Allan Gray hopes that the courts rule in Trevor Manuel's favour against Peter Moyo

Allan Gray hopes that the courts rule in Trevor Manuel's favour against Peter Moyo
Published: 21 August 2019 (133 Views)
Not deterred by the bloody corporate battle at Old Mutual, the investment manager Allan Gray now owns more than 10% of the life insurer.

Old Mutual CEO, Peter Moyo, was fired in June after accusations involving a company he founded. Old Mutual owned a big stake in the company, and was owed a large payment in dividends. While this remained unpaid - Moyo received more than R30 million in dividends from the company, Old Mutual claims.

Moyo, for his part, claims his relationship with Old Mutual chair Trevor Manuel started to deteriorate after he pointed out that a company, which Manuel chaired, stood to benefit financially from the group's massive restructuring.

Last month, a court ruling forced Old Mutual to take Moyo back as CEO - at least temporarily, as the legal battle continues.

"We hope that the courts rule in Old Mutual's favour and that Peter Moyo leaves the group without a large financial settlement," says Jacques Plaut, portfolio manager at Allan Gray.

For Plaut, the worst case scenario would be that Moyo is somehow reinstated. But he believes this is an unlikely outcome.

"Another bad outcome would be if a split develops within Old Mutual between employees that are sympathetic with Peter Moyo, and those that are not," says Plaut.

Since the battle between Moyo and Manuel erupted, Old Mutual's share price has lost almost a fifth of its value.

Allan Gray believes it's now trading at a large discount to what the company is really worth (its "intrinsic value").

Old Mutual is currently trading around R18.  Its stake in Nedbank alone is worth R5, and its other investments and cash worth more than R7 per Old Mutual share. This leaves R6.

"This means the ‘operations' (funeral policies, insurance, savings products, infrastructure investments) are valued at an implied R6 per share," says Plaut.

"We think the operations produce about R1.30 of earnings after tax in a normal environment, so the implied multiple [price earnings ratio] is less than 5 times (R6/R1.30)."

A price earnings ratio gives an indication of whether a share is cheap or not: it calculates what investors are willing to pay for a rand of the company's profits. A low number can indicate that a share is trading at cheap levels. The implied multiple is less than half the JSE average of 11 times.

- businessinsider

 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Zimbabwe govt expenditure problem

by Clemen Moyo ka Mangena | 15 September 2019 | 99 Views

Sympathy for the devil

by Zimbabwe Vigil Diary | 15 September 2019 | 117 Views

ZINARA Employees stealing from government and motorists

by Munya Shumba | 15 September 2019 | 124 Views

ZAPU in its bravest rebranding and transformation exercise

by Sakhile Sibanda | 15 September 2019 | 97 Views

Mugabe's death breathes life into sleepy Zvimba

by Staff reporter | 15 September 2019 | 165 Views

Zimbabwe's success inevitable, says Mnangagwa

by Staff reporter | 15 September 2019 | 217 Views

Mugabe died a sad man

by newzimbabwe | 15 September 2019 | 254 Views

Zinara looters put on notice

by Staff reporter | 15 September 2019 | 242 Views

Ramaphosa apologises for xenophobia

by Staff reporter | 15 September 2019 | 172 Views

Mugabe funeral programme shifts to Zvimba

by Staff reporter | 15 September 2019 | 278 Views

Zimbabwe nears SA industry loans deal

by Staff reporter | 15 September 2019 | 167 Views

Crafty Bob is not just history but our history

by Bishop Lazi | 15 September 2019 | 140 Views

G40's ahistorical narrative

by Ranga Mataire | 15 September 2019 | 163 Views

A too-comfortable end for Mugabe

by Jason L Riley | 15 September 2019 | 182 Views

Mnangagwa may not revenge against Grace Mugabe

by newzimbabwe | 15 September 2019 | 167 Views

Final salute for Robert Mugabe

by Staff reporter | 15 September 2019 | 131 Views

'The West is upset about Zimbabwean land'

by Prof Arthur Mutambara | 15 September 2019 | 164 Views

South Africans need a history lesson

by Mtandazo Dube | 15 September 2019 | 149 Views

'Foreigners can now invest in Zimbabwe's restricted sectors'

by Staff reporter | 15 September 2019 | 172 Views

Grace Mugabe praised

by Staff reporter | 15 September 2019 | 175 Views

Zesa, BCC agree on compensation for power station use

by Staff reporter | 15 September 2019 | 136 Views

The 'Zimbabwean' mogul in SA police's crosshairs

by Staff reporter | 15 September 2019 | 176 Views

Can Bosso stand Colliery heat?

by Staff reporter | 15 September 2019 | 87 Views

ZB Bank introduces WhatsApp banking

by Staff reporter | 15 September 2019 | 84 Views

Sables beat Zambia, win Victoria Cup

by Staff reporter | 15 September 2019 | 66 Views

College charges extra on EcoCash

by Staff reporter | 15 September 2019 | 45 Views

Concern over sharp increase in armed robbery cases

by Staff reportetr | 15 September 2019 | 47 Views

'18 people living in one room'

by Staff reporter | 15 September 2019 | 75 Views

Zimbabwe stuck with expired medical drugs, says committee

by Staff reporter | 15 September 2019 | 50 Views

Mugabe: The socio-genesis, posterity of Pan-Africanism

by Richard Runyararo Mahomva | 15 September 2019 | 115 Views

Bulawayo City Council workers demand housing stands

by Staff reporter | 15 September 2019 | 31 Views

The installation of the Lozwi King at Emawabeni

by Pathisa Nyathi | 15 September 2019 | 127 Views

Graca Machel: Appreciate Mugabe's role in Zimbabwe

by Staff reporter | 15 September 2019 | 43 Views

Gukurahundi victims react to Mugabe death

by Staff reporter | 15 September 2019 | 48 Views

The other side of Mugabe

by Nqaba Matshazi | 15 September 2019 | 100 Views