Shares in small financial services counter Conduit Capital have lost a good deal of traction since peaking briefly at 390c at the end of September 2015. The shares have lost around 14% this year to settle (at the time of writing) at 215c — a level last seen in April 2015. Clearly the market, which previously enjoyed flirting with Conduit, has turned wary. The transaction that seemed to turn the market off was Conduit’s purchase of investment companies Snowball Wealth and Midbrook Lane for R465m and R168m respectively. The deals, settled in scrip, allowed Conduit to increase its positions in companies it was already invested in. But some observers felt it was a deal that benefited Snowball and Midbrook Lane, giving them an opportunity to sell out investment portfolios at net asset value (NAV) in exchange for paper, offered a discount on the underlying NAV of the same investments. One asset manager, who asked not to be named, says Conduit has taken some big bets in its investment port...
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