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AS A journalist I’ve harped on about transparency and disclosure for many a year.
Yet when I peruse my humble share portfolio I have to confess to retaining the bulk of my holdings in investment companies where disclosure is less than brilliant.
When mulling that issue I usually comfort myself with the reassurance I’m backing personalities with proven track records in the investment field.
In other words, I can live without knowing the exact underlying composition of assets because the individuals managing the portfolio have more often than not pulled off impressive returns over the long run.
In certain investment companies – and here I think of my holdings in Foord Compass and RE:CM & Calibre – I’m inclined to give the brains trust (in this case, Dave Foord and Piet Viljoen) some latitude about non-disclosure.
Foord Compass usually discloses its main portfolio constituents only once a year, while RE:CM & Calibre has – to date – not revealed what it holds in its (relatively small) equity portion of its portfolio.
But for both companies complete transparency in terms of portfolio composition could compromise their respective competitive edges.
For example, both companies wouldn’t want attention to be drawn to efforts to quietly build deep value positions.
While I can live with reticence at Foord Compass and RE:CM & Calibre, I’m increasingly frustrated by the lack of disclosure at Reinet Investments [JSE:REI].
That may sound crazy, because for all intents and purposes Reinet is really nothing more than an alternative entry point to British American Tobacco [JSE:BTI].
But let’s just assume for a minute Reinet isn’t a simple proxy for BAT and there’s a long-term investment strategy based on building up specialised and niche investments.
BAT – at year-end 2010 – was Reinet’s biggest holding, accounting for around 86% of its portfolio. Perhaps what’s fuelling my frustration is that so many of my friends and acquaintances keep urging me to bail Reinet and switch into BAT.
To me, BAT is currency for Reinet – something that might be mobilised at a later stage to build a war chest for sizeable acquisitions. (Although in times such as these, Reinet’s BAT holding provides sound defensive qualities when investment sentiment is under siege.)
While there’s clearly merit (and common sense) in shifting into BAT, I’ve stayed in Reinet largely because in my 23 years in financial journalism I’ve witnessed the enormous wealth the Rupert family – the controlling shareholders of Reinet – have created for shareholders.
So my determination to stick it out with Reinet is really premised on backing the Rupert family. And I can take some comfort in the fact astute local investors such as the PIC and Allan Gray are also backing Reinet.
Still, I’m becoming increasingly irritated with Reinet’s constant refusal to disclose what it holds in its so-called Other investments.
Those “Others” are worth €101m (almost R1bn) – €96m being classed as unlisted holdings and €5m as listed holdings.
The “Other” portfolio includes small businesses with growth potential as well as investments in specialised investment funds focused on developing markets and niche sectors.
Sounds intriguing – especially knowing Rupert’s ability to latch on to new growth concepts (Vodacom, Seacom, e.tv and Tracker) over the past decade-and-a-half.
When approached for details on its “Other” portfolio Reinet indicated: “We haven’t disclosed the details (of the “Other” portfolio) on the grounds these small investments are not material in the context of Reinet overall.”
Sure it’s small, especially measured against the R24bn value accorded to its BAT holding. But what if there’s a future “Google” or “Thawte” tucked away in that small portfolio?
My question, at this juncture, is whether Reinet has a criterion for determining when an investment becomes “material”?
Is it when an investment reaches a certain value (say, €100m) or is it when Reinet chairperson (and asset manager) Johann Rupert decides an investment hidden away in the “Other” segment is delivering on its promise?
It’s easy to dismiss disclosure about the “Other” portfolio as a small issue but the fact is that segment of Reinet’s investment portfolio has grown fairly fast – remembering that the size of the “Other” portfolio has more than doubled since end-March 2009.
Reinet could soon be forking out close to R1bn in performance and other fees to the Rupert family – a contentious issue, seeing as the default holding in BAT has largely determined the company’s performance since listing.
With that in mind I really think some effort can be made to enlighten shareholders about what the asset manager – who isn’t passing through the BAT dividend to shareholders – has been doing to grow the other businesses.
* This article was first published in Finweek.
* To read more Finweek articles, click here.
Yet when I peruse my humble share portfolio I have to confess to retaining the bulk of my holdings in investment companies where disclosure is less than brilliant.
When mulling that issue I usually comfort myself with the reassurance I’m backing personalities with proven track records in the investment field.
In other words, I can live without knowing the exact underlying composition of assets because the individuals managing the portfolio have more often than not pulled off impressive returns over the long run.
In certain investment companies – and here I think of my holdings in Foord Compass and RE:CM & Calibre – I’m inclined to give the brains trust (in this case, Dave Foord and Piet Viljoen) some latitude about non-disclosure.
Foord Compass usually discloses its main portfolio constituents only once a year, while RE:CM & Calibre has – to date – not revealed what it holds in its (relatively small) equity portion of its portfolio.
But for both companies complete transparency in terms of portfolio composition could compromise their respective competitive edges.
For example, both companies wouldn’t want attention to be drawn to efforts to quietly build deep value positions.
While I can live with reticence at Foord Compass and RE:CM & Calibre, I’m increasingly frustrated by the lack of disclosure at Reinet Investments [JSE:REI].
That may sound crazy, because for all intents and purposes Reinet is really nothing more than an alternative entry point to British American Tobacco [JSE:BTI].
But let’s just assume for a minute Reinet isn’t a simple proxy for BAT and there’s a long-term investment strategy based on building up specialised and niche investments.
BAT – at year-end 2010 – was Reinet’s biggest holding, accounting for around 86% of its portfolio. Perhaps what’s fuelling my frustration is that so many of my friends and acquaintances keep urging me to bail Reinet and switch into BAT.
To me, BAT is currency for Reinet – something that might be mobilised at a later stage to build a war chest for sizeable acquisitions. (Although in times such as these, Reinet’s BAT holding provides sound defensive qualities when investment sentiment is under siege.)
While there’s clearly merit (and common sense) in shifting into BAT, I’ve stayed in Reinet largely because in my 23 years in financial journalism I’ve witnessed the enormous wealth the Rupert family – the controlling shareholders of Reinet – have created for shareholders.
So my determination to stick it out with Reinet is really premised on backing the Rupert family. And I can take some comfort in the fact astute local investors such as the PIC and Allan Gray are also backing Reinet.
Still, I’m becoming increasingly irritated with Reinet’s constant refusal to disclose what it holds in its so-called Other investments.
Those “Others” are worth €101m (almost R1bn) – €96m being classed as unlisted holdings and €5m as listed holdings.
The “Other” portfolio includes small businesses with growth potential as well as investments in specialised investment funds focused on developing markets and niche sectors.
Sounds intriguing – especially knowing Rupert’s ability to latch on to new growth concepts (Vodacom, Seacom, e.tv and Tracker) over the past decade-and-a-half.
When approached for details on its “Other” portfolio Reinet indicated: “We haven’t disclosed the details (of the “Other” portfolio) on the grounds these small investments are not material in the context of Reinet overall.”
Sure it’s small, especially measured against the R24bn value accorded to its BAT holding. But what if there’s a future “Google” or “Thawte” tucked away in that small portfolio?
My question, at this juncture, is whether Reinet has a criterion for determining when an investment becomes “material”?
Is it when an investment reaches a certain value (say, €100m) or is it when Reinet chairperson (and asset manager) Johann Rupert decides an investment hidden away in the “Other” segment is delivering on its promise?
It’s easy to dismiss disclosure about the “Other” portfolio as a small issue but the fact is that segment of Reinet’s investment portfolio has grown fairly fast – remembering that the size of the “Other” portfolio has more than doubled since end-March 2009.
Reinet could soon be forking out close to R1bn in performance and other fees to the Rupert family – a contentious issue, seeing as the default holding in BAT has largely determined the company’s performance since listing.
With that in mind I really think some effort can be made to enlighten shareholders about what the asset manager – who isn’t passing through the BAT dividend to shareholders – has been doing to grow the other businesses.
* This article was first published in Finweek.
* To read more Finweek articles, click here.
