Await­ing a break­out

Finweek English Edition - - Marketplace - Mox­ima Gama

in­vest­ment hold­ing com­pany Remgro, chaired by Jo­hann Ru­pert, is known to be sta­ble with good man­age­ment, in­clud­ing a proven track record of un­lock­ing share­holder value. It’s in­vested in com­pa­nies aligned with good man­age­ment teams and cred­i­ble growth pro­jec­tions.

It has an ef­fec­tive in­ter­est of 44.6% in Medi­clinic In­ter­na­tional. Other in­vest­ment hold­ings in­clude stakes in Rand Mer­chant In­sur­ance Hold­ings (RMI), Rand Mer­chant Bank Hold­ings (RMB), FirstRand, Grindrod, Dis­tell and RCL Foods.

Out­look: Medi­clinic, which is down ap­prox­i­mately 52% from its high, has con­trib­uted to Remgro’s un­der­per­for­mance over the past few years. Remgro is cur­rently trad­ing in a bear chan­nel, which com­menced in 2015, af­ter form­ing a new high at 28 445c/share.

Remgro has bounced on the lower slope of its bear chan­nel, but is en­coun­ter­ing re­sis­tance at 21 935c. Cur­rently trad­ing at a 15% dis­count to in­trin­sic value, buy­ing a Remgro share means you are buy­ing a bas­ket of aboveav­er­age qual­ity as­sets.

On the charts: Con­fined in a bear chan­nel, Remgro is en­coun­ter­ing re­sis­tance at 21 935c/share, but is re­tain­ing firm sup­port at 19 680c/share. The fact that Remgro is trad­ing at a dis­count is at­trac­tive to in­vestors.

Go long: Remgro would have to trade above 21 935c/share to trig­ger fur­ther gains to ei­ther the 23 325c/share level or the up­per slope of its bear chan­nel – ini­ti­ate a neu­tral long. A pos­i­tive break­out would only be con­firmed above 24 800c/share, po­ten­tially prompt­ing a 100% re­trace­ment to the all-time high at 28 445c/share – in­crease long po­si­tions. Go short: Remgro would form a lower top if it should fail to trade above 21 935c/share – a bear­ish sign. Sup­port at 19 680c/share may give in, and the share price could top­ple to the lower slope of the chan­nel, or the 17 915c/share level. ■ ed­i­to­rial@fin­

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.

SOURCE: ShareNet

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