Isn’t it interesting how some analysts can shoehorn data into a story that they want to tell?
Thing is, the knives are out for the Jardine group of companies. A recent Bloomberg article even quoted an analyst as saying that diversification isn’t working.
It pointed out that Dairy Farm Holdings (SGX: D01) is the biggest faller in the Straits Times Index (SGX: ^STI) this year. It highlighted that Jardine Cycle & Carriage (SGX: C07) is down 6% since the start of January.
Both of those statements are irrefutable.
It is also true that Jardine Strategic (SGX: J36), which owns stakes in both Dairy Farm and Jardine C&C are down this year. Also lower is Jardine Matheson (SGX: J37) and Mandarin Oriental (SGX: M04), which was not mentioned in the Bloomberg article.
But the article conveniently left out Hongkong Land (SGX: H78) that is up 19% this year. Why allow important facts to get in the way of a good story, eh?
If the assertion is that conglomerates are failing, then the last thing you want is to include any information that knocks the claim on its head.
Check the facts
If an investor had bought an equal weighting of the five listed Jardine companies this year, the total return of the investment this year would be down around 4.5%.
That’s not great. But interestingly, the laggards this year were the outperformers last year….
…. In 2018, the total return for Dairy Farm International was 17%. So, since the start of 2018, Dairy Farm has delivered a flat total return, which doesn’t seem too terrible for a company that’s in the middle of a turnaround.
And if we are prepared to go back a decade, $1,000 invested in the five Jardine companies in 2009 would be worth $2,714 today. That’s an annual compound return of 10.5%.
When we invest, we need to check the facts. There is a wonderful quote from Aaron Levenstein who said: “Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital”. The same should apply to some articles we read.
A version of this article first appeared in Stock Advisor.
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