🎯 Tariff Talks: Where Are We Now?

Simon Brown recaps the evolution of Trump-era tariffs, with recent developments around:

• US-China deal: effective 54% tariff on Chinese goods, 10% on US goods

• UK, Mexico, Canada, Vietnam likely settling around 10%

• Expectations for other regions like EU, Saudi Arabia, South Africa

• Conclusion: tariff escalation seems contained, reducing recession risks

Key Insight: Markets are stabilising as the worst-case tariff scenario is dialed back.

Trump targets high drug prices in the US, pushing for:

• 30-day deadline for pharmaceutical companies to lower prices

• Unclear legal basis; possible price controls debated

• Pharma stocks bounce back slightly after initial drop

Simon’s Take: Healthcare is risky for investors due to constant regulatory pressure — he stays away.

Lewis expects a 55–65% EPS increase, sparking:

• A ~16% stock price surge

• Ongoing share buybacks and high dividends (7.8% yield)

• Strategy: loan book expansion, carefully managing bad debts

Verdict: Strong fundamentals, still looks cheap. Simon and analysts are bullish. 📈

First results since Boxer listed:

• Modest headline earnings (new shares diluted results)

• 25 new superstores & 35 liquor stores planned annually

• Operating margins on par with Shoprite* (~5.5%)

• Stock trading at fair valuation (R64.77), analysts' target: R76.66

Insight: Promising growth but priced in. Shoprite still Simon’s preferred pick. 🏪

Highlights from AngloGold’s trading update:

• 7x increase in free cash flow

• New dividend policy: $0.125 quarterly minimum + 50% of FCF

• 26% production increase (aided by Egypt acquisition)

• Concerns: strong rand + weak gold price pressure the stock

Simon’s Position: Holds the stock, likes the dividends — cautious on expansion. 🪙

Property sector comparison:

• Calgro M3*: Sub-R1m homes, shifting from gov’t subsidies to open market

• Balwin: Mid-to-high-end units (R1.1m–R3m+), annuity income from parks & amenities

• Both cautious due to election risks and past invasions

Bottom Line: Simon owns Calgro, likes both for their contributions to housing. 🏡

Simon Brown

* I hold ungeared positions.

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🧓 Warren Buffett Steps Down as CEO of Berkshire Hathaway

• Buffett officially steps aside as CEO at age 94, replaced by Greg Abel.
• Still remains Chairman
• Berkshire A shares up ~44,000% since the 80s
• No dividends ever paid, only share buybacks
• His legacy: simplicity, repeatable process, and long-term vision
• Emphasis on reading years of balance sheets and loving cash flow
• Fun fact: 96% of his net worth came after age 65

🏦 Investing Lessons from Buffett

• Stick to quality companies at reasonable prices
• Focus on permanent capital and compounding
• Keep your process simple and repeatable
• Don’t chase hype — focus on fundamentals
• South Africa's Chris Seabrooke noted as a local Buffett-like investor

🌸 "Sell in May and Go Away" – Myth Busted

• Simon critiques the old market adage.
• S&P returns from May–October average 0.49%, Nov–Apr average 1.02%
• Transaction costs, taxes, and missed rallies make timing unreliable
• Verdict: It's a nursery rhyme, not an investment strategy

🛢️ Oil Falling as OPEC Hikes Production

• OPEC+ accelerating production increases
• Brent now ~$60/barrel

Impacts:

• ✅ Good for fuel prices & oil consumers
• ❌ Bad for Sasol (though price hasn’t reacted much)
• 🏚️ Fracking rigs in US may shut down if prices fall further
• Possible geopolitical angle: helping Trump by lowering gas prices

💵 Rand Strengthens

• ZAR at R18.24/USD, nearing a key R18.30 technical level
• Boosted by stronger exports, higher gold prices
• Could trend toward R17 if momentum continues

🪙 Gold Surging Again

• Gold bouncing back above $3,000 after recent dip
• Driven by:
  • Central bank buying
  • Rebound in ETF inflows (especially in Europe, Asia, and US)
  • General inflation and recession fears
  • Upcoming FOMC decision adding fuel to the rally

🏛️ FOMC Decision This Week

• Fed expected to hold rates
• US inflation stickiness, strong jobs data, and political independence from Trump all in play
• Simon expects no change but criticizes SARB for being too hawkish despite low SA inflation (2.7%)

🧠 Palantir Results – Big Numbers, Big Risks

• Q1 Revenue up 39% YoY to $884M
• Customers up 39%, EPS (non-GAAP) at $0.13
• Price-to-book: 58x ⚠️
• EV-to-sales: 100x ⚠️
• Heavy stock-based comp = shareholder dilution
• Analysts split: mostly neutral or bearish
• You’re investing in Peter Thiel’s vision, not value metrics

Simon Brown

* I hold ungeared positions.

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