The Burgundy2018-04-20T17:14:46+00:00

SA Mobile Telecoms – A Price War?

Over the past year, Cell C and 8ta have disrupted the SA mobile market by introducing aggressively priced data and voice offerings. These come against a backdrop of an implicit duopoly in the local industry that is protected by a strong ‘network effect’. Initially supported by high termination rates, high voice prices are [...]

Trouble Brewing in the Unsecured Lending Market

In our view, the massive growth in unsecured lending over the past couple years has been driven by a ‘gold rush’ mentality on the part of credit suppliers. With the economy at large growing slowly, but cost pressures biting the banks’ bottom line year after year, lenders are desperately seek high margin revenue [...]

Our Take on Platinum Part II

Since our last communication, we have observed the labor troubles that have gripped the platinum group metals ("platinum") industry and the world's attention morph into a broader political issue. In our view, these events, in fact, represent a grand failing of South Africa's industrial policy. Much of the political commentary on the tragic [...]

Our Take on Platinum Miners

We would like to begin by expressing our deepest sadness for the manner in which matters at the Lonmin-owned mine, Marikana, have unfolded in recent days. We also wish to convey our condolences to the families of the deceased. This grave outcome demonstrates that the conflict is simply greater than what we as [...]

Competitive Advantages and Economic Development

Since the first commercial mine in South Africa was established in the middle of the 19th century, mining has been a driving force in the country’s economic development and cultural history. The country continues to be famous for its abundance of natural resources which account for a significant proportion of world reserves and [...]

The Evolution of Valuation

The Holy Grail is not just a biblical concept. It transcends natural and social sciences as well as the arts. Not only does every researcher or practitioner have that one question they would love to see answered, successfully answering that question is what catapults them to the pinnacle of their profession. A great [...]

Implications of the US Downgrade

The US downgrade to AA+ is a concrete and highly symbolic step that merely acknowledges that which the market already knows. To those needing to park excess cash safely, the US remains amongst the best of various unsavory options for those investing trillions of US dollars. While we don’t expect an immediate rerating [...]

The Investment Value of Resource Equities

Commodity equities are difficult to invest in due to the cyclicality of commodity prices, a significant value driver. Over the years, macro economic factors impacting security of supply and consistency of demand caused cyclicality in commodity prices - the larger tHe shock to supply or demand, the wilder the swing in price. As [...]

Stock Market Mis-pricings

Our investment philosophy, outlined in our Investment Guide, is a discussion of how we invest profitably on behalf of clients; this is a discussion of what makes it possible for us to do so. Choosing to be an active manager does not automatically bestow one with the ability to extract economic rents relative [...]

Gold Versus Moats

Some investors flock to gold as a “safe haven” when faced with concerns about rampant inflation on the one hand or disasters in the economy and financial markets on the other hand. In this exercise, we test this rule of thumb against reality by comparing both the fundamental company results as well as [...]