MONEYWEB: David Cobbett joins us now, chairman of Strate Charity Shares. David, I was talking to someone the other day who described you as being where Simon Marais is today, and Roy McAlpine perhaps was before. You were the man before that as the investment guru. Do you still keep your hand in on the markets?
DAVID COBBETT: Yes, I do Alec, but how much longer I don’t know, because I’ve now suddenly come across the Financial Services Board that tells me that I’ve got to register and pay a fee and probably sit some exams. And at the age of 78 I don’t feel inclined to do so.
MONEYWEB: I don’t blame you. What are you doing with Strate Charity Shares?
DAVID COBBETT: Well, it was my idea to find something to do in my retirement, because I knew about this problem, being in the business for far too long, that clients’ portfolios were clogged up with little holdings that they had no value worth talking about. They mainly came through unbundling, which you remember was the fashion a few years ago, or script dividends. And then Mrs Brown would get her share certificate for two shares, she would put it in the drawer and promptly lose it. And nobody wants to deal with those shares. They can’t turn them to account, because the cost of selling them is too high. And also they now have to be dematerialised. From the issuing company’s point of view they’ve got their share registers cluttered with little holdings that cost a fortune to service. Many companies are getting rid of these now by having odd-lot offers, which are becoming increasingly popular. You know, you are told either you can sell your shares to us or your can make it up to 100 – but you''ve got to do one or the other. But not every company has done this. So particularly in the UK this idea has evolved of having a company – a non-profit making company – where you can give your shares to charity. And I thought this was a good enough idea to start doing it here.
MONEYWEB: So it''s a little odd lot. If you’ve got two shares that might have been issued to you as a dividend or a capitalisation – how many of these shares are around, though?
DAVID COBBETT: Oh, I can’t tell you that. I don’t think anybody can tell you that. If anybody could it would probably be Computershare, who are very active in Strate Charity Shares.
MONEYWEB: But how much money is involved, though?
DAVID COBBETT: Not much. Not much. That’s the trouble, and the brokers don’t want to sell them. Nobody is interested because it''s all petty cash. But they’re clogging up the works.
MONEYWEB: So how do you unclog the works?
DAVID COBBETT: You unclog the works by donating your shares to Strate Charity Shares. And one of the great features of our scheme is that even if you’ve lost the share certificate, we can overcome that. Because otherwise if you’ve lost the share certificate there’s nothing you can do unless you sign a form of an indemnity and find an insurance company to underwrite it. It is a hell of a procedure. In the meantime it''s stuck on the company’s share register, and it costs R200 plus per year per client to service that holding. Now by the Strate Charity Shares you can simply contact us, either directly or through your broker, and that’s all.
MONEYWEB: A pretty good idea which charities does it go to?
DAVID COBBETT: Well, they’ve got to be charities that conform to Section 18(a) of the Income Tax Act, and I don’t want to get into that.
MONEYWEB: But they’re good charities, in other words.
DAVID COBBETT: Oh, absolutely. I mean in our first year of operation we’ve helped Salvation Army, Hospice, Worldwide Fund and, oh, a couple of others. But we shan’t keep to that list but my point is, and this is an important point, that they have to conform with the requirements of Section 18(a) of the Income Tax, so that we in turn do. And the implication of that is that if you give shares to Strate Charity, we will issue you a receipt and you can claim that against your taxation liability.
MONEYWEB: David, while we’ve got you on the line, I’d like to just get a view from you on the way these markets are at the moment.
DAVID COBBETT: No, that''s not fair, Alec.
MONEYWEB: Is it not? Do you not keep in touch still?
DAVID COBBETT: Oh, yes I come in to the office every day. I don’t do very much. I look after family accounts and a few friends.
MONEYWEB: Very briefly then, do you think there is still value in the JSE? If friends and family say they want to put money into shares on a longer-term investment, are you …
DAVID COBBETT: Well, I frankly can’t think of an alternative. Yes, I would. All my family money is in shares in one from or another. Not always shares that you would approve of but, yes, I don’t see any joy in sticking it into the money market or in fixed deposit.
MONEYWEB: Not always shares you would approve of?
DAVID COBBETT: No, well, I mean to say you know when I was running Harvest we spoke to each other eight years ago possibly.
DAVID COBBETT: You know Harvest’s specialisation was the small-cap shares, and we did very well on that. You know the shares where the company was too small to interest the institution. And I think there is still money to be made there. There is also money to be lost there, of course.
MONEYWEB: David Cobbett, chairman of Strate Charity Shares and one of the real gurus of South African investment. As I say, if you talk of Simon Marais today, and before him you would talk of Roy McAlpine – well, in the time before that David Cobbett was very much in a league of his own.
We’ve just received a statement from Anglo American and let me read it to you in full “Anglo American remains committed to South Africa and has full confidence in the country’s political leadership. There is no substantive disagreement between Anglo and the government. The sentence highlighted by the President in his weekly newsletter came from an interview with the Financial Times in which Tony Trahar was asked to comment on investor perceptions of South Africa in the context of the leaking of the mining charter two years ago. He confirmed that the impact had been quite negative, but that investor perception had improved markedly since then. Anglo American is fully supportive of transformation in South Africa and is a leader in several fields in this regard. Anglo American has also worked closely with the government in ensuring that the transformation of the mining industry proceeded in a way that met the requirements of all parties. In its roadshows internationally it has always made a case for South Africa and investment in South Africa and repeatedly and systematically corrected negative perceptions about South Africa. The transcripts of such presentations over the past few years are available. The company currently has new approved investments of some R26bn. It has no uninvested surplus cash balances on which it is sitting, and has reinvested in South Africa over R100bn since January 1999. We look forward to meeting with the government to confirm our shared understanding of these issues”.
Well, you’re on the money, Wayne McCurrie. It''s exactly that. Obviously there was a question which was different to the way that it came out. As Tony Trahar said there, he was asked to comment on investor perceptions of South Africa in the context of the leaking of the mining charter two years ago.
WAYNE McCURRIE: That explains it.
MONEYWEB: I wonder why Thabo Mbeki didn’t pick up the phone before writing something like this? He’s spent 3,000 words now attacking a misperception.
WAYNE McCURRIE: Look, politicians – you can’t always logically work out the rationale as to why they do something, but I’m very happy that it appears to be sorted out.