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Buckets of Investing & Popular Investing, New Realm – Jamaica Way
Interesting, new, emerging investment strategies that have been evolving globally over the past few years have been investment themes around shares/ stocks are:
- Popular companies via media, public relations, and social media activity
- Companies executing unprecedented & continued growth via deals, mergers & acquisitions, add-ons, etc.
Using these themes with our Market as a sample size, the Jamaica Stock Exchange (“JSE”) and with no statistical evidence at this stage, but conducting our own surveys, we have found some interesting findings & responses to date:
Media, Social Media, Public Relations Activity: Shares on the JSE
Barita Investments Limited, Derrimon Trading Company Limited, Jamaica Producers Group via St. Mary’s JP & Kingston Wharves, Kingston Properties, Seprod Limited, FESCO Limited, &Fontana Limited.
Consistent Growth via Deals, M&A, Add-Ons: Shares on the JSE
VM Investments Limited, Barita Investments Limited, Sagicor Group Jamaica, Derrimon Trading Company Limited, JMMB Group Limited, Jamaican Teas Limited, Seprod Limited, Supreme Ventures Limited, Cargo Handlers Limited, FESCO Limited, & Tropical Battery Company Limited.
Investing habits/ themes, some will say never changes, others may say principles never change. However, we have seen over the past decade, many changes have happened in the global financial place, with Berkshire Hathaway invest heavily in Apple Inc, our very own Michael Lee-Chin doing away with buy, hold & prosper, Cathie Wood emerging with her investing strategies at ARK Invest, and other notable investing strategy themes…
As markets evolve, asset classes develop, investing changes and while the above strategies may not be observed as mainstreamyet in Jamaica, it is difficult to be in any lunchroom, or any event and not listen to a story or a query about Barita or Derrimon. It is also interesting to note, that they overlap both aboveperceived themes as well.
Market Moves:
- The Dow Jones index (US: DJIA) makes major plunge and drops below 35,000 points on news and fear of new Covid variant that is vaccine resistant. It represents the single largest fall in the markets in the U.S. on a single day in 2021, with the Dow Jones down over 900 points. Additionally, commodity benchmark price of Oil, goes significantly lower as well, falling below US$ 70/ barrel after surging past US$ 80 recently, with notable analysts easily projecting US$ 100 or higher in the short-term for the highly used energy product. Oil down over 10% during the trading day on this negative news. Bitcoin fell more than 8%.
The global headline of the discovery of a Covid variant in Southern Africa drove significant fear around the global financial markets throughout today, with European stocks down over 3% to continue the theme. Plus, with Germany already imposing serve lockdowns and limiting travel, all in all, this added to the fear and the retreat in global prices.
- Well, we know the financial sector is back to its winning ways and firing on all cylinders. Not just are the profits back but there is significant double digit after-tax profit growth across the board again. JMMB Group, Sagicor Group Jamaica, Barita Investments, Sygnus Credit Investments, and a few other highlighted financials. One of the sleepers, as they needed some time, a re-brand and some deals under their belt is the VM Group or VMBS investment arm. To be specific, VM Investments (JSE: VMIL) that trades on the Jamaica Stock Exchange (“JSE”). They are still a young company, from a listed standpoint, approximately 4 years old, as they listed in late 2017. During the past 4 years, VMIL has been putting together a solid track record. Calling a spade, a spade, VMIL’s weakness had always been that they would have inherited VMBS’ reputation and brand image of being ultra conservative (prior to the re-brand, a big change). Now, there is a pro & con that comes with the legacy & history. When managing client funds, seeking to grow assets under management (“AUM”), etc. it is very positive to have VM as the anchor investor and to have this image attachment. However, the struggle during this time was also, they articulated that they, VMIL, wanted to win investment banking deals, execute IPOs/ structures, etc. The “word on the street” during those few years, was that there just was no way they would win the deals that the perennial investment banks would win or be known for. Reason being the perception of conservatism. So even if VMIL, potentially was setup and listed to be able to function as a standalone arm, it would take time to branch out on its own based on perception. VMIL did a few things that have clearly helped to address this and be an independent “kid” in the Group, they did a regional deal in Carilend that gave then some strength & raised their financial profile to potential customers. They raised funding and specifically mentioned the use of proceeds is for investment banking deals. Now, they have announced a definitive agreement to acquire a family of mutual funds in Barbados that Republic Bank (Barbados) Ltd owns, named, Republic Funds (Barbados) – Property Fund, Income Fund and Capital Growth Fund. This is big, as the last few actions, and this one, really makes what they call in financial markets, VMIL a “player.” Of course, VMIL we assume is doing this Barbados deal for return on investment (“ROI”) and for synergies with its existing business and business lines, but an announcement of this magnitude will also make several investment banking customers or potential deals that would not consider VMIL previously, now approach VMIL in 2022.
In line with this, it is very positive to see, a Senior Manager buying upon November 19, 2021, and November 22, 2021, cumulatively 32,000 shares in VMIL. As they say, “the proof is in the pudding or the eating, something like that…”
- Annual reports galore, with Wisynco Group Limited (JSE: WISYNCO), Knutsford Express Limited (JSE: KEX), Consolidated Bakeries Ja. Limited (“Purity”) and more, publishing their 2021 annual reports in most cases this past week. We really like what Knutsford Express did with their annual report and how it highlighted their business model, their wins and clearly articulated what is to come. Wisynco’s annual report, could have been better, quite a twist of events with a skyrocket and astronaut vibe to it… Something like George Jetson vibe mixed with the recent tales of Elon Musk, Richard Branson, and Jeff Bezos… Going to Space. It makes you do a double take in reading and going over the Wisynco Annual Report 2021. Nonetheless, they had a great year, and the information is good.
We keep saying, we feel like Knutsford Express is going through a “pivot” or even a transformation and it reminds us of their IPO and early years post-IPO. We think Knutsford Express may have made an error with the U.S. expansion but perhaps they can convert that into some courier play, etc. When you visit any of their locations you are seeing a significant amount of usage around their cargo and courier play. This is not new, but they are marketing/ branding it more. It is a good service and Knutsford Express has not pushed it fully yet in our opinion. The Annual Report highlights a few essential items, and as a reader you can get to this quickly in the 1st 10-20 pages. We like this and it shows how well it has been put together. They jump into, the “Drax Hall Hub”, a major investment and revenue point for Knutsford Express. Additionally, what we view as the “transformational” theme, logistics/ courier, with 18 locations and growing across Jamaica, and recent media surrounding, that they will be implementing “smart lockers.” Overall, Knutsford Express could surprise in 2022.
- Radio Jamaica Limited (JSE: RJR) has been making big moves in recent times, as reflected in the share price, still above J$ 3/ share. A true winner will always be eventually reflected in the share price, and that is what has eventually happened with RJR. It did take some time, but the company this past week held an investor relations meeting with the analyst community, and it was well received. A sleeping giant with underlying value and bedrock foundation can always awaken with a few solid moves. RJR is exactly this and has been recently executing. They completed their re-organization, and divested Music 99FM. With the handling of each matter, the investor communication was handled well, the market digested it well, and the share price reacted positively. An investor relations exercise for a company of this magnitude will always be received well, and it demonstrates a company willing to change and on the move. It shows relevance and investors like to see the company they invest in prevalent and their respective brand out there. These recent actions and the investor relations exercise should bode well for RJR, and the objective for them should be to continue at this space and even consider quickening their corporate actions of digitization and anything else.
See you in December!
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