Avoiding ‘landmines’ top priority for asset managers
Industry has a responsibility to do due diligence and be sceptical in order to shield investors
High-profile share price collapses, the most notable being Steinhoff, are making asset managers tread more carefully when it comes to investing in South African listed companies. Several asset managers warned at the Investment Forum in Sandton on Wednesday that just because a company was trading at a discount to its underlying value did not mean it offered good investment opportunities. Given the recent significant drop in the value of companies such as Steinhoff, EOH, Aspen and Tongaat Hulett, weighing their risk has become more important than chasing potential returns from discounted stocks, they said. This was especially true for companies with poor governance and limited disclosures. “There are a number of shares on the JSE that are worth three to four times their current price but we forgo them. The risk is just too high for us. Although we can build a case for those shares doubling, we think they can also easily halve,” said Coronation’s chief investment officer, Karl ...
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