Cadiz grows up

Johannesburg - The announcement earlier this week by empowerment group Makana Investment Corporation that it plans to up its stake to 15% in Cadiz Holdings [JSE:CDZ] may be a market signal that the asset management firm is maturing as a listed investment.
 
In five years Cadiz has gone nowhere. In May 2005 the share was trading at 335c. It hit a high of 600c in February 2007, before tumbling to a low of 140c in March 2009. The share has clawed its way back to 340c as markets have recovered.
 
In contrast, competitors Coronation Fund Managers [JSE:CML] over the same period is up from 390c a share to trade about 1 250c, with an attractive dividend yield of 5% to boot. Hedge fund competitor Peregrine Holdings [JSE:PGR] has also returned 156% over the same time, showing just how far off the pace Cadiz has been as a listed entity relative to its peers.
 
Cadiz CEO Ram Barkai told investors earlier in the week: "The increased shareholding by Makana will strengthen our strategic partnership and enhance the empowerment credentials of Cadiz."
 
Said Makana chair Peter-Paul Ngwenya: "The relationship between Makana and Cadiz is delivering tangible results for both parties and is enhancing shareholder value.

"A real benefit is that our partnership continues to generate mutual deal flow and we have participated jointly in several high-profile black economic empowerment transactions."
 
As a relatively small listed player, Cadiz flies beneath the radars of many of the mainstream investment managers. At the end of March 2010 just seven asset managers were holding the share in their funds.
 
The largest of these was the Nedgroup Investments Growth Fund, which holds 2.5% of it portfolio in Cadiz, followed by First National Bank's Growth Fund with around 2%.
 
Both managers upped their stakes in the last quarter.
 
Stockbrokerage Imara SP Reid rates Cadiz as an "add", citing that improved assets under management figures announced in May showed a 14% rise to R52.2bn. This was assisted by improved investment performance of retail funds.

Six Cadiz funds were ranked in the top 10 out of 496 unit trusts for the three-year period to March 2010, a factor which attracts further investment.
 
"Currently the stock is on a less demanding PE (price to earnings multiple) of 7.9 times its peers, and its market cap at 1.7% of its assets under management is likewise lower than that of its peers," the firm told clients.
 
 - Fin24.com