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Online Share Trading

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For a little long term discussion...

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Werner_1
Super Contributor
Whats your views on Capitec - one of my favourate companies that I've been holding for quite some time and got a very decent profit on at the moment... I believe as long as fundamentals keep on going well it will be an stock to hold. maybe not get into at the high price but its really on the move, any thoughts?
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14 REPLIES 14
Preston
Super Contributor
Worst case scenario : When Greece default? Are you prepared to sell and re-enter at a lower price?
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SimonPB
Valued Contributor
it ooked like it was breaking up agin, but today the sellers arrived ..
why would a greek default have any impact on CPI ??
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Preston
Super Contributor
negative sentiments, panic selling and the rest of the emotions that goes with this market.
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Not applicable
Well, at a PE of 25 and no divs, it is still very much a growth stock, but then again, with those net profit margins, I think such a PE is still justified. What evaluation method are you using with them - DCF?
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SimonPB
Valued Contributor
for me this just a momentum play .. so far so good ..
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Werner_1
Super Contributor
Preston, I am a long term investor, i dont sell for short term and get back in, i am in for the long haul, Greece hasnt scared me for CPI at all... Others, I am a value/growth investor and CPI has performed very well for me and as Simon said, Momentum play is very good, and as long as the earnings, growth and customer numbers are going good at Capitec I will support them and not sell out. but if a sizable drop does happen to come along and the numbers i mentioned above stay attractive i will buy more, but not right now.
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Werner_1
Super Contributor
When i bought CPI it was indicated on my valuation model as attractive, nobody here agreed with the logic, but it seemed to work out very well, this was in 2007 or so (not sure exactly). I based it on forecasted growth in earnings, asset value and current earnings at the time, just to say now its overvalued for entry using this model... The model is a cross between value/growth.
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Preston
Super Contributor
Werner, why invest more , when you can average down?
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Werner_1
Super Contributor
If i get a good price on an investment that i believe will make above average returns over 10 years + i would consider investing in it. for me to get a price cheaper than i paid for in the first place will not happen easily, i have a huge gain on the position.
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Werner_1
Super Contributor
Preston, i also did say that for me to invest more it needs to conform with the model, for this to happen we would have to see a significant drop or a major surge in NAV or EPS, right now i dont see me buying shares in CPI soon... I have a few others i really like, I like APN (added a bit to my long term position), CFR to name 2.
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Not applicable
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Werner_1
Super Contributor
actually still got them all. GND really hasnt been performing that very well over the past while, but i still believe once the world's economy picks up it will do better.
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Werner_1
Super Contributor
A bit news - "Grindrod and Remgro issued a joint announcement today regarding a proposed R2 billion capital injection into Grindrod to be implemented by way of a specific issue of new Grindrod ordinary shares for cash. " If Remgro likes shares in GND there should be something behind it... will check this out in detail. http://www.grindrod.co.za/News_View.aspx?id=37
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Not applicable
Most fund managers value financials in general and banks in particular on price/book ratios. Typically 1.0 is cheap and 2.5 is expensive. At 5.6 times CPI looks to factor in the next trippling of its loan book. Great company but you gotta ask is it in the price. In contrast you can buy European banks at 50% discount to book value. Sure they will likely have to take a large haircut on their sovereign debt holdings - but the market is saying hlf the loan books will default with zero recvoery. So gotta agree with Simon, CPI at these levels got nothing to do with value and everything with momentum. IMHO
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