Northstar quarterly market reports
The Northstar Market Report provides powerful empirical evidence as to why we are confident that our investment philosophy and process, closely followed, will deliver market beating returns for our clients over time. This work again points to controllable factors - markets move wildly, falling in and out of love with different sectors and companies, but we have a defined formula that works and we stick to our guns by only owning quality companies when they are incorrectly valued by other investors. We discuss stocks in this report, delving into our investment cases for specific securities which we own.
CURRENT QUARTERLY REPORT
2018 – Quarter 2
THE BIG PICTURE
Are South African equities expensive?
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.
FROM THE ANALYSTS: EQUITIES
Equities – Why we like Boeing
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.
FROM THE ANALYSTS
Equities – Reunert – slow and steady
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.
CLIENT CORNER AND NORTHSTAR NEWS
How financial services firms depersonalise clients rather than creating a culture of care
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.
Acknowledge the past, but let’s own the future!
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.
Is 5% really a safe draw rate at retirement?
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.
NORTHSTAR SOCIAL RESPONSIBILITY
Tears – Masiphumelele
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.
STAFF MEMBER PROFILE
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.
QUARTERLY REPORTS ARCHIVE
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