I recently had the opportunity to catch up with Andrew Vintcent from asset management firm ClucasGray and having a look at their quarterly commentary, there was an interesting figure which jumped out at me.
As some background, the team from ClucasGray are well respected in the South African boutique asset manager space and they have enjoyed an 18% return on their general equity fund – out-performing the SWIX.
The figure – and comment – that surprised me is the rebound in retail sales in South Africa. As you can see from the graph below, there has been a moderate recovery indicating that consumers are spending. The observation from the ClucasGray team was that the recovery started BEFORE the ANC elective conference in December 2017.
South Africa has a long road ahead of it, but the rebound in retail sales and the recent improvements in GDP growth figures, suggest that the economy is warming up slightly. If there is some coordination on economic policy, we could see further reasons to be positive about the country.
Reunert
This is not a stock I look at a lot but I saw that it is one of the biggest holdings in the ClucasGray Equity Fund (end of February 2018). Reunert is an electronics, engineering and ICT business with some legacy military applications for some of its technology. I thought to go and take a look at some of the high-level numbers:
- A forward price to earnings multiple of 9.5
- Dividend yield of 6.4%
- Directors spent R7.5m buying shares in December
An interesting recent development around Reunert is that a block of shareholders actually voted against the remuneration policies for the executive directors prompting further engagement. This would suggest that shareholders want to keep management on their toes to ensure that they continue to deliver value.
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