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Winners, losers and hero to zero of 2015

Winners

The big winners globally in the S&P500, FSTE100 and Euro Stoxx 50 (in local currency) were the technology companies, with Netflix being the best performing share.

Netflix is replacing cable or DSTV television by offering customers series and movies on demand for much less money than traditional satellite TV.

The other winners were Amazon, the online retailer and Activation Blizzard, the gaming company (Diablo, Starcraft and Warcraft).

Local winner, Montauk, is a 100% US business that converts waste into gas.

The company is highly illiquid and profitability is questionable given that it is heavily subsidised and there is a global over supply of gas.

Fortress Income Fund is the runner up with a 117% return this year after a spectacular 100% in 2014. Going forward we would expect returns to be more in-line with the rest of the sector.

PSG and Brait also had a phenomenal year and now look incredibly expensive.

PSG for example is the third best performing share on the JSE, however its biggest holdings - Capitec, Zeder and PSG Konsult are not in the top 10. PSG is thus trading at a premium to NAV.

Losers

The common theme is that commodity shares have been the biggest losers, with Lonmin and Aveng losing nearly all of their equity value.

Globally the highly geared shale producers are the worst performers.

There are two companies that stand out in the bottom performing tables both locally and abroad that are worth a mention.

Locally Allied Electrical was the fifth worst performing share losing 68% YTD.

This is a classic example of a family run business where the second generation is just not up to the task.

The legacy of Bill Venter has been destroyed due to incompetent management.

Globally Fossil is an outlier as its business model is not related to the commodity cycle but to consumer spending.

The terrible performance of their watch business is as a result of consumers leaning towards smart watches.

Hero to zero

I also considered companies that had a very successful 2014 and a horrible 2015.

Coronation is the highest profile loser of 2015 after an incredible run over the last couple of years, this is largely due to its market exposure and in particular its emerging market focus.

Tongaat also followed a very successful 2014 with a horrible 2015, however the performance is driven by the sugar commodity price. 

Globally, Micron leads this category as the SD manufacturer has lost market share in this highly competitive market.  

*Chris Pretorius is a wealth manager at AlphaWealth

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