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Profiting from short term volatility - One to buy with one to sell

by , 21 September 2017
Profiting from short term volatility - One to buy with one to sell
We had a good week for our short-term trades.

• Sasol for a 6.71% gain
• Vodacom for 10.33% gain
• Sibanye for a 30%

All ungeared, see position updates below.

Paying too much for your retirement savings?
 
The weekend press has again highlighted the impact of costs your retirement savings. Most older policy are paying the industry norm of 3% and higher. It’s a little-known fact that reducing your retirement saving costs to around 1% can add as much as 40% more to your retirement kitty. And having lower fees in retirement could be the difference between running out of money or not.
 
Prodigy has several low costs solutions that could save you substantially in retirement. Contact us to find out more.
 
Cryptocurrency Mania… Is it a Bubble or is it just getting started?
 
Over the past few weeks, we’ve received an increasing number of requests for information about Bitcoin and Cryptocurrencies and thought a short note on it would be a good idea.
 
The performance of Bitcoin, the biggest crypto by size has been stellar. It started the year around $1,000 and now stands at $4,200. That rapid growth has been seen in some of the newer currencies and as interest grows, so do the risks. 
 
Feeding its own success, acceptance as a medium of exchange is growing and perhaps there will probably be more upside as adoption moves into the mainstream. Never the less the industry is showing many signs of a bubble and is susceptible to a loss of confidence. Prices have been extremely volatile and reflect the speculative nature of unregulated investments.
 
Caution is warranted; deal with reputable sites and keep exposure within tolerable limits, based on your financial position.
 
The week ahead:
  • Tuesday: Current Account
  • Wednesday: BER Business Confidence, Retail Sales
  • Thursday: Wholesale and Motor Trade Sales
  • Results expected: ASC, COM, CLR, ATT, TAW (12/09); JSC, GPL, TRL (13/09); IMP, ACE (14/09), HWN, SPIBEE (15/09); SVB, DSY (18/09)
  • Offshore Results Expected: Oracle and China Life Insurance
  • LDT (12/09): AIP, ARH, AWA, BLU, DSYP, EXX, GNDP, L2D, MSM, NPN. RBP, S32, SBK, TCP, TRU and WHL.
     
Last week’s movers and shakers…

  • Best Performers: DRD 12.9%, DTC 7.8%, MUR 7.1%, ADI 6.7% and TOR 6%
  • Worst Performers: TSX -9%, VOD -8.8%, SGL -7.3%, NED -6.8% and TBS -6.2%
 
Murry and Roberts extended its rally to make a 52-week high at R16.93 last week. Vodacom fell on the back of Vodafone reducing its stake to 64.5% from 69.7%. We now see value in buying at these levels, see comment below.
 
 ********************You may be interested in********************
  
JP Morgan, Goldman Sachs, Bill Gates, Peter Thiel, Putin, thousands of Japanese investors…
 
Are all ploughing into cryptocurrencies!
 
This is the biggest financial revolution since the invention of money – and its making some early investors filthy rich.
 
 
 ****************************************
Other Economic data releases of interest…
  • Tuesday: CPI (UK)
  • Wednesday: PPI, Crude Oil Inventories (USA)
  • Thursday: Unemployment Rate (AUS); Industrial Production (CHN); Swiss Monetary Policy (EU); Official Bank Rate (UK); CPI, Unemployment Claims (USA)
  • Friday: Retails Sales (USA) 

One to Buy
 
Vodacom – Buy the sell off for a short-term recovery
 
We profited as Vodacom sold off 8.8% last week. It did so on the back of Vodafone reducing its stake in the company. The free float on VOD was low and needed to be increased to increase its weighting in various indices. On the back of the passive trackers needing to be natural buyers to track the respective indices, we believe now is a good time to be buying for a move back to the R180.00 level. Buy VOD below R167.00
 
One to Sell
 
The Rand – Profit from Politicking Risk
 
The risk of the Rand weakening from these levels is significant on the back of political risk. We believe the Rand could go to R13.25 to the US dollar in the nera term. Sell the ZAR/USD at R12.90.
 
You can use the current Rand strength to allocate a suitable portion of your portfolio to a direct offshore portfolio. Contact Prodigy to find out how.
 
 
Shorter Term Ideas
 
  • Pioneer Foods: Place take profit at R112.50, reduce stop loss to R120 to lock in 9.43%.
  • Sasol: Profit target at R382.50 reached on short for a 6.71% ungeared gain.
  • Vodacom: Profit target achieved for a 10.33% gain in 6 weeks.
  • Sibanye Gold: Position Closed for a 30% gain.
 
Long Term Ideas 
 
  • EOH: Pulling back to support. Buy below R107.50
  • Tharisa: Moving in the right direction, buy dips below R18.00
  • Steinhoff: Strong bounce from the sell-off, up 7.21% on position. Hold.
  • Jubilee: Moving higher slowly, buy below R0.68
  • African Rainbow: 10% gain on position, R6.50 dividend declared. Hold.
  • Old Mutual:  Nicely in a profit. Buy dips below R33.
  • AECI: Price consolidation at support. Buy below R105.00
  • MTN: Pulled back to support. Buy below R122.50.
  • Coronation: Moving up. Keep stop loss at R66.
  • Glencore: Rally intact, open gain of 30%. Hold
  • Wescoal: Long term buy. Add below R2.15
  • Famous Brands: Consolidating above R115.00. Accumulate Below R120.
  • Naspers: Pushing to R3,000. Hold
  • MediClinic: Moving above the 200-day moving average, a move to R139 is on the cards. Hold.
  • Richemont: Breaking out finally, more upside to come. Maintain stop loss at R112 to lock in gains. Hold

Get Exposure to US and EU with limited downside Risk
 
Invest offshore through a structured product that provides a return of 100% if the S&P 500 and EuroStoxx 50 are up just 1% in the next five years. And you receive 100% downside protection should the indices fall by less than 40% over the period. You have no currency risk as the investment is in Rands. Minimum investment of R100,000. Time is limited to invest in this opportunity. Contact Prodigy for more information.
 
(This article is an extract from Prodigy’s weekly Investor Digest. For more information contact Gavin McCarter on gavin@prodigyam.co.za.)
 


Profiting from short term volatility - One to buy with one to sell
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