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Cape Town - A couple of years ago there was great excitement about unlisted shares, but that market's spark appears to have died.
Analysts reckon if one is looking for investment opportunities, one should look in places where additional value might be unlocked.
The unlisted market is generally too illiquid for bigger investors and unit trusts are not permitted to invest in it – and it consists of only a handful of companies.
These are mostly agricultural companies whose shares are traded over the counter and which have trading platforms for investors to trade in their shares.
One of the most active shares is Kaap Agri, which holds a large stake in listed food producer Pioneer Food Group [JSE:PFG].
In the year to end-September, 5% of the company's shares traded – which is regarded as very liquid for an unlisted share. Over the year the average share price was R7.76, 40% higher than in the previous year.
The price rise is largely ascribed to Pioneer’s share price performance.
Rudolf Oelofse, a portfolio manager at BJM Private Client Services, said the share prices of the unlisted companies with tradable shares mostly represented a discount to the value of the underlying assets.
The shares were trading at a 25%-odd discount, which made them good value investments.
Shares showing value are those whose underlying asset is a listed enterprise, and include Kaap Agri, Pioneerand the Capevin companies, as well as liquor giant Distell Group [JSE:DST].
Investors can, for example, currently get access to Distell in four ways – through listed companies Zeder Investments [JSE:ZED], Remgro [JSE:REM], Capevin Investments [JSE:CVI] and the unlisted Capevin Holdings.
The discounts to asset values at which these companies are trading could shrink if future access routes are reduced by the unbundling of the Capevin companies to shareholders.
The problem with unlocking value of an unlisted shares is the time-frame uncertainty.
If you are a value investor and you have time on your side you could buy them because the dividend stream is relatively strong, said Oelofse.
Other shares for possible trading include Capespan, Overberg Agri, Moorreesburg Koringboere, BKB and Klein Karoo (shareholding limited). The Hermanus abalone company Abagold also trades over the counter, but rarely.
BKB and Capespan are also trading at a discount to their asset value.
Chris Logan, an asset manager at Opportune Investments, which is invested in some of these unlisted shares, said that Clover had been an especially good buy last year. The company's share price had more than doubled in the run-up to its listing. Logan said his company was a value investor that invested in shares whose value it believed could be unlocked.
He also highlighted Kaap Agri as one whose performance in recent years had been steady because the underlying investment in Pioneer was doing well. In his view Kaap Agri was cheap and there was the possibility of corporate action to unlock value.
But Capevin Holdings was more fully priced compared with its investment in the listed Capevin Investments company.
He said KWV needed to get its business fully on track, because the company had been performing poorly.
Unlisted opportunities also needed to be considered, compared to listed opportunities.
Remgro, an investment company giving access to other companies was, for instance, also trading at a discount.
- Sake24.com
For business news in Afrikaans, go to www.sake24.com.
Analysts reckon if one is looking for investment opportunities, one should look in places where additional value might be unlocked.
The unlisted market is generally too illiquid for bigger investors and unit trusts are not permitted to invest in it – and it consists of only a handful of companies.
These are mostly agricultural companies whose shares are traded over the counter and which have trading platforms for investors to trade in their shares.
One of the most active shares is Kaap Agri, which holds a large stake in listed food producer Pioneer Food Group [JSE:PFG].
In the year to end-September, 5% of the company's shares traded – which is regarded as very liquid for an unlisted share. Over the year the average share price was R7.76, 40% higher than in the previous year.
The price rise is largely ascribed to Pioneer’s share price performance.
Rudolf Oelofse, a portfolio manager at BJM Private Client Services, said the share prices of the unlisted companies with tradable shares mostly represented a discount to the value of the underlying assets.
The shares were trading at a 25%-odd discount, which made them good value investments.
Shares showing value are those whose underlying asset is a listed enterprise, and include Kaap Agri, Pioneerand the Capevin companies, as well as liquor giant Distell Group [JSE:DST].
Investors can, for example, currently get access to Distell in four ways – through listed companies Zeder Investments [JSE:ZED], Remgro [JSE:REM], Capevin Investments [JSE:CVI] and the unlisted Capevin Holdings.
The discounts to asset values at which these companies are trading could shrink if future access routes are reduced by the unbundling of the Capevin companies to shareholders.
The problem with unlocking value of an unlisted shares is the time-frame uncertainty.
If you are a value investor and you have time on your side you could buy them because the dividend stream is relatively strong, said Oelofse.
Other shares for possible trading include Capespan, Overberg Agri, Moorreesburg Koringboere, BKB and Klein Karoo (shareholding limited). The Hermanus abalone company Abagold also trades over the counter, but rarely.
BKB and Capespan are also trading at a discount to their asset value.
Chris Logan, an asset manager at Opportune Investments, which is invested in some of these unlisted shares, said that Clover had been an especially good buy last year. The company's share price had more than doubled in the run-up to its listing. Logan said his company was a value investor that invested in shares whose value it believed could be unlocked.
He also highlighted Kaap Agri as one whose performance in recent years had been steady because the underlying investment in Pioneer was doing well. In his view Kaap Agri was cheap and there was the possibility of corporate action to unlock value.
But Capevin Holdings was more fully priced compared with its investment in the listed Capevin Investments company.
He said KWV needed to get its business fully on track, because the company had been performing poorly.
Unlisted opportunities also needed to be considered, compared to listed opportunities.
Remgro, an investment company giving access to other companies was, for instance, also trading at a discount.
- Sake24.com
For business news in Afrikaans, go to www.sake24.com.
