I woke up yesterday, bought the Sunday newspapers, and opened a business section to the following headline.
Steinhoff bleeds billions and more pain lies ahead
Online news did not provide a reprieve.
Steinhoff write-offs pass R198 billion as accounts crisis deepens
Without rehashing the ordeal, Steinhoff and some executives were involved in an accounting scandal. Some zeros were added where they shouldn’t have been, and vice versa.
The result was its share price conducting a cliff dive that would have earned it a sponsorship from Red Bull.
From R56.26 per share on the JSE on 30 November 2017, to R1.29 on 29 June 2018 – there were a few swear words spoken in the office by colleagues who had invested in the company before the disaster.
Before Steinhoff went under R1.50, though, it sat around the R5.00 mark for a while.
Cue the master share trader, crypto expert, and all-around business-savvy individual – me – to make an expert play.
On 19 March 2018, I bought 5,000 Steinhoff shares at R4.24. Now, all I would have to do was wait a few months, a year tops, for the company to fix itself and my shares would go up 10-fold.
It turns out I overestimated my knowledge of corporate turnarounds, and Steinhoff took a dive to the R1.00 level soon after.
When you lose money on a share, the impact is two-fold.
Besides the money I threw in a bin and proceeded to set on fire, the earning potential of that money was also lost.
If it had been invested in tech shares, this article would look very different.
Tech stocks, particularly many based in the US, are on a rocket ride out of the earth’s atmosphere.
Looking at the well-known players, you would have made handsome returns in the first half of 2018 if you had invested at the end of 2017.
Somewhat better than my Steinhoff bet, at least.
Steinhoff’s share price started falling hard from 5 December 2017, and hit R6.00 a share on 8 December.
If you had put aside any desire to catch falling knives and invested in tech shares at the time, these are the returns you would have seen today.
- 8 December 2017 – $191.49
- 29 June 2018 – $236.90
- 8 December 2017 – $169.37
- 29 June 2018 – $185.11
- 8 December 2017 – $1,162.00
- 29 June 2018 – $1,699.80
- 8 December 2017 – $188.54
- 29 June 2018 – $391.43
- 8 December 2017 – $179.00
- 29 June 2018 – $194.32
- 8 December 2017 – $84.16
- 29 June 2018 – $98.61