Grindrod) are listed on the JSE.

As an investor who is extremely keen to re-establish a position in Remgro, I pray that Renaissance’s target price comes to pass. Having become accustomed over the years to the market applying a 20%-25% discount on Remgro, there is some reluctance on my part to buy the share at a skinny 5% discount to the intrinsic value of the investment portfolio.

In my opinion Remgro’s price has largely been driven by the surge in the share prices of private hospital group Mediclinic (which has substantial holdings outside SA) and the financial services hub (FirstRand, RMB and RMI) — segments that make up a considerable chunk of the investment portfolio.

My quandary is whether to wait anxiously for a meaningful widening of Remgro’s discount, or simply hit and hope the momentum extends. It’s a tricky call, especially when my investment associates are advising me not to get overly sentimental about a long-loved stock and rather move on to new areas of value, like Steinhoff International or resource conglomerates.

Perhaps there is a middle ground in creating my very own Remgro-lite? This I could achieve, technically speaking, by accumulating stock in the lessdemanding segments of the listed portfolio — say, Grindrod and RCL Foods.

But I’m not entirely convinced, because I have a penchant for Remgro’s unlisted gems in consumer brands giant Unilever (notwithstanding the washing powder wars), empowerment investment company Kagiso Tiso and the promising TMT bundle (Dark Fibre Africa, Seacom and Sabido).

Twitter: @MarcHasenfuss