Companies that drove the JSE to a record, and two managers who called it right

JOHANNESBURG - The JSE’s All Share Index (Alsi) might finally be at the same level it was in May 2008, but its composition has changed big time. Back in May 2008 it was the resources giants, Anglo American (JSE:AGL) and BHP Billiton (JSE:BIL), that had driven the market to a record high. Then the bubble burst. Today these mining stocks remain well below 2008 prices.

Instead, a new record, set on Tuesday, owes its success to industrial stocks, retailers and banks. Some of the biggest contributors have been: SABMiller (JSE:SAB), Naspers (JSE:NPN), FirstRand (JSE:FSR), Shoprite (JSE:SHP), Sanlam (JSE:SLM), Standard Bank (JSE:SBK) and Bidvest.

In May 2008, the last time the All Share closed above 33 100 points, mining stocks comprised more than half the market. Today they account for less than 40%. The mining index remains 30% lower than its all-time high.

Who got it right

No doubt several fund managers can take credit for riding the bull market in industrial stocks. But two spring to mind for the good advice they gave at the time.

One who called the market correctly is John Biccard, manager of the Investec Value Fund. While the JSE has delivered zero return since May 2008, Biccard’s fund has grown by 44%.

In July 2008, Biccard warned that there was scary downside in resources shares.

Today Biccard has significant exposure to mining stocks. In fact, Gold Fields is his single biggest holding. Others include: Sasol, Anglo American, Anglo Platinum and AngloGold Ashanti, but he also warns that local shares are not that cheap, and has a significant portion of clients’ funds invested offshore. A detailed recent interview with Biccard on this topic can be read or downloaded here.

Another fund manager who offered readers a good tip is Alwyn van Der Merwe of Sanlam Private Investments. In March 2008, Van der Merwe used a simple model to show how cheap Standard Bank was relative to Anglo American

Since then, Anglo has lost a third of its value, while Standard Bank has beaten the market with a return of 10%.

-moneyweb.co.za