TAKING STOCK OF RECENT TRADE RECOMMENDATIONS

Looking back at the last month and the trades that we have recommended, the time has come to see how our recommendations have faired.

First up was Coronation Fund Managers Ltd (CML). We recommended CML as it was trading at a 12.6% discount to our valuation of the share as well as having a great dividend yield of 5.7% and it is aggressively growing its market share in the asset management business. We recommended a buy at R29.00, although it proved stronger and never gave us the opportunity to buy at that price. Having a look at the chart below with the target entry area indicated, we managed buy some stock at R29.50. CML is currently trading at R30.30 and it still has some way to go before it reaches our target price or the price we believe it should be trading at from our valuation.

CML - Daily

Then came MTN Group Ltd (MTN). With its subscriber base up 6.9% and revenue up by 17.5% we recommended a buy at R150.00. Again, MTN proved stronger and we had to take advantage of one of the various opportunities it gave around the R155.00 level. It became clear that it was not going to trade down to our target entry and we bought at R155.00. Our price target is still some way up from here and MTN is currently trading at R159.94.

MTN - Daily

We also recommended Brait SE (BAT) on the back of a P/E ratio of 5.28 and a forward P/E of 5.26. There are also an abundance of fundamental reasons including the defensiveness of their holdings and the quality of their management team that prompted the buy. We did not specify an entry target price for BAT, however we took advantage of the price action 2 days ago and bought at R28.00. Currently BAT is trading at R28.50.

BAT - Daily

The lastly, we recommended a pair trade which was Long - MTN Group Ltd (MTN) and Short - Anglo American PLC (AGL). The entry prices we attained on these two opposing trades were (MTN) R158.40 and (AGL) R149.68. Currently, they are trading at (MTN) R159.94 and (AGL) R257.70 meaning that thus far the pair trade is down -0.23%. We have of faith in this trade as we are long the relatively stronger of the two shares and we are of the belief that this pair trade will soon become profitable.

Then just to end off with some news; the German constitutional court has ruled in favour of the (European Stability Facility) ESF provided that certain conditions are met by the ECB. This is favourable news for market and the since the ruling; the market has responded by becoming somewhat more buoyant on the day. Eyes now turn to Ben Bernanke once again, and the FED announcement that is due tomorrow (13 September 2012) regarding whether or not the FED is willing to provide more Quantitative Easing (QE3). Combine that with the situation developing in the South African mining sector and we have a lot of event risk in the market. Please trade with caution and make sure that you are in fundamentally good shares with good earnings growth potential, much like the shares that we have recommended above, in order to avoid the bulk of this event risk. The market place is noisy and we must ensure that we are in the very best possible shares so that we may ignore the noise.