Organic Growth Versus Acquisitions

When a company's management decides to grow organically or through acquisition; they need to consider their strategy carefully. Organic growth increases the turnover of a company's existing business or brings about profits that are generated within the company. Organic growth represents the true growth for the core of the company. It is a good indicator of how well management has used its internal resources to expand profits. Organic growth also identifies whether managers have used their skills to improve the business.

Compare this strategy to a company that grows by acquiring other companies. Naspers went on the acquisition trial last year, but due to limited opportunities this year, decided to grow organically. Naspers management believes that internet valuations have become inflated and good value is difficult to find. Growth by acquisition, however, still has more advantages and is often regarded as a quicker and cheaper option with less risk attached to it.

Reunert manages a number of businesses focused on electrical engineering, office systems and services and defence electronics. Reunert is on the acquisition trail again, to lift revenue, which seems to have stagnated. The company wants to bring an IT business into the fold as a way of completing the transformation of its communications unit. The share seems inexpensive trading on a historical PE of 11.1 times and at 2.3 times its NAV. Accordingly we recommend investors to buy the share. The share is underpinned by a historic dividend yield of 5%. The share price is trading below its 200-day moving average and just above its 10&30-day moving averages. The trend is moving sideways with a bearish bias. Wait for the price to pullback and confirm a change in trend before buying in.

Naspers is a multinational media group with its principal operations in internet platforms, pay-television and the provision of related technologies and print media. Based on the current market price we estimate that the group's operations excluding its investment in Tencent (listed on the Hang Seng) and Mail.ru (listed on the London Stock Exchange) is trading on a historical PE of approximately 3.5 times. These two investments currently comprise 93% of the group's market cap and remain the key drivers of future growth. We feel the share is fairly valued and recommend investors to hold their shares. Nasper's share price is trading above its moving averages and the trend remains bullish, although sideways in the medium term. Wait for the either the price to retest the support level at R351, or for a breakout above the resistance level at R406, before buying in.

For an investor, fast growth looks good, but companies can get into trouble when they grow too fast because they cannot maintain those growth rates and their share prices suffer. When evaluating companies with aggressive growth policies, investors need to determine carefully whether these policies have higher drawbacks than benefits.

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The Roles of Financial Advisors and Their Impact on Asset Allocation

Managing finances is not an easy job. The ever-changing market makes it an even more difficult job than it already is. There are many financial goals to meet, which makes taking the right decisions that much more challenging. This is why taking on a financial advisor is often advisable. What does a financial advisor do? They offer advice on what you should do with your money; they also help you take better decisions as an amateur asset allocator, among other things.

Financial advisors will offer you their professional input on how best to deal with financial issues. They are experts that can help you maintain and achieve your goals through proper investment planning, money management, asset allocation, and more. He or she offers you their years of experience in the industry to help you deal with mutual funds, bonds, stocks, and other ways to secure and protect your money. Their services are best for individuals and companies who want to maximize the money and assets that they have.

On top of the above, financial advisors' ultimate goal is to help their clients understand how their financial decisions will have an impact on their lives or businesses; they help you comprehend the finer aspects of finances, letting you make better choices that will have positive effects on your future. They are also great at helping you allocate your asset. It is the topmost determinant of the performance of your investment portfolio.

Taking on the services of a financial advisor will help you greatly if you want to be an amateur asset allocator. Market timing is extremely important and it is vital that you achieve long term consistent success, which is why professional help is valued greatly. It begins with the client's risk tolerance upon which the portfolio is built. It is used as a guide to deliver the highest possible return from the market. A wide range of possible asset classes are available to choose from when building a portfolio. Taking help will ensure your success and minimize risk.

Simply put, the role of financial advisors is to help you take better care of your finances. Now you know what does a financial advisor do, helping you better appreciate the services they provide. If you want to become an amateur asset allocator then their help will be highly beneficial. It is a risky business that is aided best by years, if not decades, of professional financial experience.

The author has spent a lot of time learning about what does a financial advisor do and other related topics. Read more about Amateur Asset Allocator at the author's website.

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