What the smart money is doing

head of investment research and content: FNB Wealth & Investments Buy: Bidvest (long term)

Bidvest’s share price has not fully recovered after a soft trading update in November. The interim results released in March, however, showed that despite this pressure the overall performance was relatively resilient testament to the company’s diversified business model and management’s cost-containment efforts. The outlook statement was relatively positive, with management remaining confident in the group’s growth prospects. The group also has a pipeline of reasonably sized acquisitions that are being considered. We would expect a recovery in most of the strained businesses as economic conditions improve (expected from mid-2024). We think current levels present attractive upside for long-term investors.

Sell: MultiChoice (profit take)

We still like MultiChoice from a long-term perspective, but the Canal+ offer of R125 may limit nearterm upside potential. Because of heavy near-term investment in Showmax, we don’t think investors have much bargaining strength in pushing for a higher offer price and there is also substantial downside risk should the deal not go through.

The regulatory hurdles attached to this deal may also result in it taking quite some time to be concluded and there will be an opportunity cost attached to staying invested in the stock while it trades close to the deal price over this time. We will reconsider a long position in the combined entity should it ultimately list on the JSE.