Much has been written about how buying cheaper, smaller companies with rising prices, and shorting the opposite, has helped investment returns. These concepts, often called factors, were popularized by the research of Eugene Fama and Kenneth French. Indeed, this approach is now sufficiently popular that low-cost Exchange Traded Funds (ETFs) exist to programmatically replicate aspects of these strategies. Nonetheless, research, including papers by Fama and French once again, have unpicked other themes that help drive investment performance.Investing LessGenerally, companies that spend less money on big projects, see better share price performance than those that are big spenders on a new plant or machinery. This makes sense because spending money on plant and machinery is cash that is not being returned to shareholders, and may tend toward empire-building rather than disciplined capital allocation. Also, large capital projects have a tendency to run late and over-budget, so greater capital spending exposes companies to potentially greater risk. The idea was highlighted in Fama and French's 2015 paper updating their asset pricing model.Higher ProfitabilityOne insightful measure of profitability is to look at profits relative to assets. What return is a company actually making on the investments it has already made? When this number is higher, it has historically lead to improved share-price performance on average. This result appears to be quite robust, since other measurements of profitability seem to reach the same result. Arguably, this is an important aspect of Warren Buffett’s investing approach, building on the work of Ben Graham. Buffett works to find companies that are not merely earning profits, but are doing so in a way that they can then reinvest those profits at a high rate of return. Academic research has shown the validity of that approach. This has been highlighted again, in the 2012 paper by Robert Novy-Marx and subsequently reflected in Fama and French's work.Not Issuing SharesIssuing shares typically hurts share price performance. Again, the issuance of shares may suggest a firm that demands capital rather than producing it, hurting investment performance. Also, management's decision to issue equity rather than to fund projects differently or delay them, may suggest a lack of alignment with shareholders. Research by David Ikenberry found that companies that repurchase their own shares tend to outperform the market. R. David McLean has shown that companies issuing shares tend to underperform, and this result tends to hold across countries.Taking Less RiskContrary to what you might expect, researchers have not found an expected relationship between risk and return, in fact, they have found the opposite. Companies which are less financially secure, actually tend to perform worse than more robust firms. It appears that, on average, investors have a tendency to seek out risky situations, and bid them up in price more than they should, but that returns to these setups can be unattractive on average.Source: forbes.com
An outbreak of foot and mouth disease has led to the temporary suspension of South Africa's FMD-free status, the Department of Agriculture, Forestry and Fisheries announced on Tuesday."The matter has been reported to the World Organization for Animal Health (OIE) on Monday (January 7, 2019)," said spokesperson Khaye Nkwanyana."As a result of this development, the official OIE recognized FMD-free status of South Africa is temporarily suspended."This means any exports where FMD-free zone attestation is required, cannot be certified at present.This followed laboratory testing of samples taken when reports came in of lameness in cattle just outside the FMD Control Zone in the Free Zone.This zone is in the far north of South Africa.Experts from the department and Limpopo's veterinary services were conducting further investigations to verify results and determine the extent of the outbreak.Control measures would be determined by the findings of this investigationFMD is described as a "severe, highly contagious viral disease which affects livestock with significant economic impact".It affects cattle, pigs (domestic and wild), sheep, goats, and other cloven-hoofed animals.It does not affect human beings.Signs of FMD include depressed animals, sores in the mouths of animals causing a reluctance to eat, and lameness.Any suspected cases must be reported to the local state veterinarian immediately.Nkhwenyana said the affected area was under quarantine and no movement of animals and animal products was being allowed.Farmers further away from the outbreak have been cautioned to observe bio-security measures, which means they must not allow any new animals into their herds, and must minimize the movement of their own herds to other farms.Source: Allafrica.com
Nairobi — Sub-Saharan Africa (SSA) region is expected to perform well according to analysts at Cytonn Investments.According to the analysts the growth will be supported by increased public spending on infrastructural development owing to the high demand for basic needsKey risks remain difficult business conditions and poor infrastructure, reliance on commodity exports, political tension in some countries and debt sustainability due to high levels of public debt in most economies in the region.According to the analyst’s stock markets valuations remain attractive for long-term investors.SSA economic growth remained relatively strong in 2018.This is according to the World Bank as preliminary data indicates that the region recorded a 2.7 percent GDP growth in 2018, a rise from 2.3 percent recorded in 2017.In East Africa, a rebound in growth was recorded in Rwanda, Uganda and Kenya, which grew by 7.7 percent, 6.8 percent and 6 percent, respectively, as at the third quarter of 2018 driven by improved agricultural performance attributed to improved weather conditions.A slowdown was however recorded in Tanzania mainly underpinned by an unfavorable investment climate following President John Magufuli's stringent policy changes.In Western Africa, several countries recorded growths of 6. Percent and above which include Benin, Burkina Faso, Cote d'Ivoire, and Senegal.There was however subdued growth in other countries in the region such as Nigeria with the subdued growth being attributed to a decline in oil production, which was due to pipeline closures during the period.In the Southern Africa region, growth was subdued in South Africa and Angola, which are the two major economies in the region.Growth in Angola, the region's second largest oil exporter was dampened by reduced oil output following the maturity of key oil fields.Source: Allafrica.com
PARLIAMENTARY Budget Committee Chairperson George Simbachawene has advised financial institutions in the country to look into alternatives of reducing loan interests, especially to small entrepreneur groups.Speaking at the Mpwapwa Teachers' College Savings and Credit Cooperative Society (Saccos) annual general meeting yesterday, Simbachawene said, "Saccos that offer high interest rates are going below their targets to reduce poverty and improve the economic status of their members," said Mr. Simbachawene."The majority of Saccos are short lived due to high interest rates, whose effects are down to the members as they cannot access the loans with set rates," added Mr. Simbachawene.However, he challenged Mpwapwa teachers tallying at 1,500, saying if they all joined forces and contributed to the setting up of the Saccos the high rate interest problem would have been history.For his part, Mpwapwa Teachers Saccos Chairman Piniel Loilole said last year they issued 82m/- loans both as development and emergence loans to members.Moreover, he said, there were some members, who did not service their loans as required, thus failing some of its operations.He mentioned a big challenge they encountered last year was that some of the members, who had taken loans were on the list of ghost workers and those with fake academic certificates, thus causing a 6.6m/- loss.Source: Allafrica.com
A group of small and medium enterprises (SMEs) under the National Association of Small and Medium Enterprises (NASME) is mobilizing resources to establish a sugar and sugarcane-related products manufacturing plant in the country to tap from opportunities that exist in the business.The group has since established a steering committee for the initiative. Members of the Committee have elected Norman Lufesi, Adams Kalumbi, and Andrina Maxwell as Chairperson, Secretary, and Treasurer respectively. Lufesi said 12 entrepreneurs have expressed interest in venturing into the initiative.@The investment is very exciting, but will require a lot of investment and we will ensure that we start small while aiming big. We have not approximated the investment but we are working towards that since it will involve acquisition of land, machinery, labour and more to ensure that we have raw materials,” Lufesi said.He further said, so far, people interested have contributed a combined 100 hectares which is the prime advantage as the development is in progress.Lufesi also said the venture would produce sweets, ethanol and fertilizer. “With the growing population, a market is available. We know Brazil has a large proportion of ethanol in their petrol and we are determined to move this agenda.” We are working with the government to ensure that this initiative is implemented and that the raw materials are being sourced. We will move into the next phase which will be studying from other SMEs in other countries so that this takes off as soon as possible,” Lufesi said.Source: The Daily Times,
Page 43 of 44