Knowing what we do about Orbis-type organisations, they are not...

Knowing what we do about Orbis-type organisations, they are not concerned about the fact that the SP is below their average cost.

They have worked out what they believe the intrinsic value of the company is and so long as no new news comes out to change this materially down, they know that over time the market will revalue the stock upwards.

Well, as you might expect Swap & Co. have been tracking Orbis through their sub holder notices. I have given the details previously, but here they are again:

They have bought just over 342,246,000 shares for a total cost of just over $96,695,000. This is across all of their funds - remember that the report to which this thread refers is just one of them.

This gives an average cost of 28.09 cents per share across all funds.

Sarc, you weren't far off. The first 5% was done at 40.04c and the average cost has dropped ever since.

If Orbis were to mark their investment to market, they would be down about $60m on paper, but this means nothing. Firstly, even in a 'normal' market there are very few people who can pick the bottom, especially when you have investors screaming to get out and you're trying to buy 15% of the company. Secondly, there is no way they could move 344m shares for 11c anyway in the current environment.

Orbis know, as do we, that the safety margin between current NTA and their average cost remains large enough for them to make a substantial amount of money in the next 3-5 years. They also have clients who share the same view and are prepared to wait.

If you look at the site of Orbis and their associates, you'll see that they have been executing exactly this strategy for many years... and very successfully so.

I could see Orbis netting in the region of $150 to $200 million on this deal in their 3-5 year time horizon. Not bad for clients who are in no rush.

The other interesting point is that CNP control 51% of CER, Orbis have 15% and there are some other big holders still in the mix. This has reduced the amount of stock that can come to market for the insto players to pick up when CER returns to favour.

For the record, I am not associated with Orbis in any way, but I do like their style.