Stuck in the dol­drums

Financial Mail - - DIAMONDS & DOGS -

The com­pany starts its in­terim re­sults an­nounce­ment with an anal­y­sis of its per­for­mance ver­sus the JSE all share in­dex (Alsi) since it kicked off in 2010, and, to quote many a lower-league foot­ball man­ager over the years, it’s been a game of three halves. Per­for­mance lagged the Alsi hugely un­til Septem­ber 2014, when RECM en­tered a pur­ple patch. By March 2017 it had a de­cent lead, but since then it’s been in the dol­drums. It ended the pe­riod ahead of the in­dex by a nose at best.

This is not a dis­as­trous per­for­mance, but it’s a long way short of what in­vestors would have been hop­ing for from a man­ager with the rep­u­ta­tion of Piet Viljoen. Of the cur­rent port­fo­lio, 50% by value is in Gol­drush, a gam­ing busi­ness that owns bingo li­cences, op­er­ates lim­ited-pay­out ma­chines and owns re­tail sports bet­ting op­er­a­tions and an on­line sports bet­ting site. This op­er­a­tion is per­form­ing well, though the more eth­i­cal in­vestor may be a lit­tle squea­mish about get­ting into a busi­ness that taxes the woe­fully in­ad­e­quate at maths.

The only other ma­te­rial po­si­tion, at 21% of to­tal as­sets, is in As­to­ria In­vest­ments, which has suf­fered from an in­creas­ing dis­count to its un­der­ly­ing value, and RECM is look­ing to buy out the other share­hold­ers if the Mau­ri­tian reg­u­la­tors give the nod.

The com­pany sounds punchy about the prospects of its po­si­tions, with the ex­cep­tion of its dab­bles in min­ing and con­struc­tion, where it sticks up the hands and ac­cepts the mighty past­ing that these blun­ders have been given by the mar­ket.

Let’s hope the mar­ket picks up and the in­vest­ments ful­fil their po­ten­tial.

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