100 episodes

All about investing on the JSE with Simon Brown. Every Thursday.

JSE Direct with Simon Brown JustOneLap.com

    • Investing
    • 4.9, 14 Ratings

All about investing on the JSE with Simon Brown. Every Thursday.

    Market Standard 03 August 2020

    Market Standard 03 August 2020

    Offshore
    / US earnings season
    / Q2 GDP data is coming in at about -10%
    / US jobless claims remain stuck at around 1.4million and CARES has ended, albeit congress is in talks
    / Alphabet says WFH until summer 2021 & Zuckerberg says there’s ‘no end in sight’ for Facebook employees WFH
    / Big tech results (Amazon, FB, Alphabet & Apple) knock it out the park
    / Big tech breakup congressional hearings
    Local
    / Steinhoff wants to settle claims
    / Europa Metals booms 16,000%, except it didn’t (500:1 consolidation)
    / ANG ceo quits
    / Vivo Energy results as fuel sales decline
    / GLD closes July at an all-time high
    / City Lodge rights issue 13:1

    • 56 min
    Script lending (#410)

    Script lending (#410)

    Simon Shares Day 126 of lockdown and Covid-19, cases may be moderating?
    Sasol (JSE code: SOL) sells some assets for R8.5billion and the stock is up over 12%. The sale is SA gas operations at Secunda. A sale and leaseback as Sasol only customer. But gets Sasol cash to pay down debt so good news short term, less so long-term. Korean websites also reporting on a possible 50% sale of US Ethane Cracking Center for US$3.3billion, which cost +US$12billion to build (for the other bits as well). Trading update due next week will give more details about the LCCP right downs which will surely be massive, but as importantly also maybe on the possible rights issue? Gold above US$1,900 and looking strong, albeit as I say that it'll now surely collapse in a heap as even I now own gold stocks? South Africa gets a US$4.289billion loan from the IMF. It's a very small amount and at great terms of around a 1% interest rate, albeit currency risk has to be hedged out. Upcoming events; 20 August ~ JSE Power Hour: Pro-active passive management Subscribe to our feed here Sign up for email alerts as a new show goes live Script lending EasyEquities users got all heated last week on Twitter as EE put T&Cs about script lending into their new mandate. I not commenting on the EE offer as they've withdrawn it. But many have asked about script lending as a concept.
    If I want to go short (make money from a falling stock) I need to sell shares and naked shorting is not allowed by the JSE (or most exchanges). So I need to borrow stock from somebody.
    Usually, you borrow from a large institutional investor who has plenty, you pay a fee and will also be liable to pay the lender any entitlements such as dividends.
    This process happens in the background when you're shorting via derivatives and why some shares are not sortable, no script to borrow.
    The script lender earns a fee, but there is risk so default.
    Whoever you lent the script to may not be able to return the script. Maybe they're just a crook? Maybe they can't afford to close out the position. remember they sold to buy back lower, but what if an offer arrives and the stock jumps say 50%?
    It certainly can and some income to a portfolio but the risk needs to be managed and the income is fairly modest. That said I've never lent out my script but I have borrowed script in recent years for some shorting (Aveng and Lonmin).
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 17 min
    Market Standard 27 July 2020

    Market Standard 27 July 2020

    Offshore
    / 1.42 million Americans applied for unemployment benefits in the week ending July 18, up from 1.3 million a week earlier
    / Gold through $1,900
    / EU leaders have agreed to a €750b ($857b) stimulus package (US is in talks for their next round of support)
    / Tesla into sp500
    / Results; Microsoft msft & Intel intc
    Local
    / MPC rate cut
    / IMF loan to be announced tonight, R70billion
    / MTN update Vodacom
    / Datatec update
    / Sasol update

    • 59 min
    Gold gets its wings on (#409)

    Gold gets its wings on (#409)

    Simon Shares Day 119 of lockdown and Covid-19, cases may be moderating? Monday is 4 months of lockdown.
    Quantum Foods (JSE code: QFH) is coming back to earth after 1157c last Friday. Tech stocks in the US are flying. Expensive? yes, but. They have solid earnings, a moat and lots of new products they can roll out. Very solid Datatec (JSE code: DTC) update. From @keithmclachlan on Datatec valuations

    Westcon at $600m x R16.50 = R9bn + Logicalis x 10 PE x R16.50 = R5bn = R14bn..

    Less 10% head office = R12.6bn equity value against R5bn current market cap..

    Listen ==>> https://t.co/HeaMQxTCYK@Moneyweb #MoneywebNOW
    — Simon Brown (@SimonPB) July 22, 2020
     
    Long4Life* (JSE code: L4L) buying back 40million shares at 275c which is less than 50% of the last stated net asset value. The PSG (JSE code:PSG) AGM talks about PSG 3.0. The Zeder (JSE code: ZED) AGM was a mess as directors didn't take all the question that were asked via the virtual system Best execution rule is coming to South Africa and this is a biggie in many ways. * I hold ungeared positions.
    Subscribe to our feed here Sign up for email alerts as a new show goes live Gold gets its wings on I have never been a gold bull, in fact, the phrase I most used for gold stocks was that the only time you buy a gold stock was when you closed a short.
    But golds time has arrived and the miners are going wild even with a vaccine at some point this trend is likely to continue.
    The stimulus in the US and EU is massive and while stock markets are doing great, and maybe they can be propped up forever (certainly it worked post 2008/9 crisis) the underlying economies are not doing so great.
    Gold ETFs are an easy way to get exposure but they have no leverage, so less risk and less reward. Gold miners offer that leverage so will do way better, but also bring a bunch of risk.
    The Rand also brings risk as it strengthens.
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 19 min
    Market Standard 20 July 2020

    Market Standard 20 July 2020

    Offshore
    / US jobless claims remain at around 1.3million
    / Netflix drops 9% on weak Q3 guidance.
    / Jamie Dimon’s warning for the U.S. economy — nobody knows what comes next
    / Amazon stock had its worst week since February
    / Fiscal Cliffs Threaten Fragile U.S. Recovery as stimulus expires late July
    / Qantas has removed all of its international flights until March of 2021
    Local
    / Tsogo Sun Hotels sells Maia resort for wild price
    / CPI May 2.1%, lowest since Sep2004
    / astral enters the quantum fray and price still flying
    / Diamond sales collapse and Richemont update
    / Rights issues announced, TFG R3.95 billion (40 per 100 shares, 40% discount), SUI R1.2billion (93 per 100 shares, 25% discount)
    / Spur CEO resigns

    • 57 min
    The pie price wars (#408)

    The pie price wars (#408)

    Simon Shares Day 112 of lockdown and Covid-19 cases are still spiking in South Africa and no drink again.
    Load shedding. An economy on its knees now without power. Quantum Foods (JSE code: QFH) still booming as Astral (JSE code: ARL) buys a 6.42% stake to protect their broiler supply. Bell Equipment (JSE code: BEL) trading update says HEPS to least 80% lower. CPI for May 2.1%, (3.0% in April and 4.1% in March) below the target range albeit helped a lot by petrol that has since increased. The Foschini Group (JSE code: TFG) buys Jet for R480million. Tsogo Sun Hotels (JSE code: TSG) sells its 50% interest in Seychelles Resort for $27.8million. The UK economy shrinks 19% in three months to May. The US CARES act expires on 25 July. Currently, this gives extra support ($600/week) to unemployed Americans. If it is not extended past the 25 July deadline when the last cheques will be sent, then things will get real bad real quick. Currently, the average US households get over 6% of their household income from unemployment benefits. Pre-Covid19 this was around 0.2%. So either the CARES Act is extended or there will be a massive hit. We've also seen in the results of Citi, JP Morgan and Wells Fargo make a significant increase in provisions for bad debts. From a collective total of some $4billon six months ago, it is now almost $30billion. The problem is that the actions put in place back in March assumed a much better scenario in July then the US is currently seeing with 40 states still reporting increasing Covid-19 cases. Upcoming events; 16 July ~ JSE Power Hour: How to manage your portfolio during a pandemic Subscribe to our feed here Subscribe or review us in iTunes The pie price wars I lived in Pietermaritzburg in 1994/5 and it was the time of the great pie wars as the price for pies kept on falling. It was great for me as a pie eater, but a horror for the pie makers, of which there were many. The many in part why there were pie price wars, everybody dropping prices to try and push others out. In the end, I suppose it worked for some, but at the time of dropping prices, profit was out the window.
    The point is that if your only edge is the price, you're in trouble because somebody will just make it cheaper.
    Now sure, quality matters as does the ability to supply. Cheap pies in Pietermaritzburg didn't help people living in Durban never mind Johannesburg.
    We've seen this in construction when back in the 70s/80s ability was really important. I remember the firm my father worked for hiring a German engineer to help with a project and it was a big deal to have the skills be brought to the business. Finding him and getting hin to South Africa was a challenge. But now that sort of skill is a click away on LinkedIn so what is your edge?
    If it is the price you're in deep trouble. Hence we've seen a number of construction companies locally and globally move away from traditional construction while the specialist construction companies (think roads) are under pressure as everybody becomes a road builder.
    So when investing always be considering what is the edge and is it defendable?
    JSE – The JSE is a registered trademark of the JSE Limited.
    JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.
     

    • 20 min

Customer Reviews

4.9 out of 5
14 Ratings

14 Ratings

Bills04 ,

Informative

Simon does a brilliant job summarizing topics which are on his radar about JSE stocks. The topics covered are broad so this will benefit anyone interested in SA financial markets.

Kirk Oldfield ,

Absolutely Brilliant

JSE Direct is a great podcast for any trader in South Africa, and Simon Brown is an inspiration to the community.

By far my favourite podcast.

-// ,

Insightful and humble

Simon clearly presents his views on shares on the JSE and isn't afraid to tell when he got it wrong. A great podcast to learn from.

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