BROKERS’ NOTES: What the smart money is doing

BUY/Standard Bank

We were slightly underweight the banks so we are picking up banking shares opportunistically. We still like Standard Bank a lot.

There are a few elements: first, ending the lockdown should help economic activity improve. Don’t expect anything meaningful, but an improvement would require finance to support it. Then, if you look at interest rates going higher, that will benefit banks. And we think SA’s banks are trading at price-to-book ratios, essentially pricing in a no-growth scenario — that they’ll only just meet their cost of capital.

SELL/Adcock Ingram and Aspen

We’ve been trimming our positions in Adcock and Aspen. We sold meaningful parcels of our positions in Adcock and Aspen.

In Adcock’s case, it’s come from the R40s to the R50s — and we struggle to see the strategic direction that would make a meaningful impact on future growth. It still has Bidvest as a shareholder and maybe that’s holding the business back a bit. It has also been able to capture some of the Covid upside, but we think that’s going to come to an end.

Aspen stock basically ran ahead of itself. It has been very good at marketing around the vaccine, but take-up doesn’t seem to be good and people are becoming reluctant to get their jabs. We think it is unlikely to realise meaningful value in the scale of vaccinations expected.