INVESTING

[Blik]

Hello Threshold, I agree with your sentiments generally. But I am also cautious of limiting myself in terms of value based upon a set range of factors. What about an IT company like ISA, which has good cash assets, and also generates a fair amount of cash - almost 30% of its Market Cap valuation is cash, or just under 22 cents of its 78 is cash. Not too bad for an IT company I think. Others I like are CCL, but this only trades in tiny %s, always been a big fan of SPP ever since listing and the Rupert / Mouton suite - for lack of a better term.

[#2]

Another question for you guys - what is your process for filtering and selecting your stocks. I know Barry likes to set up a watch list, and pick the winners - but that is more a momentum approach, vs true value investing. I started a process of scanning sens announcements every morning and again in the evening, looking for trading updates - but that turned out to be pretty unreliable and labourious.

[THRESHOLD]

I Audited a good few IT co's. Then started an IT company after articles. Supplying kit to smaller dealers, general hardware to the public and support services. So I know this game very well. I will say only this - I owned UCS and cried bitter tears when they threatened to give me BCX paper for this gem. So I sold it. There is not a single South African IT stock in which I have any interest!

[Blik]

Fair call - Buffet doesnt like IT stocks either.

[topgun]

Well, I have developed a fairly extensive excel spreadsheet over the years, adding or culling companies should they conform to the basic criteria mentioned above or no longer merit inclusion eg. TKG, ACL, GIJ etc. Obviously, the bigger your universe the more likely you are to spot the gems or identify opportunities where the market seriously undervalues a company. It takes a fair amount of effort to constantly update and adjust the various models that feed into the overall programme but is certainly worth it over time. We are bombarded with so many views and so much information that you have to apply a methodology to arrange all the data in some form that makes intuitive sense. Like any business, it takes patience, perseverance and discipline.

[#6]

South African IT stocks have no long term future especially those that rely mainly on providing IT services e.g EOH. Indian IT companies e.g TATA, Wipro etc are taking over many of the large contracts in SA because of their cheap skilled labour force. I am in the industry and we are experiencing this as we speak. Lots of the lower level "doing" jobs are going to the Indians and this is where companies like EOH make the highest margin. Soon there will be only SA managers and all Indian "doers"

[#7]

What would you classify Datatec as - or Dimension Data? Very good IT companies, IMO, with solid reputations and brands.

[THRESHOLD]

DIMENSION DATA was an interesting company - mainly due to prorietary assets. The best thing about her was her Internet backbone - mainly IS. Mostly she was a CISCO (and others) agent. But she was very expensive. AND still subject to technology risk. DATATEC is a glorified CISCO reseller and highend wholesaler. CISCO's future is now viewed as uncertain and, as a result, you can buy this monster company on 9x forward earnings. So what hope is there for DATATEC. I know she is pushing her support services. BUT so is every kid in the world. VAST turnovers - tiny profit = Here today, gone tomorrow. Neither of them is/was worth owning.

[Rams]

Buffet did not invest in IT companies because he did not understand them...besides the high cost and the lack of "durable competitive advantage..."

[Blik]

Rams - very true. Each person will have their own value method. Personally I have found that I watch shares that I own a lot more carefully - as one should - and hence am able to buy or sell with a better decision process. For example I bought TigerBrands and hung onto my SPP unbundle at 1800 odd. Watching it go up I have bought at various intervals up to about 8000. Since my current avg price is still very low I can cost average up a touch, since I feel I understand the share a bit better and I would like to keep this. But - big butts here - this doesnt mean that SPP is currently a better value play that SHP or PNP at the moment. For value I still like to keep track of a PE ranges, PEG ratios, Neff scores, DY and ROCE as base considerations, along with my limited understanding of the stock....

[Werner_1]

Threshold, I dont know if you remember my comments from the past, i had enormous arguements with the guys here about long term investing approaches, but really enjoyed them :) I havent been here much lately, quite busy with other stuff, latest is gliders in Worcester.. but long term investing is so cool it lets you spend time doing other cool things while your money works for you. hehe. i would gladly chat to you about it, actually i am thining of making a monthly report based on my valuation model and research, not sure if anyone would find it interesting though... will see how the idea develops.

[Blik]

Werner you havnt posted in ages! Hows JP Morgan doing for you?

[Werner_1]

who over here owns Capitec? I bought 2 years ago or so and the guys on this forum told me it wasnt a very clever move, my model said it offered value at that stage. i am now very happy... i also like to analyse the management, business strategy and other non numeric aspects of the business and just apply the logical reasoning, it helps alot, buffett also likes that!

[Blik]

Isnt SPB a Capitec Fan? A mate of mine bought about 150K at about 3000...sitting quite pretty now!

[shares]

I didn't get into Capitec directly but have a fair amount of exposure via PSG.

[shares]

Astrapak (APK) has been testing my patience in terms of share price. However the turn around strategy was needed. After years of acquiring numerous small disparate packing companies it was losing focus and lacked sufficient scale in certain of the markets that it was in. This process clearly isn't finished as evidenced by the intention to become a low cost leader in certain markets. I do think that the company has been hit hard by high polymer prices but Nampak has done better. Any of these factors could change and result in a positive re-rating for the share price.

[shares]

What about using companies like Brait, PSG, Zeder and Paladin Capital to gain access to private (unlisted) companies? Private equity has a lot of potential especially if you don't have the time to do in depth research into the companies yourself.

[Werner_1]

Hi Blik, yes been quite busy and didnt get time to post much... JPMorgan's doing Ok, a bit up-and-down, but dividends increasing and long term i still have the same view. My biggest winners are CPI and EOH though. Working on a new idea now to create report that uses my valuation model for mathematical suggestions... quite interesting what it told me about CPI in mid-2009!

[THRESHOLD]

Does anybody follow the fortunes of CNL?