For those who tell you not to worry so much and just invest in anything, no need to do much research, you need only say one word: Steinhoff.<\/p>\n
Steinhoff has been called the largest corporate scandal in SA history, but what many people don\u2019t know is it\u2019s fall was also the largest failure ever on the JSE. The collapse promoted months of headlines, in which South Africans read, shaken, about the demise of the brand which had been every investor\u2019s darling. It wasn\u2019t just the death of a retail titan, it was the death of the concept of \u2018too big too sink\u2019 corporates.<\/p>\n
In a world post-Steinhoff, all previous bets about how investment works are off. If everyone \u2013 and it was pretty much everyone, high and low \u2013 was wrong about Jooste and his African champion, couldn\u2019t we be wrong about everything else? It\u2019s not comfortable stuff to ponder, but actually there are valuable lessons in the Steinhoff fallout for investors willing to look.<\/p>\n
Lesson 1 \u2013 Recommendation is no match for your own research<\/strong><\/p>\n Many of the most knowledgeable and powerful men and women on the SA investment scene were overweight on Steinhoff. Some, like Christo Wiese and insurance champions Johan van Zyl and Len Konar, were even members of Steinhoff\u2019s board and had decades of investor experience on their sides. This shows the importance of checking out financials for yourself, corporate governance frameworks and growth patterns and projections. If something seems too good to be true, with meteoric out-of-the-ordinary growth from nowhere, then it probably is.<\/p>\n Lesson 2 \u2013 Look at management, not results<\/strong><\/p>\n The common thing to do when considering an investment option is to look at results as a predictor of future dividends, but growth can be misleading. This is especially true of a depressed economic period like the one we\u2019ve had for a while, in which good companies can suffer in their results due to the market, while bad ones\u2019 shortcomings can be masked. Instead, look at the corporate governance of the board and how transparent the company is for a feel. Steinhoff, for example had amazing figures on paper, but their complex two-tier management structure was, in hindsight, a sign of deliberately complicating matters to hide the truth.<\/p>\n Lesson 3 \u2013 Not everyone will be a Steinhoff<\/strong><\/p>\n The reason Steinhoff made the news is that it\u2019s the exception rather than the rule. Although there have been a few corporate governance lapses though none as severe as Steinhoff, it doesn\u2019t mean that our corporate governances metrics themselves are broken. On the contrary, South African governance law and the JSE itself have been proven to be quite robust in the crucible that was Steinhoff. The internationally respected Frankfurt Sock Exchange (FSE) took just as hard a hit as the JSE, after all. The chances are very low that you will invest in an unsound company of the Steinhoff ilk \u2013 especially after the scandal meant corporates undergoing extra scrutiny.<\/p>\n And if you\u2019re worried about existing investments of yours? Let\u2019s chat, revisit our due diligence, and remember \u2013 Steinhoff happened once, but that doesn\u2019t mean it\u2019ll happen again.<\/p>\n","protected":false},"excerpt":{"rendered":" \t\t\t\tFor those who tell you not to worry so much and just invest in anything, no need to do much research, you need only say one word: Steinhoff.\t\t<\/p>\n","protected":false},"author":1,"featured_media":3179,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,28],"tags":[],"class_list":{"0":"post-3178","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-blog","8":"category-market","10":"post-with-thumbnail","11":"post-with-thumbnail-large"},"yoast_head":"\n