Regular readers of this blog may have noticed a drop in activity levels of late. This is partly because I have been finding it a bit more difficult to come up with new topics on a weekly basis, but also because this blog is more a means of documenting my investment journey, rather than a revenue source in itself (in fact it makes no money and costs some money to run). As such I have found that thinking of a topic every week and then writing it has distracted me a little from the primary way I earn a living, which is investing.
The initial aim of this blog was to document my journey with regard to dividends earned from US and UK stocks. So far there have not been any dividends from these sources, hence the slight change in direction. I am living in South Africa, and the aim is still to invest in the US and UK as a means to diversify out of an emerging market, that has not changed. However, what has changed since I begun this blog, in my opinion, has been the wonderful stock opportunities presented in South Africa. This combined with what was an extremely weak currency when I started this blog has made offshore investing less attractive to me, for now. Had I invested out of South Africa 6 months ago I would be looking at 30% losses purely on the currency movements.
In light of the above points I have decided to refocus this blog to be about investing in general, especially the psychological side of it, which I believe to be incredibly important. I will also share more about my stock market efforts in South Africa, as this is the market I know best and where I believe I have a competitive advantage. I will still share with you any analysis and moves I make into US and UK stocks, although I do not think the dividend updates will continue. I do think this is a rather crowded field and there are literally thousands of dividend blogs providing this sort of material. I am not sure how many of them are honest, but it is not a competition I want to compete in.
What has been happening
It has been a very good period of what I would call ‘Active patience’ which I believe is setting me up for some good growth to come. I am still sitting with my hotels, see last post on the matter here . This saga continues, but fortunately since my last update there has been a piece of good fortune, the buyout price from the majority holder of the stock was raised from 65c to 85c. This was always on the cards, but not expected. There is still the matter of a circular and a vote to contend with, and so it is not a done deal, but at this price, if it is successful, it means my return on investment increases remarkably, and will be close to 70% profit on a fairly short holding period. Here is the graph of the stock price on the day of the revised offer:
This ‘victory’ is one I am rather proud of, in that it is the first time I have been involved in any sort of shareholder activism, and I do believe the increased offer was due to a few of us minority shareholders voicing our discontentment with the price originally offered.
The downside is it has delayed the receiving of any funds, but for an extra 30% return, I am willing to be patient.
- Search for new ideas
The promise of a fresh injection of capital from the sale of my hotels has long been on my mind, but the boost received of late has refocused my research, and I have been working hard on researching some companies in South Africa which I believe will make for excellent investments when I have the funds. These include the manufacturing, property, retail, beverages and fast food sectors. Some of the value on offer is really good in what I believe are high quality companies. I will in due course share some of these ideas with you.
I do believe that the most important job of an investor is reading. It really is vital to try and obtain the best knowledge possible about the world around you, about various industries, companies and business leaders. I think it is sometimes difficult to justify to those around you that you are ‘working’ when reading a book or business magazine, but really that is what it is, even if you happen to enjoy it. Investing is accumulating knowledge and then applying it. It has been a particularly good period for me, where I have stumbled upon or found some incredibly good books. Two that I will mention because I can thoroughly recommend them are:
Keynes and the Market: This book is the story of how this world renowned economist, John Maynard Keynes, became an incredibly successful value investor, and ended up making a fortune on the stock market. His methods really resonated with me, and I will write about this at some point.
Pour Your Heart Into It: This is an early stage (1997) book by Howard Schultz who propelled Starbucks from a tiny Seattle coffee company into the global giant it is today. If you are a regular reader you will know Starbucks is on my radar, so this was a very interesting book for me. I have read more recent books about Starbucks, but it was extremely interesting to read a book about the earlier years.
Finally, taking a break at Dunkin Donuts..
One of my cornerstone investments is in a company called Grand Parade Investments. This is a company that I have owned since 2010 and have steadily been increasing my equity stake in. I go to the AGM every year, and follow them closely. The current focus is on building a large food business. They have had the South African license for Burger King since 2013, and now have over 60 stores. They have also obtained the license to operate Dunkin Donuts in South Africa. I think this will be successful and with every store opening, my business expands. I went a few weeks ago to see it for myself, I was especially keen to try the coffee which I have heard good things about. Unfortunately (or perhaps fortunately) the queues where so long I was not able to get a coffee and had to be content with buying some donuts on the side.
They are opening another branch this weekend so I will perhaps try the original store again for a coffee. You may have read my article Visiting your dividend machines, this is my favorite part of the job, especially in this case..
Thanks for bearing with me. I hope you will find the change in direction agreeable, you are welcome though to let me know what you think.