You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day.
So as it's a Wednesday, I'm speaking to Skullclo,
Portfolio Manager at PSG World's Old Oak division in Cape Town. Now,
I spoke to a previous commentator and I said, you know what,
there's really not much to talk about because everything's going swimmingly.
Thank you very much.
The markets keep on...
driving their way higher in their own sort of grinding way and okay we've had a few
things out on the stock exchange new
service today but otherwise not very much so maybe skulk low we should start with
the um
JSC Securities exchange Arsenal metal quilter 91 anything else anything you want
to comment upon
I I think I think the quilter was was the one that that already stood for me
Nice move in the share price after the trading update.
But this is good.
I mean, from an investment person, I mean, I love investments.
These type of figures usually makes me excited.
You know, assets under administration and management reach
£116.2 billion.
And in September, now it's a 2% increase.
I think the thing that stood out for me, the core net inflows.
Now, all these, let's call it, it was a 2% increase on the assets at administration
and management or
management administration.
But they attributed this growth in the AUM to
net inflows.
Yeah, and higher market levels.
We've been chatting about this market.
But listen to this.
I mean, they came in quarter one.
they had inflows of 810 million pounds.
Quarter two, they increased that to 923 million pounds.
And this quarter, increasing it by 1.5 billion pounds.
That's amazing, amazing.
So hats off, Kulte.
I mean, you clearly are doing things right.
Market, as I mentioned, really, really loved it.
Share price up.
just shy of 3%, close the day, 33.54.
Yeah, and then they just look at, you know, through these segments, you know,
how, you know, the IFI channel,
how they've enjoyed inflows, you know,
on the platform increasing by 76% year on year.
It's just everything in this trading update made me feel good.
I'm not a shareholder.
You know, days like today, I do feel a little bit.
you know a FOMO but I think you know shareholders of quilters definitely
definitely feeling feeling a little bit better today than they
felt tomorrow.
Tell me this then what's your philosophy now if the market dips for any reason
because the general market dips or quilters
shareholders decide to take a profit whatever it is and it dips to a sort of
level that you that your metrics mean that
it's on your radar would you be a keen buyer of it in other words to become a
shareholder?
Yeah I'm No, definitely.
I like these companies and I don't have time to really comb through
1991. I know that they've given recent updates and not just today's one,
but recent updates have shown that they've, unlike Quilter,
they had a bit of a difficult time.
They didn't enjoy the inflows that Quilter had and
I know some of the funds really struggled.
I mean...
And again, I'm not going to be harsh.
I love 91.
Also, not a shelter, so that's easy to just get that out of the way.
But it's a great company and well-managed.
One should always remember, when you're an asset management company, that's weird,
listeners sometimes feel, you know, look at them.
They really struggle.
The funds struggle overall.
I mean, and it wasn't just the one fund.
It was quite a few funds that… that sort of underperformed their benchmarks.
And people should know that when you've got, for instance, I'm just going to use
an example, and that can be very,
very straight.
I mean, an IT one is not necessarily a value manager.
I'm just like, when you've got a typical value manager and you've got a growth
market,
which we've had recently, if that value manager actually still managed to
outperform,
markets and their benchmarks,
they clearly did not follow the mandate by being a value manager.
But investors are a very, very fickle thing.
I mean, when you tend to do well, you don't often hear about them.
And when you sort of don't do well, you do hear.
And investors are very vocal saying, well, why are we paying active fees?
Why are we paying management fees?
You do have a mandate.
It wasn't the time or the environment for 491's mandates, and they struggled.
Hence the fact that they struggled in terms of the similar performances that
Quilter had.
Share price, after the uptick today, down 4.3%.
Clearly, clearly not a good time for that.
Is it the case, Scalp, that there are certain fund managers that when markets
are doing really well,
don't do really well with the market because they are active rather than
passive?
In other words, if they had an ETF or they tracked a particular index,
they would track that index as the phrase suggests, index trackers.
So during bad times, do you think companies like 91 and others do better?
than during really, really good times, which is what we're seeing at the moment?
Or am I being too simplistic here?
No, no, no.
You've actually nailed it straight on ahead.
Because, I mean, I think, what was it?
Was it 2023, I think, if I'm not mistaken, was the year where we've had the
Magnificent Seven.
If you stripped out, for instance, the Magnificent Seven, seven shares out of the
S&P 500,
basically leaving the remaining 493 shares, if you only invested in...
in those four and only three on one stage you had negative return um for the for
that year adding
the the the uh let's call it those seven shares suddenly the performances went up
to you know 15 or
16 just showing you that if you were an active manager and for some reason felt
you follow a more value approach
you don't want to buy companies that that's trading at anything between 30 and
80 times and
price earnings ratios because you feel that it's going to be very very difficult
to justify over the longer haul.
If you don't have those shares, I mean, clearly you're going to be
underperforming.
So you're right.
At times where things are just, some of these larger components just go, yes, it's
a great,
great way of investing.
Go invest in a passive investment.
But it's usually when volatility increase,
that's the environment where you do see these active managers start coming forward
again and outperforming these benchmarks.
very good very good analysis okay let's have a look at the markets now they're
gratifyingly boring uh the
dollar round is 17 in 1765.
there we go again i just want to quickly stop lindsay myself just off of uh in
record we we had a san africans
which we um which we call you know bitter lacquer you know how how can you have the
word bitter and lacquer which is great um
in in in one sentence you know, with each other.
I'll explain that.
And you just say, what do you call it?
Gratifyingly boring.
Yes, exactly what I said.
And you asked me how I was today before we came on air.
And I said, tolerably good.
In other words, I'm good, but you know, it's, I can tolerate it, but it's not
absolutely brilliant.
But what did you say?
Bitter lacquer.
Yeah, bitter lacquer.
It's, this is, this is, I mean, it's not just lacquer, which is great.
It's, it's bitter lacquer it's like bitter great i mean so in other words it's so
good it's almost painful
yeah i don't know unless you really i i you know if you've got a fondness for
bitterness and i know there's some people do have a fondness but
geez no uh-uh the afrikaans
afrikaans language sometimes just a lovely language i have to say anyway i was going
to tell you about an afrikaans
woman that i knew that used to read me afrikaans poetry i didn't know a word of
it But it was so lyrical.
She used to sit and read me these poems.
Anyway, I've said it now.
I said I wouldn't say it, but I've just said it.
Dollar Rand 1764, just to reiterate.
British pound against the Rand 2296.
And the Euro Rand is 1920, we'll call it.
Yeah, 1920.
Euro dollar 108.75, barely changed.
British pound, after some really, really good inflation data from the UK today.
seeing it go down to 1.7%.
And don't forget, it wasn't that long ago that it was above 11%.
So the Bank of England has done very well there, along with the government, of
course,
because of the complete lack of demand in the UK economy.
Elsewhere, what have we got?
We've got the gold price up 9 to $26.70.
$2,670 per ounce.
Platinum up 18.
It's gone into four figures.
There's 1,005.
Very, very good, 1.8% higher.
And palladium up $12 an ounce to $1,016 an ounce.
The white metal's suddenly doing a little bit better.
Now, this completes the sort of very good commodity complex for South Africa.
Brent crude oil is $73.59, which is down nearly 1%.
And West Texas crude, just over 1% weaker, $69.76.
We've got natural gas prices falling nearly 4%.
and yeah it's all very very satisfactory
what else we have here the s p 500 futures uh for december you know they've been
making record highs almost
every day here we go just very slightly higher at 5864 today the us 10-year
treasury yield is
uh four percent on the nose and the south african 10-year 9.40 bitcoin
is gosh 67 403 So yeah, market's okay, Skulk.
If you have a look at the movers on the JSC today, you mentioned Quilter, but it
doesn't make it into the top five,
unfortunately for you, because some of the ones that are in the top five will be good
for you.
Harmony, up 6.75%.
DRD Gold, up 4.4%.
Goldfields, up 4.2%.
No, Quilter does come in at number five, 3.9% higher.
Downside, AVI down 6.1%.
And you'll tell me.
but that's um ex-dividend story and 91 plc and 91 limited 4.3 and 3.7 weaker
respectively premier down three and a half percent and growth point down 3.3 any to
add from
your stable yeah no
no no so so so as you read that the top performance i i went back to my my uh
afrikaans saying
bitter lacquer now that's that's what i call a bitter bitter lacquer day on the
jsc
when your top four performers you know out of the top five all the gold diggers i
mean that's what i want to
see i want to see this and these guys are printing money lindsay i mean you
mentioned it in 2670
odd dollars per ounce yo i mean these guys are really really profitable currently
pointing it as they
say in england they're coining it which is and i still believe that they're still
lagging the gold price i think you
know investors still feel that this this
a current gold price or a bit of a flash in the pan and um i think if it's going to
turn out to be
a a let's call it a a stick in the ground or a pen in the ground then then then
you know then this this is going to be very very interesting for gold miners i
think what you should do with your your
excellent linkedin messages sometimes what you should do you should get the gold
price in us dollars the gold price in rand and the
performance of I know there's no gold index anymore, but I'm sure you can come
up with one somewhere and put the three.
And if the gold miners are lagging, it's not because they're doing badly.
It's because people have been so disappointed with them over the years that
they say, oh, we just don't believe them anymore.
But the gearing, if you want gearing to the gold price, you go for a gold miner,
surely.
Yeah, no, no, no, for sure.
And I know a lot of listeners out there will always highlight the fact that when
you look at
a gold mine or specifically our gold miners uh either all in cost or all in
sustainable cost how
that is increased quite incremental you know quite a bit more than than inflation
um or even it
actually increased way more than what the gold price increased i
i do conquer i do agree with that those statements but the one thing if you look
back and i've done some analysis on gold
fields where i look back 15 years and every time you do get these pops in the
gold price,
you suddenly see these gold mines really, really aggressively increasing their ore
in cost.
And it's very, very easy to look at because when you've got a gold price that
moves as it's currently doing,
the management are looking at this and say, well, we need to be aggressive.
Let's just find any person in a 10-kilometer radius around the mine.
Let's try and find it, convince them to get a shovel, get a...
pick and let's just try and so you you actually do they always increase their
costs um and short-term costs
and as you know next next let's call it quarter or two you see that all-in costs
stabilize and even come down in this
higher um you know gold price environment if this is going to be a similar trend
that we've seen historically
as i mentioned these mines are gonna be printing money i mean i looked at a few of
the top ten um
mines globally.
And some of these mines are still mining merely at
$1,500, $1,600 per ounce.
And that's what, but some of these mines are mining their gold, and they're getting
$2,600,
$2,600.
Exactly.
This is something that you and I, early 80s was a little bit before Mark's time,
where we've had massive, massive gold price levels and similar environment.
Since then, you will know, gold miners struggle.
They always sit with very, very high debt levels.
They didn't really have any free cash flow, so you didn't expect any dividends.
Now, suddenly, this is a different story.
These guys are printing money and are quite financially healthy.
They're sitting with very, very little debt levels.
And soon, you're going to start seeing them pay very, very large dividends if the
trend continues.
So, yeah.
I think this...
Have you finished with the gold story now?
No, never ever.
You know me.
You just start me up.
It's just a little push.
You don't even have to...
Just a nudge.
That's all that's a low need.
Okay.
Please give me the closing JSC indices, Skulk.
And just before I finish, I'm going to mention that AVI had a massive,
massive final and a special dividend.
So...
And then the SPM and most of the decline today was all dividends.
And also you mentioned GrowthPoint.
GrowthPoint was the other one that had a final dividend.
So I think three of the four, both getting 91.
91s are just, I think, the big, big drop for today after the trading statement.
So closing prices for today.
The JSC All Share closed at 86,393 points.
That is up 52 basis points.
I'm going to leave the best for last.
So the industrial's up.
nine basis points just keeping themselves in the green while financial struggle to
keep themselves in the green they were down 18 basis points
even the asset property index they were down six basis points and wait for it our
resources were the
star of the day today
closed the day at 2.83 percent in the green so what what a stunning day you
know for our gonna stop performance on the chase you know the resources and when I
look at the turnover I must say, you know,
when you've got a day like today where the resources trade the way they do,
you would typically like to see a larger turnover.
And we had, you know, 25.4 billion traded for today.
Very nice.
Very, very nice.
It's very good news.
Market going up on high volume.
That is an encouraging sign.
Very good.
Okay.
Skulk, thank you for your excellent analysis as always.
Skulk Lowe is a portfolio manager at PSG Wealth.
Old Oak in Cape Town and that was the five o'clock shadow.
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