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News
Fall of the big five
C
annon Asset Managers PortfolioManager, Samantha Pauwels, says
that investors and analysts often put the biggest companies on a
pedestal. Industry heavyweights and familiar household brands
usually dominate their sectors for years.
This often creates a barrier for newcomers and investors find comfort
in investing in large, prominent companies as they invariably perform
very well. Pauwels says, “The big five in the construction sector includes
Wilson Bayly Holmes, Murray & Roberts, Basil Read, Group Five, Aveng or
rather it was. Remarkably, the big five of the construction industry have
fallen from their high-rise status.” She explains, since 2007 the big five
have lost 79% of their value, a total loss of R60 billion in value.
There are a handful of companies that have been able to increase
shareholder value during this tough period. “Things have structurally
changed with China shifting from an investment-driven economy to a
consumption-led one. Certain industries are cyclical and there will be
peaks and troughs. This we should accept. However, we need companies
to be able to adapt, be flexible, innovative and entrepreneurial during
these challenging times.”
“While government spend is not on stadiums, it is being directed at
other vital pockets such as roads, housing andwater infrastructure which
are currently very buoyant. We need companies to be agile, withmanage-
ment teams that are able to do business in challenging times. Whilst the
big five were falling, the likes of Calgro M3 and Afrimat were rising. Noth-
ing stopped the big five from adapting and navigating as times changed.
However, they continue to look in the rear view mirror, missing today’s
opportunities that lie straight in front of them.”
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