NORTHSTAR MARKET REPORTS

RESEARCH-DRIVEN | LONG-TERM FOCUSED


Navigate below to previous quarterly reports

2018 - Quarter 03

Download Full Report
THE BIG PICTURE
STYLE INVESTING - WHAT WORKS, WHEN?
Adrian Clayton (Managing Director and CIO) and Rachel Finlayson (Analyst)

There are many investing styles. To recognise a style, one can look at the factors an investor considers key before allocating capital to an opportunity.
Read more
FROM THE ANALYSTS
EQUITIES – VODACOM
Marco Barbieri (Director - SA Equities) and Simphiwe Msibi (Trainee Analyst)

Regulatory headwinds and changing consumer trends have negatively impacted the South African mobile telecommunications sector with all four operators feeling the effects of a sector-wide de-rating over the last year. While investors have become increasingly negative and are likely to apply a higher risk premium in valuing these businesses, we feel important company specific characteristics are being neglected.
Read more
FROM THE ANALYSTS
EQUITIES – APPLE
Rory Spangenberg (Director - Global Equities)

In the 3Q 2017 Northstar Market Report we highlighted our focus on free cash flow (FCF)¹ as one mark of superior company fundamentals. We also showed how we could discern the market’s implied in perpetuity FCF growth expectations for a particular company from the current share price and how this provides a useful shorthand or high level approach to valuation.
Read more
CORRIDOR CHATTER
IT’S MAY DAY FOR ELECTION 2019
John Steenhuisen (Political Analyst)

The Zondo commission has finally got out of the starting blocks and already some interesting skeletons have begun to tumble out of the proverbial closet of State capture. Explosive testimony by former deputy finance minister, Mcebisi Jonas, has exposed the brazenness of the Gupta smash and grab on our economy. It remains to be seen if anybody will actually be held accountable but in true South African tradition, we hope for the best but expect the worse. As the Zondo commission unfolds, the slowing economy, petrol price increases and escalations in the cost of living have started to bite, citizens have begun to count the real cost of the scourge of state capture.
Read more
ADVISORS' CORNER
NORTHSTAR ROADSHOWS 2019
By Adrian Clayton (Managing Director & CIO)

We are hosting advisors in Durban, Johannesburg and Cape Town on the dates and times indicated in the attached invite. This invite was e-mailed to all financial advisors which we have on record. Demand has exceeded our expectations in Cape Town and Durban but we are happy to accommodate more guests at all venues. Should you want to attend, please send an e -mail to info@northstar.co.za. You are also welcome to bring along your clients. Our existing Northstar clients will be hosted at similar events in the months ahead – please watch for invites in your mailbox.
Read more
STAFF MEMBER PROFILE – ANDREW RANDLES
ANDREW RANDLES
Adrian Clayton (Managing Director & CIO)

What is your function at Northstar?
I am an equity analyst and work in the South African equities team. I am responsible for analysing various companies which are listed on the JSE. This involves writing up research reports on these businesses and building financial models on each.
Read more

2018 - Quarter 01

2018

Quarter1

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THE BIG PICTURE
DOES QUALITY INVESTING WORK?
Adrian Clayton (Managing Director and CIO)

‘Long-term exposure to quality assets where value exceeds price’ defines our investment belief system and our behavior too in that it determines the characteristics we seek in companies that are allowed into our clients’ portfolios.
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FROM THE ANALYSTS: EQUITIES
AECI – NOT JUST AN EXPLOSIVE BUSINESS
By Marco Barbieri (Director SA Equities)

AECI is South Africa’s largest explosives manufacturer and a dominant player in the specialty chemical industry. The group has a long history in the South African mining landscape having been formed in 1924 with its main purpose to provide explosives and detonators to the gold and diamond industries.
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CLIENT CORNER AND NORTHSTAR NEWS
OUR OFFICE MOVE AND STRATEGY AROUND CLIENT CONTACT
By Matt Bertram (Financial Director & COO)

Remaining dedicated to our value system Considering Northstar Asset Management’s mantra is: ‘Consistent long-term investment performance underpinned by exceptional client service’, our clients should expect all our behaviour to revolve around the key concepts of generating investment returns and improving service to you.
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STAFF MEMBER PROFILE
PETER STEELE
By Adrian Clayton (Managing Director & CIO)

When did your interest in financial markets start?
My interests in markets goes way back to the mid 1970’s. I guess the beauty of this is that I’ve seen my fair share of cycles. The 1970’s was a tough time for investors.
Read more
CORRIDOR CHATTER
WILL THE ANC EXPROPRIATE LAND WITHOUT COMPENSATION AGGRESSIVELY?
John Steenhuisen (Political Analyst)

The great land debate and what’s really at stake. Boardrooms and dining rooms across South Africa have been abuzz with the news of parliament’s recent passing of the EFF motion to look into amending section 25 of the Constitution (commonly referred to as the “property clause”) to allow for the new phrase de jour: “expropriation without compensation”.
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FROM THE ANALYSTS: FIXED INCOME
WHAT IS PRICED INTO SA BONDS?
By Mark Seymour (Director Fixed Income)

When did your interest in financial markets start? Fixed income investors have experienced a rollercoaster ride of events since 2012, which is when South Africa’s credit rating started to slide, highlighting the importance of adhering to a set of sound investment principles in realizing required returns without incurring permanent capital loss.
Read more

2018 - Quarter 02

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2018

Quarter2

THE BIG PICTURE
ARE SOUTH AFRICAN EQUITIES EXPENSIVE?
Adrian Clayton (Managing Director and CIO) and Rachel Finlayson (Analyst)

For four years the domestic stock market has been moving sideways, testing even the most bullish local investors. See Figure 1. With this in mind, we use three approaches in the following article to provide some indication on whether the JSE is expensive or cheap. We also then look at our view of expected returns. There is no simple framework for predicting market returns, this is not a perfect science and consequently, our approach does not aim at pin-point precision, it also is triangular in that we look at various inputs.
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FROM THE ANALYSTS:
EQUITIES – WHY WE LIKE BOEING
Donovan Stefan (Analyst)

Founded in 1916, Boeing’s success has and continues to be predicated upon the size and durability of its strategic competitive advantages (economic moats) and the high barriers to entry that characterise the industry. Boeing benefits from different economic moats including its distribution and operational scale, intangible assets (brand, patents and regulation), and switching costs. Today, Boeing is the leading aircraft manufacturer globally and operates in a duopoly with Airbus.
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FROM THE ANALYSTS
EQUITIES – REUNERT – SLOW AND STEADY
Andrew Randles (Analyst)

History: Even though Theodore Reunert and Otto Lenz, formed “Reunert and Lenz” in 1888 by specialising in electric lighting, power and transmission, it wasn’t until 1907 that the company made a name for itself by constructing a replacement steam-generated power plant for Johannesburg in a flabbergasting six weeks. Today: The company we know today as Reunert is a manufacturing conglomerate with exposure primarily to South Africa, as well as smaller operations in Australia, Lesotho, Sweden, the USA, Zambia and Zimbabwe.
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CLIENT CORNER AND NORTHSTAR NEWS
HOW FINANCIAL SERVICES FIRMS DEPERSONALISE CLIENTS RATHER THAN CREATING A CULTURE OF CARE
Lian Lubbe (Client Servicing Manager)

We have spent time studying how the financial services industry is grappling with the needs of clients and where this requires change to services rendered. This article shares what we gleaned from this exercise and how Northstar is working to improve our client offering. In the world of financial services, most companies compete by selling an intangible product. Banks sell the safety of a client’s deposit.
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CORRIDOR CHATTER
ACKNOWLEDGE THE PAST, BUT LET’S OWN THE FUTURE!
John Steenhuisen (Political Analyst)

American human rights campaigner, Malcom X said that “education is the passport to the future, for tomorrow be-longs to those who prepare for it today”. For a country to own the future, it needs to be future focused, always pre-paring, not only for the immediate challenges of today, but also through a vision-oriented approach with a keen eye on the challenges and opportunities of tomorrow. Government should be playing its role by initiating debates that point our nation towards the future.
Read more
ADVISORS CORNER
IS 5% REALLY A SAFE DRAW RATE AT RETIREMENT?
By Adrian Clayton (Managing Director & CIO)

Advisors have deep insights into structuring their clients’ wealth to meet their retirement requirements. We do not want to regurgitate what highly competent planners already know, but considering the perilous state of markets over the past five years (please see our first article: Are South African equities expensive?), we thought it worthwhile to test the widely held view that drawing 5% of capital at the end of a hard working career would always lead to safe and happy retirement.
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NORTHSTAR SOCIAL RESPONSIBILITY
TEARS – MASIPHUMELELE
Chantelle Clayton (Marketing Consultant)

Our clients are aware that Northstar Asset Management has a deep social conscience. This is not something that is legislated upon us, it is instead our choice to involve ourselves in good deeds and this is deeply embedded within our DNA. We simply want to make a meaningful difference in the lives of disadvantaged children and animals. Needless to say, our charities do not win us government points or seats at fancy board meetings, often a reason why corporates do sponsor charities.
Read more
STAFF MEMBER PROFILE – MARSHALL KANENGEBIZA
MARSHALL KANENGEBIZA
Adrian Clayton (Managing Director & CIO)

When did your interest in financial markets start?
My interest began at high school when I studied economics as one of my commercial subjects.
What did you study and why?
As mentioned above, I’m naturally orientated towards numbers and consequently, I chose to study accounting.
Read more

2018 - Quarter 03

Download Full Report

2018

Quarter3

THE BIG PICTURE
STYLE INVESTING - WHAT WORKS, WHEN?
Adrian Clayton (Managing Director and CIO) and Rachel Finlayson (Analyst)

There are many investing styles. To recognise a style, one can look at the factors an investor considers key before allocating capital to an opportunity.
Read more
FROM THE ANALYSTS
EQUITIES – VODACOM
Marco Barbieri (Director - SA Equities) and Simphiwe Msibi (Trainee Analyst)

Regulatory headwinds and changing consumer trends have negatively impacted the South African mobile telecommunications sector with all four operators feeling the effects of a sector-wide de-rating over the last year. While investors have become increasingly negative and are likely to apply a higher risk premium in valuing these businesses, we feel important company specific characteristics are being neglected.
Read more
FROM THE ANALYSTS
EQUITIES – APPLE
Rory Spangenberg (Director - Global Equities)

In the 3Q 2017 Northstar Market Report we highlighted our focus on free cash flow (FCF)¹ as one mark of superior company fundamentals. We also showed how we could discern the market’s implied in perpetuity FCF growth expectations for a particular company from the current share price and how this provides a useful shorthand or high level approach to valuation.
Read more
CORRIDOR CHATTER
IT’S MAY DAY FOR ELECTION 2019
John Steenhuisen (Political Analyst)

The Zondo commission has finally got out of the starting blocks and already some interesting skeletons have begun to tumble out of the proverbial closet of State capture. Explosive testimony by former deputy finance minister, Mcebisi Jonas, has exposed the brazenness of the Gupta smash and grab on our economy. It remains to be seen if anybody will actually be held accountable but in true South African tradition, we hope for the best but expect the worse. As the Zondo commission unfolds, the slowing economy, petrol price increases and escalations in the cost of living have started to bite, citizens have begun to count the real cost of the scourge of state capture.
Read more
ADVISORS' CORNER
NORTHSTAR ROADSHOWS 2019
By Adrian Clayton (Managing Director & CIO)

We are hosting advisors in Durban, Johannesburg and Cape Town on the dates and times indicated in the attached invite. This invite was e-mailed to all financial advisors which we have on record. Demand has exceeded our expectations in Cape Town and Durban but we are happy to accommodate more guests at all venues. Should you want to attend, please send an e -mail to info@northstar.co.za. You are also welcome to bring along your clients. Our existing Northstar clients will be hosted at similar events in the months ahead – please watch for invites in your mailbox.
Read more
STAFF MEMBER PROFILE – ANDREW RANDLES
ANDREW RANDLES
Adrian Clayton (Managing Director & CIO)

What is your function at Northstar?
I am an equity analyst and work in the South African equities team. I am responsible for analysing various companies which are listed on the JSE. This involves writing up research reports on these businesses and building financial models on each.
Read more

2017 - Quarter 01

2017

Quarter1

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2017 - Quarter 02

2017

Quarter2

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2017 - Quarter 03

2017

Quarter3

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2017 - Quarter 04

2017

Quarter4

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2016 - Quarter 01

2016

Quarter1

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2016 - Quarter 02

2016

Quarter2

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2016 - Quarter 03

2016

Quarter3

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2016 - Quarter 04

2016

Quarter4

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2015 - Quarter 01

2015

Quarter1

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2015 - Quarter 02

2015

Quarter2

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2015 - Quarter 03

2015

Quarter3

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2015 - Quarter 04

2015

Quarter4

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2014 - Quarter 01

2014

Quarter1

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2014 - Quarter 02

2014

Quarter2

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2014 - Quarter 03

2014

Quarter3

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2014 - Quarter 04

2014

Quarter4

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2013 - Quarter 01

2013

Quarter1

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2013 - Quarter 02

2013

Quarter2

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2013 - Quarter 03

2013

Quarter3

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2013 - Quarter 04

2013

Quarter4

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2012 - Quarter 01

2012

Quarter1

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2012 - Quarter 02

2012

Quarter2

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2012 - Quarter 03

2012

Quarter3

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2012 - Quarter 04

2012

Quarter4

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2011 - Quarter 01

2011

Quarter1

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2011 - Quarter 02

2011

Quarter2

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2011 - Quarter 03

2011

Quarter3

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2011 - Quarter 04

2011

Quarter4

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2010 - Quarter 01

2010

Quarter1

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2010 - Quarter 02

2010

Quarter2

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2010 - Quarter 03

2010

Quarter3

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2010 - Quarter 04

2010

Quarter4

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2009 - Quarter 01

2009

Quarter1

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2009 - Quarter 02

2009

Quarter2

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2009 - Quarter 03

2009

Quarter3

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2009 - Quarter 04

2009

Quarter4

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2008 - Quarter 01

2008

Quarter1

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2008 - Quarter 02

2008

Quarter2

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2008 - Quarter 03

2008

Quarter3

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2008 - Quarter 04

2008

Quarter4

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2007 - Quarter 01

2007

Quarter1

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2002 - Quarter 02

2007

Quarter2

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2007 - Quarter 03

2007

Quarter3

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2007 - Quarter 04

2007

Quarter4

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2006 - Quarter 01

2006

Quarter1

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2006 - Quarter 02

2006

Quarter2

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2006 - Quarter 03

2006

Quarter3

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2006 - Quarter 04

2006

Quarter4

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2005 - Quarter 01

2005

Quarter1

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2005 - Quarter 02

2005

Quarter2

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2005 - Quarter 03

2005

Quarter3

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2005 - Quarter 04

2005

Quarter4

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2004 - Quarter 01

2004

Quarter1

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2004 - Quarter 02

2004

Quarter2

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2004 - Quarter 03

2004

Quarter3

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2004 - Quarter 04

2004

Quarter4

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2003 - Quarter 01

2003

Quarter1

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2003 - Quarter 02

2003

Quarter2

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2003 - Quarter 03

2003

Quarter3

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2003 - Quarter 04

2003

Quarter4

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2002 - Quarter 01

2002

Quarter1

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2002 - Quarter 02

2002

Quarter2

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2002 - Quarter 03

2002

Quarter3

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2002 - Quarter 04

2002

Quarter4

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