The article became once first printed on 17 June 2021
BizNews editor-at-good Jackie Cameron had an unbelievable interview with Counterpoint worth fund supervisor Piet Viljoen on the present time, in which they went wait on to basics. With many of us paying – maybe – too powerful consideration to Mr Market’s actions, it is a ways refreshing to get Viljoen’s viewpoint on everything from the fundamentals of worth investing to the advantages (or lack thereof, in Viljoen’s peek) of investing in residential exact property in South Africa. Additionally, it’s always a plus to hear what this professional has on his radar and in his portfolio. – Nadya Swart
Piet Viljoen on what a worth investor does:
We are inclined to gain sources at purchase to the latest worth of the future money flows we build a query to them to generate. And the cheaper the greater. The much less you pay for one thing in due course – the greater, on fable of we feel that the future is so unpredictable and unforecastable that we don’t are looking out out for to pay plenty for a rosy picture. So we try to pay as limited as seemingly. And each now after which you get alternatives to carry out that in assorted sectors and diverse sources.
On whether issues are currently ‘on sale’ or overheated in South Africa:
I judge issues are collected shimmering powerful on sale. Asset costs are up relatively plenty off the lows of closing year – the pandemic-caused lows, however their valuation is no longer stretched by any stretch of the creativeness. I mean, I judge valuations are reasonable and – in some cases – very, very low-payment. So, we collected judge there’s a trend of bargains around. South Africa collected is terribly powerful no longer the flavour of the day. Most South Africans would relatively make investments offshore than onshore, and understandably so. But I judge that the pendulum has seemingly moved too a ways in one course, [and] seemingly needs to transfer wait on reasonably bit, on the least to the other plan.
On whether the terror has been rung that the markets enjoy hit the conclude within the US:
So, we try now to no longer predict what’s going to happen. We’d relatively play the playing cards as they’re dealt in entrance of us and take a look at and gain the sources which are low-payment. So what the US market is going to carry out, I establish no longer need any idea. If I needed to bet, I might perchance well explain that equity markets every so in most cases on the earth will continue to prance up. I judge fiscal instances and monetary instances are such that it is a ways going to be conducive for earnings going forward. And I judge ardour charges received’t prance up a large quantity. So I judge which might be simply for valuations.
So I judge equities are shapely. Personally, we take to make investments in a neighborhood outdoors the US. We judge the US is relatively more costly than many other markets. We’re discovering the bargains. The issues which are on sale are in other markets, no longer necessarily the US. But simply as a degree of departure, I judge equities are shapely. I judge it’s a quite contented space to be.
On whether Labat Africa has been on his radar:
Genuinely, no, however I became once lucky ample to hearken to an interview that Alec had with Brian van Rooyen when he announced his foray into replace treatment, have to you might perchance presumably build it that plan. And I judge there’s a assign. I judge that’s a rising pattern. I judge it is a ways relatively standard. Perhaps the most straightforward thing I might perchance well explain is that it’s laborious to construct a query to any barriers to entry, on the least within the quick to medium-term. There are no longer any barriers yet, and as manufacturers get established, maybe there will seemingly be barriers to entry. But simply now, I judge it’s very powerful a free for all.
On how seriously Labat shareholders can also collected bewitch the recordsdata that Labat Africa can also lose its JSE itemizing due to the its failure to timeously post its monetary statements:
I judge that’s serious. I judge a company needs to present very in moderation why they’re no longer producing monetary statements on time and – to the extent that they haven’t accomplished so – I judge they’ll also collected carry out in uncover snappy as seemingly on fable of it is a ways relatively serious. Whenever you might perchance presumably presumably’t get financials, that leaves build a query to marks around the viability of the industry.
On whether – as a worth investor – Labat might perchance presumably be considered as purchase opportunity:
Impress, if a company is struggling to get financials – you seemingly are looking out out for to be cautious. I mean, Steinhoff is an example – as an example – that for two, three years couldn’t get financials and the part worth simply kept occurring the total draw to, I judge at one level, 50 or 60 cents. But there became once a time there where the market became once too negative. So I judge you seemingly want to encourage and review the predicament as time goes by. Alternatively it’s no longer one thing you’d trek into simply now, no.
On Sanlam as an funding opportunity:
No, it isn’t [in my portfolio], however it with out a doubt’s one I’m having a simply investigate cross-test at. It is a completely-trek, successfully-managed industry. It purchased relatively low-payment throughout the pandemic. I collected want to get my mind around how the insurance protection industry dynamics play out into the long-term future. They enjoy had a tailwind of declining ardour charges for relatively a truly long time, which helps the industry. I judge if ardour charges commence going up over time, maybe that’s reasonably of the headwind, I’m no longer relatively optimistic. So that’s one thing I’m interested by. Alternatively it is a ways with out agonize one thing to guage on fable of it is a ways at chance of be one among the greater insurance protection corporations in South Africa at this level.
On whether Sanlam’s gain of Alexander Forbes’ life insurance protection industry for R100m will boost Sanlam’s worth within the long-trek:
Impress, in Sanlam’s life that’s relatively little. I don’t judge it makes a fleshy difference. I judge it’s the simply dwelling for that trend of industry, seeing that Alexander Forbes has mentioned they’re looking out out for to be a capital light industry. Existence insurance protection is a capital heavy industry – one needs to enjoy enough regulatory capital field aside within the occasion you write policies. So I judge the natural dwelling is Sanlam, however will it commerce the valuation of the greater Sanlam industry? No. I don’t judge it’ll get a difference whether they paid purchase worth or no longer. I don’t judge it makes a fleshy difference.
On whether residential property and in explicit South African luxurious each day life and property properties are a simply funding:
No. I rent, I don’t obtain residential property. I rent. I judge it makes no monetary sense in any recognize. I carry out judge it is a ways nice from security and from a draw of belonging and all these points. I judge proudly owning a dwelling is nice for that. But as a monetary funding, I don’t judge they get sense in any recognize.
On why investing in residential property doesn’t get sense:
The worth of homeownership is amazingly excessive. Whenever you bewitch the frictional payment of looking out out for out and promoting, the total brokerage and taxes and everything you might want to pay – no 1 – after which the cost of asserting a dwelling… It’s enormous. It runs 2% to 4% each and every year of the cost of the home, and it tends to be lumpy as successfully. There’s always a pipe breaking and a roof that needs to be mounted and a geyser breaking – there’s always stuff occurring – and it needs to be painted every now after which. And the thing more that occurs to homes; after about 10, 12 years – it becomes relatively extinct and also you might want to remodel to preserve it trend of in pristine situation. So all these items can also collected be taken into fable. It’s no longer finest what you pay for it and what you might perchance presumably presumably sell it for. There’s hundreds of costs that happen in between that folk tend now to no longer bewitch fable of.
On whether political traits in South Africa play a role in his funding planning:
Oh, very powerful so. I judge within the occasion you are planning your investments as a South African, you might want to get optimistic you enjoy a diversified portfolio. Even supposing South African sources are low-payment, it is a ways going to be foolhardy to enjoy all your sources in South Africa – due to the the wretched political atmosphere, the dearth of have faith between industry and govt, lack of infrastructure building and unavailability of within your means energy. All these concerns enjoy a dampening carry out on financial express. And if the financial system isn’t rising, then corporations will battle to carry out successfully.
Read also:
- Piet Viljoen on Foschini’s monetary outcomes, Sasol and hedging draw
- Are we in a commodities supercycle? Michael Townshend, Piet Viljoen discuss
- Piet Viljoen: Discovering the hidden gems on the JSE
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