MTN, Renergen, Sasol, City Lodge, owner of Easy Equities Purple Group, miner Sibanye, Shoprite and logistics and supply chain specialist Santova are among the top stock picks of more than 203 entrants in the Cristal Challenge this year.
Named after the premier champagne, the Cristal Challenge is a lighthearted stock-picking competition inaugurated in 2021 by JSE stalwart David Shapiro to drum up interest in the local bourse.
Shapiro who has spent five decades in the investment environment, asked 10 investors and financial journalists to choose the five stocks they thought would perform best in 2021. Another five entrants “muscled” their way in.
The 15-person competition garnered much attention on Twitter because of the interest in top analysts’ stock picks.
In its third year, the challenge has grown to 203 entrants who chose 180 stocks, up from 70 participants choosing 127 stocks in 2022.
Three-time entrant Simon Brown, a financial journalist who hosts a business TV show with Shapiro, said negativity in SA did not automatically translate into weakness on the JSE.
“You know the cliché; Main Street is not Wall street” he said. “There is a disconnect between what’s happening on the ground and the economy.”
It is easy to look at SA and be negative, but that doesn’t necessarily apply to the stock market, he said. Speaking on Friday, he said: “We sit in stage 6 load-shedding, but markets are up because they’re dominated by offshore and quality”.
The Cristal Challenge runs from January 1 to end-November, does not reflect real lief when investors can sell or buy stocks at any time.
“I appreciate that from a purely practical perspective picking five stocks for one year and holding them is not a huge lesson in anything. But the huge benefit of stock picking [is that it] focuses your mind,” said Brown.
Shapiro has changed the rules this year to allow participants to sell one stock — to either bank a gain or cap a loss.
Shapiro said, “What’s also interesting is the array of people that are participating: a pastor, ecology professor, farmer, philosopher, game developer, anaesthetist, airline pilot, and the usual bunch of accountants, attorneys, analysts and wealth advisers.”
Some of the popular stocks chosen this year, ended much lower in 2022, with some punters expecting a recovery. MTN fell about 25% in 2022, while Purple Group ended 38% lower and Renergen slumped more than 29%.
Popular choices this year also include Naspers and Prosus, which could both do better on a recovery in China as the Asian giant has ended its zero Covid-zero policy.
Some analysts expect hotel group City Lodge, which struggled during lockdowns, to recover with a return of business and leisure travel. Sibanye could benefit from possible rising commodity prices as China’s economy reopens.
Shoprite is a favoured retailer due to its ability to target lower to higher income groups with its different brands and as it expands into multiple product ranges from baby and camping to pets.
But is there any point in stock picking when it is very hard to beat the market — a point famously made by Warren Buffett who won a bet against hedge fund managers?
The JSE all share, ended 2022 down 0.9% and for the competition period from January 1 to end-November it was down 0.76%, excluding dividends.
By contrast, in 2022 winner Herman Lloyd’s stock picks gained 58.1% including dividends. In an indication of just how difficult stock picking is, Lloyd was the worst performer in 2021.
Four out of the top five entrants in 2022 chose coal miner Thungela, whose outstanding performance projected them to the top.
2022 winners
Lloyd’s picks were AngloGold Ashanti, EOH, Harmony, Prosus and Thungela.
In second place was Charles Gordon with a gain of 57.27%. He chose Growthpoint, Nedbank, PPC, Steinhoff and Thungela.
In third place was Chad Crouch, with a gain of 52.58% from City Lodge, Grindrod, Kumba Iron Ore, Spar and Stefanutti.
Fourth was Zenzo Lusengo with his picks up 48.41%. They were Capital Appreciation, Metrofile, Rebosis A, Sibanye and Thungela.
Also in the top five was last year’s winner musician Betsie Schaap who finished with a gain of 41.48% with African Rainbow Capital, Purple Group, Renergen, Steinhoff and Thungela.
Popular choices that disappointed in 2022 included packaging firm Nampak, Purple Group, electronics group Ellies and Steinhoff, which ended almost 90% lower after the firm announced its lenders could take over 80%-100% of the company.
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