The Value Creators team from Unisa won the August University Speculator category in the JSE Investment Challenge for the second month in a row, taking home the prize with growth of 20.71% in July and then 10.04% in August.

Team leader Junior Mahlangu is no stranger to the challenge, having entered last year when he was finishing his BComm degree at Rhodes University. 

“Khanyisile Ndlovu and I both finished our BComm degrees last year and this year we are doing the first year of our accounting honours degrees via Unisa. Since we are friends and both based in Mpumalanga, we opted to enter the challenge as a team,” he says.

Mahlangu says the team name speaks to the ultimate aim of investing — to create value. 

“Since I first entered the challenge last year, I feel I have grown so much as an investor. Last year, we were just focused on buying stocks but since then I have learnt a lot about derivatives and more especially single-stock futures. 

“So, my team strategy has moved from just being an ordinary long buyer to short-selling, since derivatives allow for that. Unlike just focusing on buying on the long side, derivatives allow you to take a short position and benefit from the downside if you see a sector or shares are going to underperform,” he explains.

There was a great example of the use of derivatives earlier this year when Chinese regulators came down harshly on the tech sector, which saw Tencent taking a hit, with the knock-on result that Naspers and its subsidiary Prosus also took a hit on earnings. Naspers reported a 40% drop in headline earnings while Prosus absorbed a 23% fall in headline earnings.

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“Since the market was expecting Naspers and Prosus to drop in market value, we took short positions on that. Generally, in the South African market, most of the fund managers have been unsatisfied with Naspers’ performance since then,” he says. 

However, later in the year, Naspers announced that it would be selling off part of its stake in Tencent and buying back its own shares. Roy Mutooni, a market analyst at Absa Asset Management, told News24 that the market had always raised concerns about the relative discount between the trading price of Tencent and Naspers and Prosus.

The Business Gurus Team from left: Wandisile Nyangana, Asaka Hele, Iviwe Melane and Jayden Marcus. (Photos: Supplied)

In the School Equity category, there was a winning team from the Eastern Cape for the first time this year, when the Business Gurus of Lawson Brown High School scooped the top position for August with an equity portfolio growth of 1.56%. 

Business studies teacher Morne Coetzer says the school chose 2021’s top four business studies Grade 11 students to represent the school in the JSE Investment Challenge this year. 

“However, finding time to meet and discuss the investment portfolio has been a particular challenge, especially since the team members — Iviwe Melane, Jayden Marcus, Asake Hele and Wandisile Nyangana — are all in Grade 12 this year,” he says.

Coetzer says although the pupils have learnt about the JSE as part of their business studies curriculum, the competition has given them a much more practical experience. 

“They definitely now have a better understanding of the different investment strategies. Initially, they focused on the JSE top 40 companies but we found it quite limited, so we started looking at all the listed companies. 

“Our strategy has been to buy between 10 to 20 companies with an even spread of investments in terms of market cap so that the portfolio is diversified,” he says. DM/BM