House View: Cal­gro M3, Shoprite Hold­ings

Finweek English Edition - - Contents - *The writer owns Cal­gro M3, but will be ex­it­ing as soon as this is­sue hits the stands.

I sold the ma­jor­ity of my Cal­gro M3* hold­ing in De­cem­ber 2015 in the days af­ter the fir­ing of then fi­nance min­is­ter Nh­lanhla Nene. But I erred in that I only sold some 80% of my hold­ing.

This was a ma­jor er­ror, not be­cause the price has now col­lapsed, but be­cause as in­vestors we need to be de­ci­sive and I was not. Rather, I was try­ing to have the best of both worlds, lock in prof­its and hold on hop­ing for more.

The lat­est re­sults for Cal­gro M3 have a lot of mov­ing parts, with new IFRS rules hurt­ing. But there is a lot more that is also hurt­ing the stock. While the land it owns is worth some 950c/share, the group’s sol­vency and liq­uid­ity is look­ing bleak, debt covenants are close or al­ready in breach and il­le­gal land in­va­sions are cost­ing them time and money.

This stock will prob­a­bly soar again, and I may rebuy at higher prices, but for now I am be­ing de­ci­sive rather than dither­ing, as I do not see the trig­ger that will see it mov­ing higher. ■

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