Bid for Bernie

Published 2023/08/31, 12:29

Market scorecard

US markets closed higher yesterday, extending their recent winning streak. The S&P 500 is up 2.5% this week, which is tremendous. The Nasdaq 100, which is heavily weighted towards technology stocks, has risen by an even more impressive 3.5% since Monday.

The US Commerce Department reported that gross domestic product (GDP) increased at an annualised rate of 2.1% in the period from April to June, after accounting for seasonal fluctuations and inflation. This was a slight downward revision from the previous 2.4%.

In company news, Apple (NASDAQ:AAPL) confirmed that the iPhone 15 range will be launched at an event in California on September 12th. Elsewhere, Visa (NYSE:V) and Mastercard (NYSE:MA) rose by around 1% each on news that they plan to boost the fees they charge to retailers across the globe. The biggest loser of the day was HP (NYSE:HPQ) (-6.6%), after printing (excuse the pun) a weak quarterly earnings forecast.

Yesterday, the JSE All-share climbed 0.64%, the S&P 500 rose 0.38%, and the Nasdaq moved up by 0.54%.

One thing, from Paul

The South African government is a disaster. The ANC policy of state-led development has not worked. Unemployment is sky-high and growth is anaemic. Public enterprises have almost all failed. Government departments are overstaffed and achieve little.

Private sector initiatives have saved the day. Eskom blew through R300 billion on coal-fired power stations that don't work, leading to loadshedding. Once the government got out of the way, self-generated solar power has taken up the slack. Rooftop solar now contributes the same as a Medupi with another 3.2 GW of panels that will be connected this year.

Government tries its best to undermine large businesses. The Competition Commission has been a huge thorn in their sides, blocking mergers or imposing onerous conditions on others. They have conducted sectoral studies and made absurd suggestions, asking healthy operators to split themselves up for no good reason (see below).

Voters really need to kick this crowd out in 2024. The election is 300 days away. Make sure that you are registered, and active in your local community.

Byron's beats

Nvidia (NASDAQ:NVDA) is up 244% this year and everyone has become a computer chip expert. If you really want to impress your mates at the next braai, watch this clip which explains how the AMSL EUV machine actually works.

ASML (AS:ASML) is the dominant company in the world that manufactures the machines that make high-end semiconductor chips. After watching the video you will understand why ASML has a wide moat. These machines can't be knocked off by a cheeky competitor.

Each EUV machine costs $200 million, consists of 100 000 parts and weighs 200 tons. Humans really are incredible.

Michael's musings

Yesterday, food services group Bidcorp (JO:BIDJ) smashed it out of the park, reporting very strong full-year numbers, sending the share price up 7.3% for the day. The company reported a 33% increase in revenue, a 35% increase in profits and a 34% increase in its dividend. It is good to see one of our local holdings doing so well.

Bidcorp has been very successful at expanding internationally. Many other South African companies have tried but failed to establish offshore operations, despite spending billions. Bidcorp only derives 16% of its revenue from emerging markets these days, and unsurprisingly, this was the division that showed the worst growth for the group over the last year. Sales in Europe were very strong, thanks to a booming summer holiday season.

Earlier in the year, the market was worried that Bidcorp would struggle to pass through higher costs to its customers. That fear was unfounded, and profit margins were only marginally lower. The Bidcorp numbers confirm that inflation has slowed significantly.

We are happy holders of Bidcorp in JSE portfolios. It is a well-managed global company that ticks along with incremental increases in profits and dividends. Well done to Bernard Berson and his team.

Bright's banter

OnlyFans seems to be doing just fine despite a few business mishaps. According to their latest financials, the subscription-based social media platform known for its 'diverse' content, paid its owner Leonid Radvinsky $338 million in dividends last fiscal year.

OnlyFans' revenue went up by 17% to $1.09 billion. The growth came from the number of creators increasing by 47% (now at 3.2 million) and users growing by 27% (now at 239 million). Profits were up 24% to $403.7 million.

While OnlyFans is best known for its adult content, it's been trying to broaden its appeal by moving into other areas too. They've been backing a range of creators including stars in sports and entertainment, to give the brand a boost.

Signing off

Asian markets are looking iffy this morning, other than the Topix in Japan. Markets in China declined after manufacturing activity in China contracted and services PMI growth slowed. The Red Dragon is looking weak, regularly undershooting forecasts.

US equity futures are unchanged in early trade. The Rand is trading at around R18.71 to the US Dollar.

Tomorrow is Spring Day, are you ready?

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