JSE Direct with Simon Brown

Podcast: Boiler room scams are back

In JSE Direct, Latest by Simon Brown

Simon Shares

  • Rough month. We’re ending May (well Wednesday mid morning, so 2.5 trading days still to go) up 3.5% for the year, but we started May up 11.8%. No don’t quote me rhymes.
  • Astral Foods (JSE code: ARL) issued a SENS detailing issues with municipal water and the cost to the group. They’ve also spoken about issues with electricity supply. The question is, are they the only ones being impacted? The answer must be no, but they are the only ones being very vocal about the issues. I wonder who else is experiencing same?
  • Famous Bands* (JSE code: FBR) results are decent if you remove the UK indigestion. The second half was tougher than the first but really that UK deal is busy undoing a lot of otherwise great effort by the company, that said the second half was better (and still better post yearend) for GBK but it still losses money. Signature brands are struggling and this isn’t a huge surprise as they’re more expensive sit down experiences. They’re also exiting the Coega Concentrate tomato paste plant, I remember all the excitement when they bought the business, saving jobs etc. Except maybe not. But we did get a dividend, only 100c, but the first since mid 2017 when they went offshore.
  • Naspers (JSE code: NPN) has confirmed their intention to list their non SA assets in Amsterdam and are now seeking shareholder approval. The theory is this will unlock value opening the group to more shareholders in Europe who will only get exposure to their global tech brands.
  • Aspen (JSE code: APN) has confirmed the sale of the Nutritionals Business is happening this Friday and they’ll get the Eur740million ASAP and be able to pay down debt.
  • The Rand has been getting killed, out at 14.88 as I speak. Many are saying it’s because DD is going to be deputy president. But that’s lazy, real lazy, thinking. Nobody actually expected otherwise, he is ANC deputy president and except for a short period when Mbeki fired Zuma the AND DP is always the government DP. Sure there was a Twitter storm of hope when he postponed his swearing in as an MP, but current ZAR weakness is in line with most emerging market currency weakness.
  • Latest maize crop forecast from the Crop Estimate Committee was again revised upwards. Good news for food producers and more supply should equal lower prices, but it could still go wrong; early frost, storm damage etc.
  • Understanding the DCCUSD
  • Upcoming events;

* I hold ungeared positions.

Boiler room scams

I’m getting the calls again, two different scams but same as they’re trying to rob you of your hard earned money.

The first is local offering you super smart trading software for a crazy high price that’ll generate amazing returns (usually 30%-50% every six months).

The software also comes with great training, but if it’s so great why isn’t the call center agent trading up a storm instead of cold calling me?

Importantly, software is often free or very cheap from your online stock broker. Or buy AmiBroker.com and get your data from InvestorData.co.za

Education is no longer something we should be paying for, there is a ton of high quality for free on the Internet, starting with Just One Lap, your stock broker, YouTube and so the list goes on.

The second is a call from offshore – you can tell immediately because of the lag when they speak.

Here they have a great stock for you to buy, an opportunity to get in early and reap huge returns.

Sometimes the scam here is to get you to open an account with some fly-by-night bucket shop that will disappear over night, taking your cash with them.

Mostly this scam is that have excess stock they need to off load. Maybe they under wrote a rights issue and ended up having to take a bunch. Or the stock is so illiquid they can’t sell it in the market so they need to boiler room sell it.

Either way the question to ask is simple. If this is such a great deal why do they need to cold call half way across the world to sell it?

Surely such a great opportunity should have people queuing up outside their boiler room keen to buy?

In both cases, just put the phone down and move on. There is no money to be made here.



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