You're listening to Strictly Business Podcast with Lindsay Williams.
The JSC has closed its doors for another day, so it's time for the 5 o'clock
shadow.
And as always on a Wednesday, I speak to Skullclo, Portfolio Manager at PSG Wealth
Old Oak in
Cape Town.
Now, I want to rant a bit, Skullclo, will you allow me to do so?
You can say no, by the way.
I'll get it.
feeling that it's not gonna matter anyway no it would do if you said no i would just
see the bit okay i'm
here wake up everybody the lunatic has taken over the asylum we've known that for
a while
and everybody that says well he's gonna say this and the ceasefire will do this
and the ceasefire will do that just like the ceasefire
between israel and lebanon is a real thing no it's not there
was a drone attack by israel by israel on lebanon today causing death.
So it's not happening.
There's no ceasefire.
Trump doesn't have a strategy on what he wants to do.
He doesn't have a coherent theme of what he's going to do.
He doesn't have a goal.
He didn't say, I need to go into Iran because I want this.
And he's almost admitted that with his ramblings.
Wake up, everybody.
The oil price, more importantly, is $100 a barrel.
It was $60 a barrel in October.
That means that inflation is going up.
That means that interest rates are going up.
That means you've got less money in your pocket.
That means that companies that are listed on exchanges are earning less.
Therefore, their earnings are coming down.
That means that the stock market falls.
Just wake up, everybody.
We've had a few weeks of, you know, think, oh, well, maybe this, maybe that.
No, not maybe anything.
We're in for the long term here.
And as I said,
the lunatic has taken over the asylum how's the market skunk you feeling
better now no actually no i'm not one of those people i'm gonna continue and i'm
gonna speak to this
african listeners now because i
mean what what what this boils down to is the whole globe is
putting pressure on on trump the u.s and also israel to to Thank you.
Well, Iran, to get around the table and get this peace deal done.
Why?
And as you mentioned, we're sitting with a $100 oil mark.
And for the listeners out there, where are we now in the cycle?
I mean, we had a massive, massive,
massive jump in the petrol price and diesel prices last month.
Now as we sit here, There's basically the central energy fund.
They're actually on a daily basis.
Beautiful.
It's like if a daily, where the oil price currently is, if it stays unchanged,
we should either see a raise or a drop in the petrol slash diesel prices.
As we sit here, if the oil price stay at these current levels, remember, they came
off a little bit.
They're not the $110 levels anymore.
They reached almost $120 around about five, six weeks ago, I think it was.
And it was a spike.
But the average is the most important thing, Skulk.
And before you go on, the point is that people say, oh, it's just speculators.
No, it's not speculators because the market has stayed where it is.
It's currently $100 a barrel on the futures market for Brent crude oil.
And people can't get oil anymore, so they're paying up.
at whatever price for whatever oil they can get from whatever part of the world.
So that filters through to the global oil market.
It's $100 a barrel.
And it doesn't matter whether you're in Alabama or Afghanistan.
Oil is $100 a barrel.
And that's what you pay if you have the luxury of having a car.
That's it.
But for those who don't have a car, they'll need to make use of a taxi.
They'll need to make use of...
Some sort of transportation.
As we sit here, if the oil price stay unchanged, as of yesterday's close,
the Central Energy Fund predicting that the petrol price,
and here I'm using the 95 unleaded, petrol price should go up further.
2.25 rand.
Diesel, wait for it.
6.60 rand.
Get out.
And remember, this is not...
As Lindsay mentioned, this is not the world price trading at $110, $120 anymore.
It's now come off.
It's actually better levels.
I mean, we're sitting with a president in the USA talking about a victory, an
indefinite ceasefire.
I still need to find out what's the difference between an indefinite ceasefire
and actually the war being over.
But anyway, an indefinite ceasefire, massive victory, blah,
And we as South Africans, and we're not the only, I mean, I think I've seen the
other day something like Malawi,
they currently, we're sitting at about 20 odd rand per litre,
they're already something like 50 or 55 rand per litre, per litre.
And running out of it as well.
And totally running out of it.
So this is going to have a detrimental effect on the world economy, South Africa
not excluded.
We went into this year, and I know they've now recalculated and said, well, inflation
that came out
3.1-ish, already north of the 3% mark that they're aiming for,
they now say it should settle around the 3.7% mark.
And already you can see, the Reserve Bank being a little bit more hawkish,
not as positive as they went into this year.
stating we should see a few interest rate cuts in 2026, very similar to the Fed.
As we sit here,
we're not expecting any interest rate cuts from the Fed for the rest of this year,
if you look at the probabilities according to the CME Fed tool.
If you look at locally already, Kahnia is saying, well,
if we're going to have pressure on inflation upwards or further inflation
pressures upwards,
we're going to have no choice.
We're going to have to hike interest rates.
And as you mentioned, Lindsay, this is going to have a massive, massive effect on
us.
Because not only are we as South Africans paying more for our fuel,
it will definitely have an effect on food prices because that will increase food
prices.
It will also mean that our debt repayment or debt servicing will also increase.
That's a crazy, crazy negative environment.
And then I'm looking at...
the US market today and I'm seeing S&P 500 is up close to 1%
Nasdaq up 1.25% I saw it today and I looked at it this morning throughout the
day, even from midnight because I,
whatever I saw the opening of the real markets at midnight, everything was going
up,
but all going up in tandem, gold was going up, oil was going up,
the index futures were going up I didn't understand what was going on and as you
speak speak,
as we speak, the oil price has just fallen a dollar.
It's now only up 2% on the day, but it's still up on the day.
And as you say, the index futures in the United States, actually, the real market
is up, and gold is up as well.
What is going on?
I think what it is, is there's so much money out there, Skulk, that people are
just buying, and they're just buying anything they can.
There's no rationale.
It's like the Trump war policy, just buy the thing, for goodness sake.
Do you understand it?
I don't.
And that makes this dangerous.
That makes this dangerous.
We were really, I mean, the other day we were talking about, oh, there we go.
S&P 500 above 7,000 points.
We talked about new all-time highs.
I just can't believe we're sitting at new all-time highs while we're sitting with
this volatile period.
We're sitting with the oil price.
Anyway, we can sort of debate this.
We can.
sort of frown upon us but i think the one thing that listeners out there should be
very very careful because
this i i'm unfortunately this this feels this feels like a bear trap all over it
really feels like
there's something there's something brewing out there and people are being too
sanguine they're being too calm
about it they're being yeah they're saying ah please we've seen this all before but
this time we haven't seen it before
because of all the reasons that i said in my rant at the beginning.
There is something going on, Skalk.
What will happen to gold if something does go on?
Will the people that are long of gold, holding gold, say, OK,
we've got to sell gold now in order to pay off our margin calls on other markets?
That's a possibility.
Well, they might use some treasury bills as well.
Oh, that's my big sell of the year.
The U.S.
Treasury bill, the U.S.
Treasury bond, everything.
I mean, it's taking a while, but the US 10-year will be at 550, 650 by the end of
the year, without a doubt.
And the other thing that I have to comment upon after your analysis, Lesechuk and
Yago...
Jay Powell, Walsh, the new incoming Fed chairman, Christine Lagarde and
Bailey at the Bank of England, they don't know.
They don't know any better than we do.
We are as good as they are skunk because we don't know as well.
We don't know what's going to go on.
So how can they say, well, we think inflation is going to peak at 3.8%
in the UK after the UK inflation came out today at 3.3%.
The South African came out at 3.1%.
you Yes, that's all very willing.
It all sounds nice.
But in the future, it's not going to be there.
It'll go up to 4% or 3.8%.
And then after that, if the oil price is still 100 or 95, it'll go on from there.
Nobody knows.
And that's what's so scary as well.
Remember, they look at the now.
And we're talking about central banks slash reserve banks.
They look at the now.
They look at the data available to them now.
And they make, I remember in COVID, it was very similar.
Remember, these are central bankers.
They're not doctors.
So they can't predict what COVID is going to do over the next 12 months.
So they look at what the commodity prices do back then, and they sort of extrapolate
that on their models.
And similar there, nobody, they're not war analysts or political analysts to sort of
forecast where this
war is going.
So they look at the data now and say, well, this is where.
Well, I'm saying that if we're going to see this war, where did I read that today?
I was a political war analyst, but
I think it boils down to do not take what Trump says every two, three days.
But this war is over.
It's done as this will be done in the next day or two.
Expect months.
So, yeah.
If we see months, I'm telling you now we're going to see a massive, massive
pressure on inflation.
I think and I still I like your bet.
I like your call.
I think I think a lot of these larger investors in the world will look at this
as well and say, well,
if it's going to be a pressure on inflation, there's going to be pressure on
rates.
Then I'd rather be selling selling my treasury bills and invest.
even further in gold because that still remains one of the base hedges against a
rising inflation tide.
Anyway, let's not go to gold again.
You know my view, and that's why I haven't sold mine yet.
That's why I would definitely encourage all my clients.
You've taken some profits, though.
I did.
And I must admit, any weakness, any further weakness, I will look at
accumulating some more.
Bye, Beck.
OK, let's have a look at the markets now with the RAND at $1, that is at 1647.
British pound against the RAND 2224.
The EUR RAND is 1930.
On to commodities now.
Well, the gold price, the aforementioned, is on my screen.
Come on screen.
Why does it do that?
I hate it when things pop up in front of you.
Scalp, the gold price is 4730.
which is up just over half a percent now if we go down to the white metals we've
got platinum up
two percent or 44 to 2085 the palladium price is 1564
up one and a half percent now onto the oil price which is very interesting i'm not
hugely bullish of it
gosh it's gone up another dollar when
we were first speaking this is how mad it is it was 101 15 it went down to
100.25.
It's now $101.38 per barrel, up 3%.
That's Brent crude.
We've got West Texas at $92.33, up 3%.
Copper price, $6.12 per pound,
up 1.9%.
And, yeah, what else have we got?
The South African 10-year, not having a good day, up 11.5 basis points.
or 1.3% to 8.55%.
And the US 10-year, this is the one I like or don't like, 4.29%.
That yield is going to 5, 550, 650, as I said earlier on.
It is going to be trashed throughout this year.
S&P 500 futures.
I still can't believe I'm saying this, Skulk.
It's up 0.84% to 715.
9.
0.50.
7,159.25.
Do these people who trade the S&P, invest in the S&P, not watch television, not
listen to us on our podcast every evening?
Maybe that's why they're making so much more money than I am.
Yeah.
Because they're not listening to me.
Great stuff.
Okay.
Bitcoin.
Wow.
Nearly 79,000 up over.
4%.
What happened on the JSC today?
I saw Quilter doing well.
I saw AMSA doing horribly.
So what we've seen today, it was a quiet day.
It was a really, really quiet day today.
We did see some information coming out from Capitec that looked good.
I mean, they're just going from strength to strength.
It's just crazy, crazy how this very much in line with Bloomberg consensus,
but I mean, headline earnings per share growing 23 percent that is that's just
crazy return
on equity i mean a lot of people usually
say well and i'm one of them was was always worried to get into capite because
when you when you look at the that they priced a book um
sometimes more than double more than double some of these other banks um the
price the books and but when you look
at the Return on equity.
Return on equity.
31%, Lindsay.
31% and that's more than double most of these local banks'
return on equities as well.
So, yeah, it's really, really going from strength to strength.
Every reporting, I think to myself, I mean, this bank just can't continue to
grow,
continue growing.
That's been going for six or seven years, maybe even more when it was 7,800 rand a
share.
People saying, I can't keep on going like this.
There's no customers in South Africa.
The economy's messed up.
So how on earth can they keep on going?
And look at it now.
Keep on going, Kapitek, I say, but there will be a point at one point where you
start ignoring customers and
customer service and you get too cocky about it all and something will happen and
it will come down.
But at the moment, just go with the flow.
That's it.
So, yeah, when we look at other news in the market, We had Remgrove.
That's an interesting one.
You know my view on Remgrove.
You know it's one of my let's call it most loved stocks.
They now mention that they now they actually had a complete full disposal of
their
first-round share.
The whole lot.
Yeah, the whole lot.
First-round is gone.
But this is crazy.
Listen to this.
When you look at the...
year-end results and that was
31st of december they had cash um cash on the cash cash within rem grow
just over 12 billion rand okay they had a potential capital gains liability that's
about five billion so that still means that's that's if it offsets we're talking
about seven billion rand in cash
the the first rand valuation on the books in in december was also
7 billion Rand.
So let's take that 7 billion Rand, add that to the remaining 7 billion Rand,
that's 14 billion Rand cash for RemGrow,
and it's still trading at quite a chunky discount to NAV.
So, I mean, you're asking me, we're talking about the uncertainty in the
market, we're talking about,
I can't believe the investors are piling into the market with this environment
we're trading in.
I think for investors that, that feel a bit of FOMO, this could be a company you
can look at.
Because I do think that at this very, very wide discount, this amount of cash on
hand,
and they haven't really made it clear what they're going to do with the cash.
So usually a company,
when they sell out of a sizable portion of the portfolio, in this case, first-rand,
they always say, well, we have identified either to pay off some...
some of our debt.
Now, in this case, Remgrave don't have any debt.
Or they'll say, well, we earmarked this for further acquisitions.
Well, they haven't done that either.
So that leaves two things.
That leaves that either they might be buying back some shares that could have a
massive effect on this
large discount to its intrinsic value, or they might pay out sizable dividends,
which will also be very, very positive.
What would you like as a shareholder?
Would you like the buyback?
which is what the American banks are doing at the moment, $33 billion in the last
quarter,
so maybe a financial company like Remgrove might do the same, or would you prefer the
special dividend?
I would currently prefer the latter.
And not that I don't believe in the abilities of Yanni and Co., well,
the Remgrove team, not at all.
But the one thing that, and you've had this conversation last year, also a few
times this year as well,
you can see the playbook.
You can see what happened with Raynette, which is the, let's call it more offshore,
I want to put it in inverted commas, Remgrove of, of um at
Rupert. And they, on that side, they got rid of the Crown Jewels, namely British
American Tobacco Company,
and gave it back to the investors.
What's left, Skunk?
Tell me what's left, please.
Inside Remgrove, it's still the largest investment in Remgrove is Mediclinic.
I don't have percentage, but I think the last that I recall was about 31, 32% of
the portfolio.
Okay, a third of it is Mediclinic, yeah.
Yeah.
And then when you look at the other large investments, and this I do like,
they've got a sizable investment.
And when I say sizable, this is now starting to get very close to the
investment size of Mediclinic, and that's outshurance.
So that's also a very interesting one.
So outshurance.
It is very interesting.
And the reason it's interesting to me is because I was watching Irish television
the other night.
I mean, you cannot believe it.
I will search.
European sites to get free football.
And on Virgin Media Ireland, Virgin Media Dublin,
there was a free football match I wanted to watch so I didn't have to pay a
subscription.
So I watched it.
And in between, there were outshurance ads.
And I thought, wait a second.
This is an Irish television station.
And they're...
And it's a really good Irish ad as well.
It was quite funny.
It was quite engaging.
And you wanted to say, well, I wouldn't mind having a look at that company.
And it was Outurance, for goodness sake.
A proudly South African company.
It is.
And it's a good story.
We were talking about Capitec earlier as a great South African story.
Great management, great prospects and forecast.
And.
And out-surance is no difference.
I think it's a model that can be replicated beyond the borders of South
Africa.
But back to the point, I mean, it's the second largest position.
Then the third largest one is the one that's actually exciting me, I would say
the most,
in the sense that they've got that deal with Vodacom where they start rolling out
this dark fiber, the
CIVH. And I think that could be a very, very interesting...
interesting company for the future.
And then I would say the fourth largest one is Discovery.
And we all know Discovery's story as well, also good.
So even if they just go and pay out a large special dividend,
I would be more than happy,
more than happy to sit with the remaining companies in Rimgrave because it's great
companies.
And do not be surprised if we've seen...
The likes of rainbow chickens, for instance,
where rainbow chickens were listed and then eventually delisted and eventually
listed again.
And we know that circle.
Don't be surprised if many clinics get to a certain point again where they get
listed again as well and stripped out of
Remgrove. Is there a chance, Skunk, that you look at this company, Remgrove, and
you look at them as they're selling first-round?
First of all, why are they selling first-round?
Why did they sell first-round?
What did they sell?
They sold advice that Remco had disposed of
51,996,739 shares and then off-market
3,300,000. Anyway, the point is they sold a lot of shares.
Why did they do that?
Did they not like first-round?
Did they not like First Rand?
No, they had a small holding in First Rand, but their main holding was in RMB.
And remember RMB, I think it was something like 96% of RMB was First Rand.
And then RMB actually unbundled First Rand out of the company.
And suddenly Remgrave was sitting with a massive chunk of First Rand.
And I think it wasn't a core holding for them.
And I've mentioned it a few times already.
First Rand was never really a core, core holding.
So I think it's just time they but again,
your bigger question is more what's been the playbook for these stuff,
for Raynet as well as Remgra over the past 24 months?
Are they getting to the point where they're saying, no, we're bored with this
now.
This is an old investment model.
So we have to get out of these things slowly and gently so that people like
Skullclo don't freak out.
and if eventually we're going to dispose of all these things, in which case you've
got to buy them immediately.
Yep, it could be.
Because at a 40% discount, sign me up for those.
Precisely, yeah.
Okay, it's an interesting one.
That could be the one.
If you're a hedge fund manager or something and you're looking at this,
goodness me, it could be the play for you.
Skunk, let's have a look at what went up and down on the JSC today.
And I'll tell you that I've got Sassel up 5.2%, 216.
Rand and 64 cents per share.
Quilter up 5.1%, Aspen up 3.9%, Tungela up 3%,
and Glencore up 2.1%.
Do you want to comment on any of those, please?
No, we had Billiton that actually brought a trading statement.
And from a copper play point of view, they did really well.
So I think that could have had an effect on the likes of Glencore as well.
Might have not.
might have had but yeah it was it was a good day i think uh billetson was also up
something like two percent so that might have just
just not make your make your top five there so that might have been just a bit
of a copper play today on the downside absa down
3.8 percent uh harmony a 3.1 percent loser richmond down 2.85 percent
uh what is it 2.1 percent down for mr price and another retailer, TrueWorths,
down just over Two percent.
Retail is not doing well, I suppose, because of the threat of rising interest
rates,
which is absolutely a threat.
And the South African consumer, if this thing goes on in the Middle East,
will be affected probably more than most.
So just on that note, Absa is an ex-stuff and also Harmony is also an ex-stuff
story.
But yeah, you're right.
I think you're definitely right.
It's definitely going to be a...
Interesting story.
Okay.
Skulk, thanks so much for your time.
Skulk Lowe is a portfolio manager at PSG Wealth Old Oak in Cape Town, and that was
the 5 o'clock shadow.
The views and opinions expressed in these podcasts are those of Lindsay Williams and
various contributors and do not reflect the policy,
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