Weekly Thoughts 28 November 2014

On Wednesday this week I reflected on some of the listed companies I had used in the day or seen operate. To simply think how reliably they go about their business regardless of all the regular hype around their share price and the stock market that everybody worries about so much.

It would have begun with switching off my house’s alarm at 5am to let the dogs out. An alarm system run by a publicly listed alarm and security company that will be enjoying a massive, regular, reliable income stream via debit order. And they pay dividends to shareholders. A short while later I looked at my cell phone. Meaning I have supported Samsung globally and MTN locally, who also receive huge, regular income via debit order. Income which is not going to go away. Then at about 6.45am my son and I ate a Tiger Brands product for breakfast. They’ve been around for a long, long time.

Later in the morning I bought my daughter a pie for lunch at a Pick n Pay store after picking her up from her art class. Pick n Pay is a store with a constant stream of customers. They are never owed money by customers because if a customer doesn’t really have the money, they use a credit card. Pick n Pay gets immediate cash in the bank, the income stream remains, and dividends will be paid. Plus they make massive interest off both the retained VAT before it is paid over and the fact that they probably pay for the products on their shelves 60 days after you have bought it from them. Again, more interest income to the business.

Then as I was driving out of Howick I noticed a South African Breweries truck parked deep inside the local – what I suppose we still call – township. Doing what? Making its regular delivery to a customer, in this case a local Shebeen owner. Again, regular income to a listed company. (SAB that is, not the Shebeen!) SAB possibly has one of the best product delivery systems in the country.

We use listed companies every day. Many of you own them through owning equities in unit trust funds. We fund these companies with our own money but then worry about their value. We shouldn’t.