Markets have a nasty habit of moving in extremes. In Brait’s case it has moved from exuberant bullishness to grossly overdone bearishness. Brait was riding high following Christo Wiese’s acquisition of a 34.6% stake in July 2011 and the purchase of a 37% stake in Pepkor that same month. Pepkor went on to drive Brait’s net asset value (NAV) per share from R16.50 to R136.34 by December 2015. Investors scrambled on board, driving Brait’s price to a 20% premium to its NAV at the end of 2015. With the price having fallen almost 70% from its peak it is now trading at R55, a 30% discount to its current R79 NAV.
Brait has NAV as a multiple of its underlying assets’ earnings before interest, tax, depreciation and amortisation (Ebitda) in the reporting currency of most of its assets, UK pounds, as the measure of its success. Wiese went on to sell Brait’s stake in Pepkor to Steinhoff in March for seven times its purchase price and redeployed the proceeds into four core assets: UK fashion...
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