Arthur Buchner: Nedcor Securities

MONEYWEB, BY ALEC HOGG, 10 MARCH 2003

BROADCAST TRANSCRIPT: We’re going to talk about something painful. Our single-stock futures portfolio. Welcome to Arthur Buchner of Nedcor Securities. We were hoping to make lots of money for the Aids orphans. My word, we’ve done the opposite, but I guess we’re not the only people taking pain at the moment.

ARTHUR BUCHNER: That’s it, the game’s never over. There’s negativity and we’ve seen negativity all through the last 10 years I’ve been in the market, and I’m sure with Dave the last 25 years he’s been in the market.

MONEYWEB: Only 25?

ARTHUR BUCHNER: Well, we’ll give him the benefit of the doubt. And, if you look at things, things move up and down. The thing is, we’ve been very, very invested in rand-hedge stocks. I personally have had a negative view on the rand over the last month with the dividend flows. It seems to be negated by the Telkom IPO – lots of money flowing in from overseas on that IPO and that seems to have netted off the outflows that we thought we were going to have on the rand, and the rand just continues to power ahead and it doesn’t help the portfolio.

MONEYWEB: Is it time to take your medicine and say well, the rand could get stronger still – or quite often that’s the worst time to act, isn’t it?

ARTHUR BUCHNER: I always look at it, cut a little bit because then you know it’s going up, because until you’ve actually cut it, it’s never going up. It’s a classic of Murphy’s law – as soon as I cut, that’s when the market moves, so it’s almost like “let’s pre-empt this, let’s cut a little bit and we’ll see the market move up thereafter”. But the shares that we are in offered value when we bought them, and I still believe they offer even bigger value now. I’ve heard “geopolitical”, and “geo” and “political” and all these scenarios that people come up with, but the fact of the matter is that overseas, in America, they’re not producing the earnings and they’re going down. If I look at the South African companies, Anglos came out with fantastic results, Amplats good results in terms of the dollar, not that great rand, but everyone was expecting it.

Same with the gold mines. There’s nothing fundamentally wrong with these stocks in terms of the earnings they are making. And, if you look at Warren Buffett, Warren Buffett comes out and says that, if you’re going to buy a company, make sure that it’s a solid company that’s going to make earnings. It will eventually come back and, when the people are being irrational and selling things at good value, don’t cut.

MONEYWEB: Arthur, I can’t believe that Sasol’s offering us over a 5% dividend yield. We had Pieter Cox on the programme saying the dividend is not in danger. He certainly wouldn’t be as confident and as strong about that if he wasn’t 100% sure that they would pay a final dividend this year. Surely we should be looking at Sasol ahead of that New York Stock Exchange listing?

ARTHUR BUCHNER: Well, the biggest problem with Sasol is like any other share where everyone is long. I’m talking local institutions. When everyone is long, there’s no-one new to come in to buy the share. Shares go up when people are short. The gold mines went up because not one South African institution owned gold – that’s why they had this 200% rally. Same with Sasol, in that it’s the reverse. Every single institution – you look at any South African institution, not one of them doesn’t have Sasol. You need new impetus, you need someone new to buy it. BP, Shell, they’re all down on the international markets because they say that this oil price is not sustainable. Sasol doesn’t make a lot of money out of it, but everyone is busy getting out because they’re saying the market will fall, and that’s the time to be buying because as soon as those guys that are taking the short-term view on Sasol, that’s it’s going to fall once the Iraqi war happens, that’s when you get negative divergence when the right guys are buying. And I think Sasol is a punt, but it’s not going to rally to R120 in the next two months or three months. It’s got a lot of flak to go through because guys have been buying it from R100, R95, R90 was the support, R89. It’s going to be very difficult to get up and have a bull market on it, but I think it offers value if you’re looking at your long-term portfolio.

MONEYWEB: Arthur Buchner from Nedbank Securities telling us to hang in there. David Shapiro, let’s hang in there, man.

DAVID SHAPIRO: One rule you learn on the market: this market tames tigers.

MONEYWEB: Are you telling me we’re tamed?

DAVID SHAPIRO: We’re tame now.

MONEYWEB: Five days down, big rally tomorrow, Arthur?

ARTHUR BUCHNER: Well, there’s a lot of meowing in this studio at the moment.

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