South Africa’s favourite stockbroker, David Shapiro, has returned from holiday with usual exuberance restored. His concerns about political mismanagement of the SA economy are ancient history for now as he urges investors to look more directly at the underlying companies. In our CNBC Africa interview yesterday, he elaborated on an overriding view that the JSE will boom in 2015. He reckons Naspers and Steinhoff will outperform and in this discussion, explains why in some detail. – AH
ALEC HOGG: David Shapiro from Sasfin is with us in the studio as usual, on a Wednesday. Every Wednesday this year Dave?
DAVID SHAPIRO: I am, yes.
ALEC HOGG: Mr Raging Bull….are you still bullish for 2015?
DAVID SHAPIRO: I’m still bullish. Do you know why I’m bullish? Listen to Bruce Henderson, you don’t hear him; I promise you, he’s not worried about the inflation numbers that are coming out of the Eurozone or anything like that. He’s got a business and he’s going to run the business, regardless of the economic situation.
ALEC HOGG: Or political….
DAVID SHAPIRO: Or political. And that’s why you invest in businesses. That’s why you invest in equities and people like that. I think we make too much fuss over the economic situations and businessmen just come in every day and battle, regardless of what the issues are.
ALEC HOGG: When last did you go to Bidvest’s head office, at Melrose Arch, to see your friend, Brian Joffe? I was there, not at Bidvest but at Melrose Arch over the holiday period. And they have a big sign up there. “We refuse to participate in the recession.”
DAVID SHAPIRO: Yes.
Watch the full CNBC Africa Power Lunch interview:
ALEC HOGG: Bruce Henderson is the same man. He said the same kind of thing. He said ‘forget the numbers of last year. Watch out for this year’s one’.
DAVID SHAPIRO: Yes, that’s exactly it and that is why you invest in good companies. I promise you, if you go to Apple, they’re not worrying about what’s happening broadly. They worry ‘how are we going to sell more smartphones’ and ‘where’s the next big thing for us’ and so on, whether it’s a drug company or a motor vehicle. Did you see Rolls Royce yesterday? Their results were staggering. They sold more Rolls Royce’s, if that’s the right plural or word, then ever in their history, last year. They’re not worried.
ALEC HOGG: That’s because the one percent’s getting richer?
DAVID SHAPIRO: Well, they’re still a good company and that’s why you invest in those kinds of companies, who are not concerned about so much of the broad economy.
ALEC HOGG: Did you see Naspers this morning; I know it’s one you love?
DAVID SHAPIRO: Great, yes, absolutely.
ALEC HOGG: So Tencent flies in China, pulls the whole emerging markets up and Naspers in South Africa has a good run too.
DAVID SHAPIRO: Absolutely and trading at a new high. Analysts are now picking up on it, global analysts are now picking up on Tencent, with some very lofty evaluations or forecasts, and that is going to just, keep picking up Naspers. They’ve suddenly discovered, after Alibaba, that there are more Chinese internet companies that you can invest in.
ALEC HOGG: Yes, and good value, relative to what they’ve given to Alibaba. Yesterday, Gary Booysen was giving us his share selection for the year and he likes Steinhoff. Partly because they’re going to be listing in Frankfurt. When the international community discovers a share, like you’ve just mentioned now with Tencent, it does make a difference. Do you think it could be so with Steinhoff?
ALEC HOGG: It’s like Jake White and John Smit in rugby?
DAVID SHAPIRO: It has to be something like that. You’ve got to back people and they’re not shirkers. They’re not going to allow this thing to fail and I certainly don’t think Christo Wiese went in to make money out of it. He might have made a lot of money but that’s not his driving force and I think given time they will…
ALEC HOGG: But he’s almost your age, 76. How does one think at 76? What’s the motivation?
DAVID SHAPIRO: I see in Singapore they are raising the retirement age, I think from 67 now to 70 as well, so I think you’re going to find…
ALEC HOGG: So are the Germans, they’ve put that up too. But David, Wiese, a 76 year old, he’s done the biggest deal in the Johannesburg Stock Exchange’s history. He’s supporting his good pal (Jooste); he actually met him as an article clerk many years ago. Does he get involved in that business still?
DAVID SHAPIRO: Absolutely, he’s not going to lie back on the beach. Not at all. Look at Buffett at 84, still going at it…still very visibly about. In fact, Berkshire Hathaway, all time high, is shifting his focus to more mergers and that. It is just part of his DNA. I don’t think Warren Buffett can wake up in the morning and go and make a cup of tea and toast, and do nothing.
ALEC HOGG: So why don’t you like Steinhoff as a stock?
DAVID SHAPIRO: No, I do. I’ve always been confused about Markus, and where he’s going, but I think that I’ve always admired his ability to actually, make it work and I think he will do it.
ALEC HOGG: And he’s now shown you where he’s going.
DAVID SHAPIRO: Yes.
ALEC HOGG: What is your share for this year though?
DAVID SHAPIRO: I still like Naspers. I still think it is going to be driven and I’m very bullish on Alibaba and I’m very bullish on Tencent. I’m very bullish on Chinese internet companies, so there are so many themes that are driving me. Another bullish theme is the fall in the oil price, and the effect that it’s going to have on European companies as well (the European manufacturers), so luxury goods companies like Richemont, have to benefit from it. You’ve got a Euro. They’re producing the watches at significantly low values now.
ALEC HOGG: So we start this year in a more optimistic mood than we have done for a while.
DAVID SHAPIRO: Yes.
ALEC HOGG: We do call him Raging Bull Shapiro, so take what David says in that context, but this time around I actually agree with him and I agree with him very strongly. I think 2015 is going to be a ‘gang-busters’ year. Not just for the global economy but South African stocks too.
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