October Idea of the Month: Africa

by Travis Johnson, Stock Gumshoe | October 16, 2009 4:48 pm

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Source URL: https://www.stockgumshoe.com/2009/10/october-idea-of-the-month-delayed/


23 responses to “October Idea of the Month: Africa”

  1. Teerena says:

    I became an Irregular member today and have just finished reading your October idea.

    Surely with the thousands of business opportunities that exist in the investment community you could find something more easily traded then this particular stock. You readily admit that Lonrho is hard to purchase, being a London based (exchange considerations) thinly traded security, etc. and is even MORE difficult to sell and all of this with a long term investment horizon and a mere 100 million market cap. Sounds like Vegas.

    I will probably be one of the shortest Irregulars to have ever graced your rolls as my cancellation is on its way after one day.

    I guess I was expecting something slighly less exotic and something with more than a “roll of the dice” investment basis.

    Just my opinion.

    Thanks

  2. Clislelsogget says:

    Thanks for your suggestions on African companies. I have owned SASOL for a long time and it’s done well. The tiny or odd companies are well worth our attention! I also really commend your sleuthing; it’s saved me hours of playing with what some of the fliers suggest.

  3. sotaaqualay says:

    My portfolio includes SSL and EZA and I have done quite well. I like your analysis of the smaller opportunities in Africa. It gives investors like me another view of the world.
    I understand now more than ever that I will always do my own research given the experience I have had with a financial advisor who did not and quite frankly was arrogant.
    I became an irregular about 6 months ago and find comments like the one negative above to be the minority and would remind other irregulars of what McArthur said ” An operation of this size there will be casualties”.
    The overall education is more than worth my time and $. Thanks.

  4. Meertaizoto says:

    Travis, as evidenced by the above discomfited reader, you can’t please everyone. Since I’m much easier to please, I’d like to thank you for this latest idea and for the legwork; I enjoy reading about (and considering investing in) the occasional oddball stock such as this one. I figure it’s good to see as much of the equity universe as we can. Gee, Lonrho bounced 33% today—you may have more market clout than you think. : )

    I also own EZA.

  5. steviep says:

    the history of Lonhro is a fascinating story of one of the greatest pioneers of investing on the African continent.The bossman of Lonhro was a larger than life character named “tiny” Rowland.A great friend of characters such as Jimmy Goldsmith and Jim Slater for those of you who are familiar with the GO-GO 60s and 70s of swinging London.Goldsmith ws one of the guys that invented the asset breakup of companies a precurrer of KKR.Rowland at one time owned the famous British newspaper -The Observer and objected strongly to the sale of the dept.store Harrods to AL-Fayed as he questioned the legality of the origin of the funds to buy the store. Rowland had a point as he was on favourable terms with such diverse characters as Mugabe,Gadaffi,Sadat,Rawlings,Kenyatta .He was also responsible for the failed attempt to commercialize the Wankel engine in an automobile called the RU80.It can be said that the original Lonhro died with Tiny Rowland.The “new” Lonhro will be a success as they have as much savvy as anyone on the intricacies of doing business on the African continent. I am curious as towhere the impetus came to write about Lonhro as most Americans recoil in horror on any discussion on the merits of African investments.

  6. alexkiroffmsc says:

    I am a big fan of Africa, probably a function of my having worked and/or lived there for about a third of my adult life, and I thank you, Travis, for focusing on aq much maligned and much-neglected part of the world.. As a business consultant and sometime private equity/finance adviser/investment banker, I lived in South Africa for 7 years, most of the time working in the financial sector. I have also lived for extended periods in DRC, Botswana, and Zambia, and I have worked or done business in about 30 countries on the continent.

    I believe that African risk, more than almost any other region’s, is overpriced. Part of this is because most people, especially in the U.S., think Africa is one country, and can’t distinguish between Sudan and Senegal. Of course there are risks, but most of them can be managed, and there is certainly a risk premium for investing there, but I have come across far too many supposedly sophisticated investors who won’t touch any part of Africa with a barge pole.

    There are a lot of ways to get African exposure, but apart from investing in various Africa-focused ETFs or buying the shares of African companies with ADR listings, there aren’t too many pure Africa plays. You could invest in big mining companies like BHP, RTZ, or Freeport McMoran, junior mining companies, mainly listed on the TSX, or in various energy companies both big and small that operate around the continent. But except for a few juniors, most of these companies have exposure all across the globe. The same goes for companies like Diageo (which owns Guinness), Heineken, and SAB Miller, which dominate brewing across Africa, and for telecoms firms like MTN, which have extended (some would say overextended) into Asia and the Middle East. The big companies listed in Johannesburg, many of which have dual listings in New York or London, are not pure African plays either. SASOL, Sappi, Old Mutual, Liberty Life, Anglo American, and others, have their roots in South Africa, but operate all over the world.

    Lonrho is an exciting company, resurrected from the ashes of Tiny Rowland’s old company, which operates in some of the most promising growth areas on the continent. They do mine for diamonds in South Africa (not too exciting), but the real excitement is in some of the areas Travis mentions: the Luba Freeport, Fly540; and the big agribusiness plans. As the world, and especially the Gulf countries, look to secure their food supplies, they are turning to Africa, which presents huge opportunities for investment in the sector. Lonrho also offers one of the few Zimbabwe plays around, and if you think this is a bad joke, don’t. Zimbabwe is starting to come back, and sooner than you think it will once again be a huge agricultural exporter, manufacturing center, and tourism destination. I think Lonrho is a classic buy and hold opportunity. Buy it now, forget about it, and in several years you could be holding something pretty valuable.

    Lonrho, and Southern Africa, are not the only play on the continent. I have said before (you can look it up on my blog – http://www.emergingmarketsoutlook.com) that in the next 20-40 years Nigeria will be a more important economic (and possibly political) force than Russia, and I still believe that. Nigeria has a long way to go, but it looks like following a similar path to Indonesia’s, which has gone from military dictatorship to genuine democracy and which has made a significant dent in corruption.

    By all means do your own research. If you are looking to start living off your retirement funds in the next five years, Lonrho and other Africa plays may not be for you. But if you are looking at the longer term, take a close look at these.

  7. amateurteens says:

    Can you identify “two red-hot penny golds” rerports hyped in “Chuck’s Penny Mining Speculator”, who Bob Czechin is pushing at a special price of $2500 for a year?

    And you are fun to read, even if I never make millions!

  8. Danrezshub says:

    I’ve subscribed to various Motley Fool offerings and a few others out there.

    The Gumshoe will give you more good recommendations for free than you’ll get anywhere else.

    You’ll also get the very valuable flipside.

    I think The Stock Gumshoe is the best value you’ll find.

  9. mariouch says:

    Ronald, I too joined today. I totally disagree with you. I have been reading The Stock GumShoe for a year now. I felt obligated to purchase a one year subscription because I have invested in many of the stocks that have been revealed by the GumShoe. If I had to subscribe to all of those newsletters. I would be broke (I just exaggerated). I have been very lucky with many stocks not only from Travis, and other newsletters. I am 61 and this year became a millionaire. It takes time and patience.

    To judge a newsletter on one issue is a little ridiculous to say the least. I really enjoy Travis’s humor. He doesn’t mislead you as do the other newsletters I belong to. They tend to exaggerate. The GumShoe doesn’t and that is the main reason I felt compelled to join today. The articles on Canadian Trusts were worth the subscription price alone.

    Have patience my friend….Life is good. Take time to smell the roses.

  10. amandac says:

    Hi to everyone, I just joined up and I like it! Wondering if anybody knows of a good and reliable forex trading course to take, I bought into the one called the Insider Code a couple of years ago which was really expensive and after reading many reviews on it I got cold feet and did not try it. Can any one help me out here, I am looking to day trade to make a living, am I crazy or can it work?
    Thanks in advance for any advice on this
    Doug

  11. paul kuznetz says:

    hey folks, new here. i look forward to the experience!!

  12. unomofuemaSof says:

    hi everyone, I´m also new today. After reading the very first Gumshoe newsletter a couple of weeks ago I felt, this is where I should have signed up instead of allowing myself to be taken in by all those expensive newsletters that certainly know how to talk their way into fooling inexperienced newcomers. Every time I saw the Gumshoe visiting card in my inbox I had to grin and felt good. So today I signed up because its the only fair thing to do . I love Travis´s humour and I love his style and I´m now convinced that he will help me to be successful, apart from the fact that he is absolutely brilliant the way he concludes which stock is being teased. I´m sure everyone realizes how much work he puts in to what he does for us. .

  13. carolesormanti says:

    Ronald,
    You joined….why? Consider it a payment for the work performed in deciphering others ploys to pull dollars out of your wallet.
    I really liked this African play, and look for investments outside of the normal pump and dump world.
    Yes, it is harder to buy and sell, but part of the problem in todays market, and life in general, is too many people expect things too quickly. You could make a note of these plays and check into them every so often, to see if they are gaining some ground in the world markets, and maybe they would be good for you then.
    I thank the Gumshoe for the ideas.
    I am going into LONR, specifically for the port project alone.

  14. Andreekoslovsky says:

    I’m puzzled about Lonrho. Looked it upon the web, got a chart saying it’s LONR on the London exchange and has gone from about 9 to about 8.25 this week. Think or Swim gives it the symbol LNAFF and says it last traded several days ago at 18 cents, moving up from 12 cents and 15 cents , which doesn’t sound like the same stock either in price level or direction and timing of of price action. What am I missing?

  15. casino says:

    My first day here!! So far so good…for a change its nice to hear analysis from someone real 🙂

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