Make some money

Simon Brown

This is what I call a fundamental trade and it has worked very well over the years. The idea is to buy Sasfin when the price is only 10% above the net asset value (NAV) or book value. This is typically called the priceto- book (P/B) ratio. When the Sasfin price hits 110% of NAV, it’s a buy, with the share price then typically moving to between 140% and 150% of NAV. Currently the stated book value of Sasfin is some 5 000c, but with corporate activity in the works I discount that to 4 500c, making for the magical 110% of NAV. This trade could run for six to 18 months and during that time I’d expect the NAV to increase as well, so an exit price could be around 7 500c…

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Finweek - English (Digital) - 1 Issue, 02-nov-17

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