Following media reports of fraud and the resignation of Marcus Jooste (CEO of Steinhoff) we felt the need to communicate with all of our clients as to how we were positioned and our current views. We have always taken a view that we are managing our money and not only that of clients. It is with this view that we diversify the portfolio across a number of counters which we believe to offer value. Steinhoff was at one stage the fifth largest company on the JSE and on a valuation basis was attractive.
The 80% fall in Steinhoff and also the resulting negative effect on other group companies owned has impacted our portfolios by 5%. We can analyse a company given what is in the public domain. However we cannot account for fraudulent reporting. We continue to liaise with the company directly to get to the bottom of the allegations. We believe the introduction of Christo Wiese as interim CEO is a positive move. Arthur has personally dealt with DR Wiese on many transactions when he was at BOE and Nedbank and holds him in high regard.
We have reduced our exposure to Steinhoff and related companies (SRR, PSG, BAT, CPI) until further news or developments provide clarity, we will continue to be prudent and not risk further losses. Should you have any worries, doubts or concerns do not hesitate to call us. We are dedicated to performance with low risk and will continue to adopt the approach which has stood the test of time.
Yours sincerely, Willem and Arthur