Rudi van Niekerk of Desert Lion Capital presented his in-depth thesis on PSG Group (South Africa: PSG) at Wide-Moat Investing Summit 2019.

Thesis summary:

PSG is an investment holding company housing a collection of wide-moat businesses. Family-founded and -operated, the company has delivered returns of 45% per annum since 1995. The Mouton Family and fellow insiders own 25%. PSG’s model is to find early-stage businesses with differentiators and long runways and then partner those businesses with stable, smart capital and the best management teams. The group owns success stories like Capitec (banking), PSG Konsult (wealth management, asset management, insurance), Curro (private basic education), and future prospects like Evergreen (retirement lifestyle villages) and Stadio (private higher education). PSG’s management team excels in capital allocation and has created significant returns for shareholders through smart capital allocation, including well-timed share issues, buybacks, rights offers, perpetual preference share funding, and others. PSG shares recently traded at a 20% discount to a sum-of-the-parts valuation, as compared to a five-year average discount of 6%.

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About the instructor:

Rudi van Niekerk manages the Desert Lion Capital Fund. He is a South African citizen and resides in Cape Town. Desert Lion Capital specializes in small- and mid-cap opportunities in overlooked segments of the South African listed equities market. The investment strategy is opportunistic and follows a fundamental, value-oriented approach. The fund is US domiciled and formed specifically to serve US and other international investors. Rudi is also the manager of Guscora Investments, a permanent capital vehicle incorporated for South African investors with a similar investment approach. Previously he founded and managed Magnum Opus, an investment partnership for mostly family and friends which delivered impressive returns during its lifetime. He has extensive experience in private equity and still serves on the boards of some unlisted companies. Rudi holds a Bachelor of Commerce and MBA degrees from the University of Stellenbosch and is a CFA Charterholder.