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How to do what the big shots are doing

May 04 2017 11:33
Schalk Louw

Schalk Louw, portfolio manager at PSG Wealth

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Some of the most interesting things in my weekly columns aren’t necessarily the data and figures I supply, but rather the little wisdoms that come with them.

I recently read through some of my old reports and I found it quite striking how many times I have mentioned my two (then very young) daughters in these reports. With one having literally only a few months of school left, and the other with one year of school left, I think it’s time to face the fact that they are no longer my two little girls.

Where they used to accept everything we said, and did everything my wife and I asked of them, I now find myself in a position where nearly everything I request gets questioned.

Don’t get me wrong, I’m all for the fact that they question things, but when we get to questions such as: “But Dad, you just did or said that, why can’t we?”, I often find myself wanting to quote another wise saying that goes: “DO AS I SAY, NOT AS I DO.”   

The investment world isn’t that much different. Yes, we have wonderful investment aids at our disposal like books, DVDs, websites and so on, that can tell you exactly how the big shots are making their investment decisions, but it isn’t always as easy to do exactly what they’re saying you should do. We want to be able to do as they do, though, and the good news is that you actually can.

Modern technology has made it possible for us to monitor on a monthly basis exactly which shares you can find in a particular unit trust fund, for example. You can even see exactly what was bought or sold by that particular unit trust fund. 

When we take a look at the top 10 largest local general equity unit trust funds, it comes as quite a shock to find that these 10 funds alone comprise more than R140bn in value.

Just to put this in perspective, it is more than R140 000 000 000 in total. These 10 general equity unit trusts make up roughly 1% of the entire FTSE/JSE All Share Index’s market capitalisation and together they are greater than 25 of the top 40 largest shares listed on the JSE. That is truly massive! I doubt whether I need to ask again whether investors still want to know what the big shots are doing then?  

Upon closer inspection, the most interesting transactions that took place within these 10 funds for March 2017 were the following:

- TFG: Two of these 10 funds sold their entire shareholding in TFG.  
- Bidvest: Two funds started buying Bidvest shares.
- Imperial: One of the funds that started buying Bidvest shares also started buying Imperial shares in March this year. 
- MTN: There was definitely a difference in opinion regarding MTN shares this March. Two of the 10 funds sold their entire shareholding in MTN, while another one of the funds more than doubled its shareholding in MTN over the same period.   

In rand value, the most noteworthy transactions for March included the following:

- The sales of TFG shares were the most notable in size this March, with a total value of nearly R350m;
- The second-largest transaction for March 2017 was the R270m Remgro shares bought by one of these funds;
- In third place was the R220m in Standard Bank shares bought by one of these funds;
- Beyond that, it seems as though one of these fund managers merely bought what the other two fund managers sold in MTN shares, totalling more than R140m in value;
- Another noteworthy transaction in March was the sale of nearly 85% of its shareholding in Coronation Fund Managers by one of these funds, totalling R110m in value. 

It’s always important to note that these fund managers, not unlike anyone of us, cannot predict with any amount of certainty what these shares’ future performances will amount to.

What they do have, however, are massive research teams that keep a very close eye on the markets, so for those investors who are wondering what the big shots are doing, these transactions can definitely be considered as options.

This article originally appeared in the 11 May edition of finweek. Buy and download the magazine here.

remgro  |  unit trusts  |  investment  |  mtn  |  imperial

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