Ask better questions to improve your financial position

The Gradidge Patch

It was another new client meeting for me. He was anxious as he had been a DIY investor for a bit and that hadn’t worked out. He had also had a few advisers (I think they were actually brokers or insurance salespeople as he did not get advice from them). He was trying one more time with me, so the pressure was on for both of us. “Thank you for meeting with me, let’s get straight into it. Where should I be investing my money now? Shares aren’t looking good and the currency is all over the place?” Are there any new and exciting products or funds that investors should consider?To me that was the equivalent of a nervous teenager approaching his crush like “Hi I’m John, am I the kind of guy you would like to marry?” I was so thrown by the start of the conversation that it…

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Vodacom Yebo Yethu’s Success

Vodacom’s BBBEE scheme “YeboYethu” is in the process of unwinding as there’s a new deal in the pipeline. Yesterday the company came out with an exciting SENS announcement where a special dividend was officially declared. In the SENS the company said the following:

“Accordingly, the YeboYethu board of directors has resolved to pay a special dividend up to a maximum of R 3 261 189 876 out of income reserves, which equates to 7300 cents per YeboYethu ordinary share.”

This is excellent news for the black investors who have been patient holders of the shares for the past ten years. At the current share price of R120, the special dividend is a 61% gross dividend yield. For the investors that have been holding since day one, this dividend is 2.92 times (in hard cash) their original investment of R25 a share. An investor who invested the minimum R2500 in 2008 will receive R7 300 in cash and still be left with their shares.

This BEE deal has delivered fantastic value for black investors. In terms of capital appreciation, R2500 invested in 2008 will see value unlock of approximately R16 000 or 6.4 times the original investment. I know investment professionals that wish they could replicate these kinds of returns.

The new BBBEE transaction is currently underway, and if you are a qualifying BBBEE investor please speak to your financial advisor on how you can get involved.

Lessons from the Vodacom YeboYethu deal for Black investors

Lessons from the Vodacom YeboYethu by Craig Gradidge Of Gradidge Mahura Investments

The Gradidge Patch

Our company turns 10 this month. On 26 June 2008 CIPRO (as it was known back then) confirmed that our business had been registered. Kagisho and I went for dinner that evening to celebrate this milestone! All the talking, planning and dreaming were now kicking into action. It was an exciting time in South Africa in general. Markets had been going up strongly for almost 5 years, the economy was growing, property prices were soaring. Fast forward a few months and President Thabo Mbeki is recalled, the global financial crisis hits global and local economies hard, interest rates shoot up, the currency falls off a cliff, and the stock market loses almost 40% of its value in a matter of months.

In the middle of everything, Vodacom announced a BBBEE deal, YeboYethu (YY). The deal came to the market soon after Sasol’s hugely popular Inzalo deal had gotten investors all…

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Andrew Left Shorting Shopify

Citron Research a firm run by legendary short seller Andrew Left The Bounty Hunter Of Wall Street released a detailed report yesterday on Shopify accusing the company for violating federal trade commission legislation. See the report here: Citron Exposes The Dark Side Of Shopify 

Shopify is a platform provider for e-commerce businesses, they provide all the backend of an e-commerce store to help entrepreneurs to focus more on the product that they produce and sell online. Shopify is up 124% year-to-date notwithstanding that it closed down 11.5% on the bad news from Citron Research. This marks their worst trading day this year.

Andrew is basically claiming that Shopify is a business dirtier than Herbalife see his Tweet below. Another Research Firm Baird wrote their rebuttal to Citron basically rubbishing the claims and saying this pull back Citron Research Creates A Buying Opportunity 
Here’s another guy on Seeking Alpha defending Shopify  Shopify Response To Citron 
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Andrew Left has a good track record as a short seller and he’s not known for shooting from the hip, this is a guy that goes for the jugular! He has the nose as sharp as a bloodhound to sniff all the accounting frauds, companies that defraud and mislead investors, naughty equity analysts. He’s a cross between a no nonsense detective with an eye for detail and an obsessive forensic accountant. Let us not forget the old adage that says where there’s smoke there’s fire. I wouldn’t touch this one with a ten foot barge pole!

Are Balanced Funds broken?

The Gradidge Patch

I have been a believer in balanced funds for many years now. The simple balanced fund offers investors good exposure to growth assets, and lower volatility than the market. A well run balanced fund can outperform the equity market over time if the manager is able to get asset allocation right. Numerous balanced funds have long term track records with better than market returns so it possible. The rise of passive balanced funds has added an additional dimension to the market as investors can now access the benefits of balanced funds at a fraction of the cost that most active managers charge.

A few weeks back I sat for an annual portfolio review with a client. He has been a client for three years and like many investors, was concerned about lower than expected returns over the period. After the usual discussion around market conditions, he asked for a bit…

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A Dozen Things I’ve learned from Stanley Druckenmiller About Investing


“Stan may be the greatest moneymaking machine in history. He has Jim Roger’s analytical ability, George Soros’s trading ability, and the stomach of a riverboat gambler when it comes to placing his bets. His lack of volatility is unbelievable. I think he’s had something like five down quarters in 25 years and never a down year. The Quantum record from 1989 to 2000 is really his. The assets grew from $1 billion to $20 billion over that time and the performance never suffered. Soros’s record was made on a smaller amount of money at a time when there were fewer hedge funds to compete against.”  – Inside the House of Money


1. “I think David Tepper is awesome and if he’d take my money, I’d give him some but I think his fund is closed.”

I included this quote to make the point that even though a very…

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