South Africa: Why Discovery Needs to Become Boring

analysis

After being a market darling and general all-round hero of innovation and accomplishment for two decades, Discovery could end up this year losing a quarter of its value. What went wrong, and can it be fixed?

To misquote The Sound of Music, how do you solve a problem like Discovery?

The healthcare, life insurance, banking, financial services and general all-round innovation group is heading for what could easily turn out to be the worst year in its history from a share-price point of view. It's currently down 24% this year, which puts it in the JSE Alsi-40 dogbox along with Sasol, Shoprite and Mr Price.

For Discovery, of all companies, to be in this position is remarkable. Arguably, the company is in full flight, doing what it has always done, branching out into new businesses with its normal high energy, astounding shareholders and customers with its creativity, grand savvy and ingenuity.

Among investors, Discovery has now reached the point where there is practically nobody on the fence any more; the company's detractors and supporters are full-throttle at each other. Whom do you believe? Both sides are convincing and passionate.

One of the problems is there is no single issue you...

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