Reading the latest management statement today, it is ( to me anyway) starting to become clear that these lads ARE actually buying stuff - admittedly like the kid who buys a sweet at a time - but the FUTURE COMMITMENTS are significant and moreover indicate a plan - the US property ( who is the undisclosed partner?) and Vanterra(?)- private equity stuff : all is starting to indicate the probable emergence of a sweet portfolio - for patient capitalists - of course.
Ja, when REI entered this US land deal, I decided to hold my shares a while longer. However, I would be more happy if thet reduce their tabbaco exposure, since I think future legislation will only turn even more against them.
I like the combination of cash generating assets (BAT) at a time when there are distressed sellers in the markets (US Property). Would also be a good rand hedge if the rand falls out of bed one day. So have brought on a 3-5 year view.
BAT is 83% of the company .. they have to do HUGE deals for them to make any difference .. and frankly they don't have the cash for the size of deals required to significantly effect the BAT holding ???
their primary listing is in Luxembourg and part of the reglatory requirements is that part of their holdings in any one company cannot be more than approx 30%. For this reason, they will need to unbundle some of their BAT holdings in the next few years. Think they have approx 3 years to comply...
They will have to sell down the BAT stake or apply for special ruling, this will have to justifiesd by the fact that no better investment can be found.. which then begs the question why not just hold BAT dirrect, why pay managment fees...The problem is they earn about 5o million pounds in dividends from BAT so its quite quite a hard habbit to kick and the directors are married to that stake.. they have 18 months to comply as the the company has been arround for 18 months already..