Spreadsheet Ranger

Benguela Global Fund Managers wrote to Capitec Bank Holdings earlier this month questioning its practice of rescheduling loans to clients, deepening the controversy around the lender after a short seller alleged it was concealing write-offs. Boutique investor Benguela raised concerns about Capitec’s “aggressive practice of rescheduling arrear loans and advances,” according to a letter dated January 19 and seen by Bloomberg. “We believe this practice has distorted the true performance of your business and warrants some review,” the letter said. Capitec, which makes unsecured loans mainly to low- and middle-income households, posted its biggest-ever intraday share drop on Tuesday after Viceroy Research alleged it was concealing significant write-offs. It then recovered most of those losses after South Africa’s central bank said it has no evidence to suggest the lender’s stability is in question. Speaking at press conference in Cape Town late Tuesday, Capitec Chief Executive Officer Gerrie Fourie declined to answer questions about whether it had received a letter from Benguela and said he would respond next month. Fourie also denied the allegations made by Viceroy and said the report was full of inaccuracies. Capitec spokesman Charl Nel didn’t immediately respond to a message or a text message left on his mobile phone outside of office hours early Wednesday morning. Shore Up Performance In its letter addressed to Capitec senior management, Benguela said the rescheduling of loans that clients were struggling to pay distorted Capitec’s performance and that since 2013 “arrear rescheduling has contributed to about 50% of reported growth in headline earnings per share.” Benguela requested a response from Capitec by February 5. “We are concerned that the rescheduling process has helped shore up the performance of the executive,” Benguela Chief Investment Officer Zwelakhe Mnguni said in the letter. Benguela doesn’t currently hold any Capitec shares, it said. Capitec, South Africa’s best performing stock of the last decade, fell as much as 25% in Johannesburg on Tuesday before closing 3% lower. Source: Bloomberg

Based on our research and due diligence, we believe that Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider. We believe that the South African Reserve Bank & Minister of Finance should immediately place Capitec into curatorship. Capitec Bank Holdings Limited (JSE: CPI) is a South Africa-focused microfinance provider to a majority low-income demographic, yet they out-earn all major commercial banks globally including competing high-risk lenders. We don’t buy this story. Viceroy believes this is indicative of predatory finance which we have corroborated with substantial on-the-ground discussions with Capitec ex-employees, former customers, and individuals familiar with the business. Viceroy’s extensive due diligence and compiled evidence suggests that indicates Capitec must take significant impairments to its loans which will likely result in a net-liability position. We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments (JSE: AXL) prior to its collapse in 2014. We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy. This report will provide underlying information and analysis we believe supports the following conclusions: Reconciliation of loan book values, maturity profiles and cash outflows imply Capitec is either fabricating new loans and collections, or re-financing ~ZAR 2.5bn – 3bn (US$200m-$240m) in principal per year by issuing new loans to defaulting clients. Legal documents obtained by Viceroy show Capitec advising and approving loans to delinquent customers in order to repay existing loans. These documents also show Capitec engaging in reckless lending practices as defined by South Africa’s National Credit Act. This corroborates Viceroy’s loan book analysis. As a consequence of re-financing delinquent loans, Viceroy believes Capitec’s loan book is massively overstated. Viceroy’s analysis against competitors suggests an impairment/write-off impact of ZAR 11bn will more accurately represent the delinquencies and risk in Capitec’s portfolio. Legal experts that we have spoken to believe that the outcome of an upcoming reckless and predatory lending test case in March 2018 will be used to trigger a multi-party litigation refund (class action). We believe that, at a minimum, Capitec will be required to refund predatory origination fees primarily related to multi-loan facilities; an estimated ZAR 12.7bn. Viceroy’s investigations suggest that Capitec’s prohibited and discontinued multi-loan facility lives on, rebranded as a “Credit Facility”. Former Capitec employees have corroborated this. Despite its perception as an affordable lender, Capitec’s implied interest rates are significantly true of the maximum allowable rates in South Africa. South Africa’s microfinancing sector has been the graveyard of numerous Capitec competitors who chased the same meteoric growth Capitec displays, largely due to low acceptance and mass delinquencies. We see no operational difference between Capitec and its ill-fated predecessors, including African Bank. Former employees consider the business to still be an outright loan-shark operation, where fees are key. Some former employees believe they were fired for not deceiving borrowers and failing to meet rescheduling targets on impaired/defaulting loans. Jean Pierre Verster, chairman of Capitec’s audit committee, is/was indirectly short Capitec through Steinhoff. We believe this is an oversight, and understand Verster to be an excellent analyst on the short side. We encourage Verster to raise the concerns within this report to company auditors and recognize Capitec’s resemblance to his previous African Bank short. Given what we believe is a massive overstatement of financial assets and income, together with opaque reporting of loan cash flow and reckless lending practices, we believe Capitec is simply uninvestable and accordingly have not assigned a target price. Full Report available here: Viceroy Research: Capitec: A wolf in sheep’s clothing

Capitec: A wolf in sheep’s clothing. Viceroy’s latest report is now live. $CPI #JSE @SAReserveBank @CapitecBankSA Fraser Perring of Viceroy Research will appear on Bloomberg @business at 8:30am GMT to discuss the report. https://viceroyresearch.org/2018/01/30/capitec-a-wolf-in-sheeps-clothing/

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Great article https://seekingalpha.com/amp/article/4140650-tencent-50-percent-discount-via-naspers

I read an article now on moneyweb about how big exactly Tencent is and made me wonder if I should not get more Naspers, basically even if all their SA businesses fail, Tencent alone should still be worth more.

That is interesting

Perhaps this article might be of help: https://platinumwealth.co.za/insights/investing/cryptocurrency-and-tax/

What are your thoughts on DADI?

This was a riveting read. It will be very hard to trust the DA ever again.

John Wick: Chapter 2 8.9/10 I am just totally biased being a major John Wick fan, the movie itself was good, more of a story to it than the first one, but still some lacking bits or places to build on if they will continue with the franchise.

The Big Lebowski 7.5/10 It was fun to watch actually had a full on storyline that made sense and it was interesting to see where so many memes came from, hard to believe this movie is 20 years old.

The bank that will allow you to open an account by scanning a QR code on their website is the bank that will dominate the future.

Keep it up, very informative.

I normally use shapeshift and changelly, recently discovered coindirect and now I am wondering who they are and if they are trustworthy? @BitcoinZAR are you aware of them?

London - Britain has appointed a minister for loneliness to take forward the work of murdered lawmaker Jo Cox and tackle the isolation felt by more than one in ten people in the UK. Sports minister Tracey Crouch will take on the new role, in addition to her existing job, and develop a strategy to address the problem, which research has linked with dementia, early mortality and high blood pressure. "We should all do everything we can to see that, in Jo's memory, we bring an end to the acceptance of loneliness for good," British Prime Minister Theresa May said in a statement. "For far too many people, loneliness is the sad reality of modern life." Cox was murdered by a right-wing extremist in 2016, after being in parliament for little more than a year. The majority of people over 75 live alone and about 200 000 older people in the UK have not had a conversation with a friend or relative in more than a month, according to government data. Most doctors in Britain see between one and five patients a day who have come mainly because they are lonely, according to the Campaign to End Loneliness, a network tackling the health threat isolation poses to the elderly. The Jo Cox Commission on Loneliness, which the 41-year-old lawmaker set up shortly before her death, had called for a minister to be appointed to lead action on the issue. "Jo would be over the moon," her husband, Brendan Cox tweeted. Source: IOL

Steady movement, I'll take it.

SIA is trying to moon, I am watching it here (https://coindata.co.za/coin.php?id=siacoin) just look at that 48-hour graph, there is mooning under suppression waiting to boom.

29,00ZAC (7,41%) Happy dance

Coindata.co.za is making some progress the past few weeks

I hope this continues!

Cape Town city council convenes a special closed meeting to discuss an independent report that implicates Cape Town Mayor Patrica de Lille in blatant cover-ups of corruption. An independent investigation commissioned by the Cape Town city council has blown the lid on rampant corruption cover-ups and contradictions by top City of Cape Town officials and politicians including, Mayor Patricia De Lille. And it’s the city manager Achmat Ebrahim, who has also been implicated, that has pointed the finger of blame at De Lille, alleging that she pointedly refused to inform council of alleged wrongdoing by the city’s Transport Commissioner Melissa Whitehead, dating back to 2014. Whitehead was implicated, in an internal investigation by the city’s forensic unit, of irregular expenditure of R72 million to Volvo and Scania, for bus chassis. The matter is among several allegations of corruption in the city’s transport authority, investigated by Bowman Gilfillan last month, after explosive allegations were made about the cover-ups by the executive director in the mayor’s office, Craig Kesson. The city council is meeting behind closed doors on Friday to consider at least three more instances of alleged misconduct by Whitehead. In the report, seen by Eyewitness News, Ebrahim claims in his evidence to the investigating team, that De Lille and former executive director for corporate services, Gerhard Ras, blocked him from taking action against Whitehead and of reporting the matter to council. Mayco member for Transport Brett Herron is also fingered as having been present at meetings where the city’s forensic report on the bus chassis payments was discussed. Ebrahim is quoted in the Bowman Gilfillan report as saying: “The mayor expressed the firm position that the matter should not go to council. Ras advised her that the city manager has authority to finalise the matter with no further action.” In documents Ebrahim submitted to the investigating team in December, he alleges that he asked Ras to provide him with the authority in writing, but that this never happened. Still, Ebrahim wrote to the head of the city’s forensics unit in December 2015, saying he had decided not to take action against any staff member and regarded the matter as closed. Ras was paid a R3.5 million golden handshake by the city council in August 2016, for the early termination of his 5-year contract to align with the city’s restructuring of its top management. Ebrahim’s testimony to the investigating team contradicts his actions. He told investigators in December that he believed the contents of the city’s forensic report into the bus chassis matter were “serious” and that the report should have been presented to council. He also told Bowman Gilfillan that he informed De Lille of this opinion on more than one occasion. According to the report: “He stated that he could, however, not undermine the executive mayor and had followed her instruction to close the investigation.” The Bowman Gilfillan report recommends that disciplinary action should be taken against Whitehead and Ebrahim. It also suggests that De Lille and other councillors should be investigated in a separate probe. Says the investigating team: “The city manager’s version in his defence gives rise to a serious concern about the conduct of the executive mayor in relation to this allegation. That requires further investigation or inquiry as well.” Bowman Gilfillan advises that the versions of De Lille and Ebrahim be tested through the same process, to determine who’s telling the truth. If the recommendations of the report are adopted by council today, Ebrahim and Whitehead are both likely to face suspension while a disciplinary process is instituted. Council could also decide to institute an inquiry into De Lille’s conduct. Whitehead has also been singled out for misconduct for cronyism in the appointment of friends to work for the city, losses of R43 million in MyCiTi fares and interference in the tender process for the city’s Foreshore Freeway Project. Source: EWN

Any news or updates about long 4 life in the coming months? When is the next expected sens announcement?

I am really hoping AXL and Pembury will pick it up this year.

We are proposing to do the secret santa thing next Christmas it makes it a lot easier and thus you buy one solid gift especially now that we are on that age where socks doesn't really cut it anymore.