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Our latest perspective - What's behind under-performing listed companies?

Outperform through the downturn

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Decreased uncertainty, improved decisions

Global Advisors is a leader in defining quantified strategies, decreasing uncertainty, improving decisions and achieving measureable results.

We specialise in providing highly-analytical data-driven recommendations in the face of significant uncertainty.

We utilise advanced predictive analytics to build robust strategies and enable our clients to make calculated decisions.

We support implementation of adaptive capability and capacity.

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Global Advisors’ Thoughts: Outperforming through the downturn AND the cost of ignoring full potential

Global Advisors’ Thoughts: Outperforming through the downturn AND the cost of ignoring full potential

Press drew attention last year to a slew of JSE-listed companies whose share prices had collapsed over the past few years. Some were previous investor darlings. Analysis pointed to a toxic combination of decreasing earnings growth and increased leverage. While this might be a warning to investors of a company in trouble, what fundamentals drive this combination?

In our analysis, company expansion driven by the need to compensate for poor performance in their core business is a typical driver of exactly this outcome.

This article was written in January 2020 but publication was delayed due to the outbreak of Covid-19. Five months after South Africa’s first case, we update our analysis and show that core-based companies outperformed diverse peers by 29% over the period.

Management should always seek to reach full potential in their core business. Attempts to expand should be to a clearly logical set of adjacencies to which they can apply their capabilities using a repeatable business model.

In the article “Steinhoff, Tongaat, Omnia… Here’s the dead giveaway that you should have avoided these companies, says an asset manager,” (Business Insider SA, Jun 11, 2019) Helena Wasserman lists a number of Johannesburg Stock Exchange (JSE) listed shares that have plummeted in recent years.

In many cases these companies’ corresponding sectors have been declining. However, in most of the sectors there is at least one company that has outperformed the rest. What is it about these outperformers that distinguishes them from the rest?

The outperformers have typically shown strong financial performance – be that Growth, ROE, ROA, RONA or Asset Turnover – and varying degrees of leverage. However, performance against these metrics is by no means consistent – see our analysis.

What is consistent is that the outperformers all show clearly delineated core businesses and ongoing growth towards full potential in these businesses alongside growth into clear adjacencies that protect, enhance and leverage the core. In some cases, the core may have been or is currently being redefined, typically through gradual, step-wise extension along logical adjacencies. Redefinition is particularly important in light of the digital transformation seen in many industries. The outperformers are very seldom diversified across unrelated business segments – although isolated examples such as Bidvest clearly exist in other sectors.

Analysis of the over- and underperformers in the sectors highlighted in the article shows that those following a clear core-based strategy have typically outperformed peers through the initial months of the downturn caused by the Covid-19 outbreak.

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Strategy Tools

PODCAST: Effective Transfer Pricing

PODCAST: Effective Transfer Pricing

Our Spotify podcast discusses how to get transfer pricing right.

We discuss effective transfer pricing within organizations, highlighting the prevalent challenges and proposing solutions. The core issue is that poorly implemented internal pricing leads to suboptimal economic decisions, resource allocation problems, and interdepartmental conflict. The hosts advocate for market-based pricing over cost recovery, emphasizing the importance of clear price signals for efficient resource allocation and accurate decision-making. They stress the need for service level agreements, fair cost allocation, and a comprehensive process to manage the political and emotional aspects of internal pricing, ultimately aiming for improved organizational performance and profitability. The podcast includes case studies illustrating successful implementations and the authors’ expertise in this field.

Read more from the original article.

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Fast Facts

Fast Fact: Great returns aren’t enough

Fast Fact: Great returns aren’t enough

Key insights

It’s not enough to just have great returns – top-line growth is just as critical.

In fact, S&P 500 investors rewarded high-growth companies more than high-ROIC companies over the past decade.

While the distinction was less clear on the JSE, what is clear is that getting a balance of growth and returns is critical.

Strong and consistent ROIC or RONA performers provide investors with a steady flow of discounted cash flows – without growth effectively a fixed-income instrument.

Improvements in ROIC through margin improvements, efficiencies and working-capital optimisation provide point-in-time uplifts to share price.

Top-line growth presents a compounding mechanism – ROIC (and improvements) are compounded each year leading to on-going increases in share price.

However, without acceptable levels of ROIC, the benefits of compounding will be subdued and share price appreciation will be depressed – and when ROIC is below WACC value will be destroyed.

Maintaining high levels of growth is not as sustainable as maintaining high levels of ROIC – while both typically decline as industries mature, growth is usually more affected.

Getting the right balance between ROIC and growth is critical to optimising shareholder value.

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Selected News

Quote: Steven Bartlett – The Diary of a CEO

Quote: Steven Bartlett – The Diary of a CEO

“The most convincing sign that someone will achieve new results in the future is new behaviour in the present.” – Steven Bartlett – The Diary of a CEO

Bartlett’s perspective places emphasis on observable action as the true metric of transformation—echoing a wider movement in leadership and psychology that privileges habits and behaviours over abstract ambition.

Bartlett’s own career is a practical testament to this principle. His path is distinguished by a series of bold behavioural changes—leaving university after one lecture to pursue entrepreneurship, relocating to San Francisco as a young founder, and then returning to launch and scale Social Chain, which redefined social media marketing in Europe and beyond. Each pivot was marked by visible, immediate action, not just planning or strategic intention. This lifelong theme—prioritising what a person does in the present over what they claim they will do—underpins his philosophy as shared through his internationally successful podcast and bestselling books.

About Steven Bartlett

Steven Bartlett (b. 1992) is a Botswana-born British-Nigerian entrepreneur, investor, author, and broadcaster. Raised in Plymouth, his upbringing was shaped by multicultural heritage, resilience, and early experiences as an outsider—a perspective he credits for instilling tenacity and creative ambition.

Bartlett’s journey began with the launch of Wallpark, a student-focused digital noticeboard, before his rise to prominence as co-founder and CEO of Social Chain. Under his leadership, Social Chain grew from a Manchester-based start-up into a global media and e-commerce group, eventually merging to become Social Chain AG—a publicly listed company valued at over $600 million by 2021. Bartlett stood out for his keen ability to anticipate digital trends and boldness in experimenting with new forms of communication and commerce.

Following his departure from Social Chain, Bartlett diversified his portfolio, investing in some of the UK’s fastest-growing firms across e-commerce, nutrition (such as Huel and Zoe), biotech, and technology, alongside founding the media company Flight Story. He gained wide public recognition as the youngest-ever panellist on BBC’s “Dragons’ Den” and, above all, as the host of “The Diary of a CEO”—Europe’s leading business podcast, renowned for candid conversations with visionaries across industries.

Bartlett’s insights are distinguished by their grounding in lived experience. His work advocates for radical transparency, incremental yet consistent change, and the idea that individual and organisational futures are shaped not by intention alone, but by fresh, deliberate action in the present.

Theoretical Context and Leading Thinkers

Bartlett’s quote sits at the intersection of several influential fields: behavioural psychology, change management, and personal development. It manifests key ideas from renowned theorists whose work reshaped how leaders, organisations, and individuals understand transformation.

  • Albert Bandura: The architect of social cognitive theory, Bandura highlighted the role of self-efficacy and observational learning in behaviour change, arguing that people’s actions—not just their beliefs—shape future outcomes. His work underpins modern understandings of how new behaviours signal genuine learning and growth.

  • B.F. Skinner: A pioneer of behaviourism, Skinner’s research demonstrated that behavioural modification—changed habits in the present—was both measurable and predictive. His insights continue to inform leadership models focused on actions over intentions.

  • James Clear: In the current era, Clear’s “Atomic Habits” has popularised the principle that small, consistent behavioural changes drive long-term results, aligning closely with Bartlett’s assertion. Clear’s influence is evident in business circles where the emphasis has shifted from big vision statements to achievable, trackable daily actions.

  • John Kotter: A leading authority on organisational change, Kotter’s eight-step process stresses the importance of early wins—tangible new behaviours—that signal and accelerate transformation in companies. For Kotter, it is not the announcement of change but the demonstration of new behaviour that creates momentum.

  • Carol Dweck: Dweck’s concept of the growth mindset links belief with behaviour, showing that those who act on new learning are more likely to realise potential. Dweck emphasises adaptability and the demonstration of learning—new strategies enacted in practice—as the true drivers of future success.

In synthesising these perspectives, Bartlett’s quote encapsulates a broader realisation: whether for individuals, teams, or organisations, the most credible predictor of breakthrough achievement is evidence of changed action today. Thought alone is insufficient; it is the present, observable behaviour—trial, risk, discipline, and adjustment—that fundamentally alters future trajectories.

Conclusion

Steven Bartlett’s career and philosophy are rooted in action—his own journey mirrors his message, and his quote distils the modern imperative for leaders and individuals alike: change is evidenced not by plans or words, but by new behaviour enacted now. This perspective is foundational to contemporary business literature, psychology, and leadership strategy, and remains a critical insight for anyone committed to authentic, measurable progress.

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