Think You're Buying At A Discount?

Investors are always keen to buy shares at a discount to fair value, but determining that fair value is not straightforward.

- Simon Brown

discounts. Who doesn’t love them? Especially when it’s real. This holds for investors as well: We always want to buy a stock at a discount to the fair valuation. The challenge, of course, is determining what a fair valuation truly is.

We may think it’s a specific price, but we could be wrong. Or the market could move against us, meaning we could have got it even cheaper. But there is one instance where we can determine whether there is a discount, and that’s when it comes to holding companies that trade on the JSE. Obviously, their main business is holding other companies, and if those companies are listed, it becomes very easy to determine a discount.