Investors are always keen to buy shares at a discount to fair value, but determining that fair value is not straightforward.
discounts. Who doesn’t love them? Especially when it’s real. This holds for investors as well: We always want to buy a stock at a discount to the fair valuation. The challenge, of course, is determining what a fair valuation truly is.
We may think it’s a specific price, but we could be wrong. Or the market could move against us, meaning we could have got it even cheaper. But there is one instance where we can determine whether there is a discount, and that’s when it comes to holding companies that trade on the JSE. Obviously, their main business is holding other companies, and if those companies are listed, it becomes very easy to determine a discount.
This story is from the 20 June 2019 edition of Finweek English.
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This story is from the 20 June 2019 edition of Finweek English.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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