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Johannesburg - US investment banking group Goldman Sachs has indicated that social media giant Facebook is worth in the region of $50bn, showing the value of tech stocks.
Local asset managers, however, have remained wary of the technology sector.
The departure of local technology blue-chip firm Dimension Data Holdings [JSE:DDT] (DiData) has left a gaping hole in the JSE for a quality technology offering.
EOH Holdings [JSE:EOH] has its fans but is far more mature than many of the other technology plays. With limited choices, investors appear to have two options: go with Vodacom, or take an indirect exposure to the sector through investment holding company Reinet.
With Vodacom Group [JSE:VOD] you know what you are getting - a heavyweight cellphone operator trading on a 12 times earnings multiple and a 4.6% dividend yield. It is solid if unspectacular.
Reinet Investments [JSE:REI] has long been viewed as little more than a proxy for its stake in British American Tobacco [JSE:BTI] , but the company has been increasing investments in the technology sector locally and abroad.
The question for local investors is whether South Africa has the potential to develop its own high-profile tech stocks like Facebook, or even another Dimension Data. A look at the tech-focused SA Start-up Index may provide some clues.
Website builder Yola, which is partly held by Reinet, features prominently and has secured a number of high-profile contracts with the likes of Hewlett-Packard (HP) and AOL.
Reinet has committed $65m to the Vanterra Transformative Energy Fund, which invests in clean energy technology. It holds a stake in international private equity fund Trilantic Capital Partners, a firm with exposure to the likes of Fortitech in the pharmaceutical sector as well as a number of clean energy technology developers.
A look at where the top managers are placing their money makes for interesting reading.
The Allan Gray general equity fund added Blue Label Telecoms [JSE:BLU] and Vodacom to its Balanced and Equity portfolio in the last quarter as it sought to replace DiData. However, holdings remain 1% of the portfolio, indicating a hesitant bite at the cherry.
It has also been a net buyer of Reinet.
Other highly regarded managers are also lowly weighted towards technology stocks. The Investec Opportunity and Equity funds hold no significant technology exposure, while the Nedgroup Rainmaker fund reduced its exposure to MTN Group [JSE:MTN] but still held more than 6% of its fund in the mobile operator. Both were net sellers of Reinet.
Piet Viljoen's RE:CM equity fund was a buyer of Telkom [JSE:TKG] and Vodacom, while Naspers [JSE:NPN] was recently added to the model portfolio at asset management firm Vestact, replacing Massmart Holdings [JSE:MSM].
For now it would appear that the choice is straightforward. If you want a value stock, Vodacom is the business; if - like Goldman Sachs - you are looking for the next big thing, maybe Reinet is worth a punt.
- Fin24
Local asset managers, however, have remained wary of the technology sector.
The departure of local technology blue-chip firm Dimension Data Holdings [JSE:DDT] (DiData) has left a gaping hole in the JSE for a quality technology offering.
EOH Holdings [JSE:EOH] has its fans but is far more mature than many of the other technology plays. With limited choices, investors appear to have two options: go with Vodacom, or take an indirect exposure to the sector through investment holding company Reinet.
With Vodacom Group [JSE:VOD] you know what you are getting - a heavyweight cellphone operator trading on a 12 times earnings multiple and a 4.6% dividend yield. It is solid if unspectacular.
Reinet Investments [JSE:REI] has long been viewed as little more than a proxy for its stake in British American Tobacco [JSE:BTI] , but the company has been increasing investments in the technology sector locally and abroad.
The question for local investors is whether South Africa has the potential to develop its own high-profile tech stocks like Facebook, or even another Dimension Data. A look at the tech-focused SA Start-up Index may provide some clues.
Website builder Yola, which is partly held by Reinet, features prominently and has secured a number of high-profile contracts with the likes of Hewlett-Packard (HP) and AOL.
Reinet has committed $65m to the Vanterra Transformative Energy Fund, which invests in clean energy technology. It holds a stake in international private equity fund Trilantic Capital Partners, a firm with exposure to the likes of Fortitech in the pharmaceutical sector as well as a number of clean energy technology developers.
A look at where the top managers are placing their money makes for interesting reading.
The Allan Gray general equity fund added Blue Label Telecoms [JSE:BLU] and Vodacom to its Balanced and Equity portfolio in the last quarter as it sought to replace DiData. However, holdings remain 1% of the portfolio, indicating a hesitant bite at the cherry.
It has also been a net buyer of Reinet.
Other highly regarded managers are also lowly weighted towards technology stocks. The Investec Opportunity and Equity funds hold no significant technology exposure, while the Nedgroup Rainmaker fund reduced its exposure to MTN Group [JSE:MTN] but still held more than 6% of its fund in the mobile operator. Both were net sellers of Reinet.
Piet Viljoen's RE:CM equity fund was a buyer of Telkom [JSE:TKG] and Vodacom, while Naspers [JSE:NPN] was recently added to the model portfolio at asset management firm Vestact, replacing Massmart Holdings [JSE:MSM].
For now it would appear that the choice is straightforward. If you want a value stock, Vodacom is the business; if - like Goldman Sachs - you are looking for the next big thing, maybe Reinet is worth a punt.
- Fin24
