Reading Reinet ’Rithmetic
Iam considering cashing in part of my oldest investment, and one I have been dabbling in since 1979 when I acquired an import copy of Pink Floyd’s Ummagumma for the princely sum of R11.99 from Michael’s Record Store in Grace Street in the old PE.
Vinyl, pundits will tell you, has made a remarkable comeback after being displaced by the clinical compact disc in the late 1980s. A stroll through Cape Town’s many second-hand vinyl boutiques will confirm that fairly steep prices are being asked for vinyl, depending on the pressing and other eccentricities. And the kids, I’m told, are stumping up happily.
I’m sure I won’t realise, at least in real terms, a dramatic return on my original buy-in price. But space is at a premium in our house, as my wife regularly reminds me. And I simply don’t get to play my LPs as much as I would like … with Apple Music fast becoming the default (even on the tinny-sounding speaker).
Of course, it’s the nostalgia value that I am letting go. Bunking school to repeatedly play Talking Heads’ Remain in Light, listening for the first time to Captain Beefheart’s Trout Mask Replica and checking whether the disc needed to be played at 45RPM. Suffering through Dylan’s dry spell from the late 1970s to the mid-1980s; sniffing TippEx while listening to Gong; and hearing John McLaughlin’s jaw-dropping recordings with Miles Davis.
Cataloguing the core of LPs to be retained is arduous and heartbreaking. Even the prog rock, which I might have grown out of at school already, is difficult to toss on the “for sale” pile. Such are the travails of the long-term value investor.
Speaking of tormenting investments, last week I mentioned Reinet as part of the Three Rs. After reading its thirdquarter statement, I am no wiser as to how Reinet is going to build value beyond its big two investments in Pension Insurance Corp (PensCorp) and British American Tobacco (BAT).
At last count these two accounted for three-quarters of the portfolio value, with an array of smaller holdings making up the balance. There are no fewer than seven private equity arrangements, the biggest being the €323m invested in Trilantic Capital Partners funds and €231m held in three Asian-themed funds. Collectively these are a quarter of the value of the PensCorp stake and less than half the size of the BAT investment. There is a paucity of detail in the performance of these investments. But I suppose if one moves the needle, we will know about it.
Grab opportunity
One of Reinet’s sizeable investments is the Singapore-based mobility, delivery and financial services “superapp” Grab, which is the biggest of Reinet’s “other listed investments” totalling €144m. There’s been corporate action, and I wonder if Reinet is looking to ride along for the longer term … perhaps as a back-seat driver? Two months ago,
Grab merged with Altimeter Growth Corp, a Nasdaq-listed special-purpose acquisition company. So far, it’s been quite a good punt for Reinet.
In July 2018 Reinet invested €43m and as at the end of December the stake was worth €66m, having dribbled down from €75m three months earlier. At the current price of around $5.51, Reinet’s holding in Grab is down to about €53m.
Second-quarter results to endSeptember showed fair growth metrics with gross merchandise value (GMV) up 62% (over the same quarter in 2020) and adjusted net sales (ANS) up 92%. GMV is forecast to range between
$15bn and $15.5bn for the year and ANS between $2.1bn and $2.2bn.
If the share price reverses further, would Reinet, which is flush from the latest BAT dividend, snap up more Grab shares?
I suppose the same question might be posed with regard to Reinet’s holding in Twist Bioscience, a synthetic DNA manufacturer, whose share price has fallen more than 35% this year.
I am no wiser as to how Reinet is going to build value beyond Pension Insurance Corp and BAT