Mar 18 2018 06:00 Aldi Schoeman
Fund managers who bought Steinhoff International [JSE:SNH] shares just after the price plummeted in December have maintained that they are undervalued.
In December, Steinhoff shares lost over 85% of their value when CEO Markus Jooste resigned, after the company admitted to “accounting irregularities”.
The plunge in the share price caused former Steinhoff chairperson Christo Wiese to fall out of the Forbes list of US dollar billionaires. His wealth, according Forbes, fell from $5.6 billion (R67 billion) in 2016 to $600 million in 2017.
In comparison with other unit trusts, the Discovery Equity and Discovery Dynamic Equity funds significantly increased their shareholding shortly after the share price plunge.
Fund manager Grant Irvine-Smith said they bought the share in the second half of December.
Their reasoning was that the price had already fallen more than the possible value of the alleged fraud, and that it therefore offered good value to investors.
“That said, we are cognisant of the continued risks around the share and have therefore allocated around 2% to Steinhoff within a broad, well-diversified portfolio,” he said.
The Discovery Equity Fund bought 6 560 551 units, which on Friday were worth R27.4 million.
According to its fact sheet, the fund goes against the tide, focusing on out-of-favour stocks.
The Discovery Dynamic Equity Fund bought 2 452 177 units, which were worth R10.1 million on Friday. According to the fact sheet, its risk profile is moderate to high.
The Investec Value Fund, in comparison with other unit trusts, increased its shareholding considerably, purchasing 12 556 221 units, which were worth R52 million on Friday.
However, they bought shares just before the “accounting irregularities” were revealed, when the share was trading at around R50.
According to portfolio manager John Biccard, Investec began purchasing the share because the price was already substantially lower than its R95 per share peak, reached in April 2016.
Biccard said they believe the market “overreacted”. That’s why they continued purchasing shares while the price fell to about R4.50.
According to the fact sheet, it is a high-risk fund. The manager buys shares that are undervalued or unpopular and the fund must therefore be seen as a long-term investment, as it can take a long time before the share prices goes up again.
The Nedgroup Investments Stable Fund increased its Steinhoff shareholding between the end of September and the end of December by 3 187 441 units, which were worth R13 million on Friday. The risk profile is low to moderate and the fund is for conservative investors. The fund’s exposure to the company is 0.06%.
The Nedgroup Investment Value fund increased its shareholding by 1 063 100 units over the same period, which were worth R4.4 million on Friday. The risk profile is moderate to high. The fund’s exposure is 0.69%.
Nedbank had not responded to requests for comment about these decisions by the time of going to print.
Steinhoff’s shares are likely to remain depressed until the company resolves the alleged fraud, which is being investigated by auditing firm PwC.
The company’s shares on the JSE were quoted at R4.08 at close of business on Friday, down almost 90% from December 5 last year, the day before the scandal broke.
Quelle: www.fin24.com/Companies/Retail/...steinhoff-shares-20180318-2
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