It’s a depressingly hollow victory when the “sheets & giggles” segment of your portfolio delivers standout returns but your slug of high-conviction stocks plod along like a dogged Geoffrey Boycott closing out the last few overs of the day. Yes, of course, I’ll take a dependable stock any day — but I still like to see the scoreboard regularly ticking over.
I was unfortunately late to discover that EasyEquities offered “short” ETFs on SpaceX — which is a pity, as most of these have already rocketed up by astronomical numbers. The Tradr 2X Short SpaceX Daily ETF is up 95% in a month. Still, I’m not one to carp about a 27% gain as a Johnny-come-lately participant. The joys of a much-hyped IPO! The challenge now is setting a “long” target price for SpaceX. Does $60 sound reasonable?
Following the FM’s recent intriguing cover story about Randgold & Exploration (RNX), I took a small Fomo flutter on this legal case lottery. The intricacies of RNX can be mulled over in gory detail in the FM archives, but essentially much of the legal matter hinges on the court case against Gold Fields for the Western Areas asset the gold mining house now owns. The ghost of Brett Kebble looms large in this particular instance, so it’s convoluted and contentious. But some punters are happy to try their luck.
RNX’s share price is up 75% over a month and a whopping 255% over three months, though trading has been largely in small speculative volumes. Potential claim numbers from RNX are big and would translate into many times the current share price. But these complicated legal matters can drag on forever. A settlement, though, at even a fraction of RNX’s legal claim, should represent some serious upside on the current share price.
It depends, I suppose, on whether Gold Fields wants a pending claim albatross around its neck. The gold miner — surely wary of the uncapped risk — would not dent its balance sheet to make an offer to RNX shareholders at a multiple of the current share price and close down the company. That is probably wishful thinking on my part, but a generous cash-out option versus a prolonged legal scrap does have its appeal.
Speaking of scraps, investment counter Reinet is not dedicating too much space to placate disgruntled shareholders ahead of its AGM next month. The group’s first-quarter report to end-June frustratingly provides no fresh insights into the strategy for allocating its monumental cash pile of about €5.4bn, other than the ongoing share buyback exercise.
Officially, “Reinet recognises the importance of cash reserves in uncertain times; it maintains relationships with numerous highly rated banking institutions and has a well-diversified approach to cash and liquidity management”. Yawn. Reinet has a stated NAV of €6.6bn, which, it notes, reflects a compound growth rate of 8.1% a year since March 2009 (and that’s including dividends). This is not a track record that inspires huge confidence if it comes to mobilising the cash pile for new investments.
If there is a bright spot — and it’s a little one — shareholders might be encouraged by the marked value uplift in Reinet’s shares in Twist Bioscience, a synthetic biology and genomics company that wants to “industrialise” the engineering of biology. In the end-June quarter, the value of the Twist investment skipped to €40m from just €18m in the previous quarter.
Twist’s share price has raced from about €44 in mid-March to as high as €102 earlier this month. The share’s spiral would have been a tad more significant measured against Reinet’s remaining investment portfolio without the oversized cash baggage (says a shareholder who is still dead keen on a special dividend).
Last, the share price of another investment counter, Hosken Consolidated Investments (HCI), has been oddly subdued in recent weeks. Admittedly, many of its listed subsidiaries have seen a slight softening in share prices (some going ex-dividend), but I would have thought sentiment might have been suitably lubricated by news from TotalEnergies, which is leading the development of the much-mooted Venus oil well off the Namibian coast.
HCI, which spent a fair whack helping to explore the concession area, has retained a roughly 10% stake in Venus, which is still enough to provide a serious X factor to the portfolio returns in the medium term. The way I understand it is that TotalEnergies CEO Patrick Pouyanné indicated in a recent quarterly results call with investors that official approval from the Namibian government for the Venus development is imminent — in his words, it is “finalising the last papers to close the deal” — and will most likely be given before the end of this month.
It will also be heartening for HCI shareholders to hear that Pouyanné stressed the importance of the Venus project for the longer-term prospects of TotalEnergies.
HCI’s share price is an intriguing reflection of the market’s inability to properly, or rather accurately, place a value on HCI’s oil and gas interests, which, of course, extend beyond just the Venus project. The closer the Venus project moves to definitive project timelines and production forecasts, the more tangible the value for HCI’s intrinsic value calculations. The volatile crude oil price, of course, remains the fast-moving curve ball.
HCI’s integrated annual report is expected shortly … and that always makes for a riveting read.