Friday, October 27, 2006

Premier World Investor (Warren Buffett) does not believe in Share Splits

Splits are all the rage but the way I see it the PRIMARY beneficiaries are your "friends" the stockbrokers...

Why?
  • Unlike a Rights Issues, there is capital "raised" by the Listed Firm
  • The trading increases thus raising listing costs for the Listed Firm
  • The costs of maintaining share registers increases
  • The extra trading benefits the brokers who trade in & out for the shareholders!
  • There is a valid point that some investors may not be able to buy the higher-priced shares but they are in a minority.
Mr. Warren Buffett has never "split" the shares of his Investment Firm, Berkshire Hathaway, since he feels it only creates an opportunity for fast money types. This is the 2nd richest man in the world & he "earned" his money unlike some sheiks & crooks.

When Buffett’s Berkshire Hathaway (nyse: BRKA - news - people ) stock reached $1,300 in 1983, Buffett addressed and rebuffed the prospects for a stock split. “We want [shareholders] who think of themselves as business owners and invest in companies with the intention of staying a long time. And, we want those who keep their eyes focused on business results, not market prices,” he wrote in a letter to shareholders that year. Source: Forbes

Note that the current price is over $104,000 per share! Yes, that is over KES 7.25 Million per share!

If Berkshire Hathaway was in Kenya, the shareholders might riot in the streets!

Back to Kenya...

Barclays - They have never split their shares in Kenya but there is a chance they may do so. The majority shareholder does not trade their shares i.e. the share price is less of a concern than the profitability of BBK.
BAT - Unlikely at the moment. They prefer paying "good" dividends. The majority shareholder does not trade their shares i.e. the share price is less of a concern than the profitability of BAT.

E.A.Cables - The majority shareholder (Trans-Century) is an outfit that would probably take profits to re-invest in other businesses OR leverage their EAC holdings. Note that the price of EAC has fallen gradually (I told you so) to more reasonable levels. EA Cables has a bright future but the price reflects that future and more!

ICDCIC - The majority shareholder (Chris Kirubi) is a smart investor who IMHO probably take profits to re-invest in other businesses OR leverage his ICDCIC holdings. Note that the price of ICDCIC has fallen and IMHO will continue to fall to reflect the "truer" value. ICDCIC has a bright future but the price reflects that future and more!

Thursday, October 26, 2006

RAVE - For Ibrahim Mo and his "Best Prez" prize!

Ibrahim Mo (of Celtel fame) has launched a "competition" for best African president... the winner gets $5 Million!

This is a great idea... in spite of the critics objections....

Who do you think will win?
Does someone have a ready list of all African presidents?

Of the presidents I know.... I vote for Paul Kagame (Rwanda)
Others potential winners:
Thabo Mbeki (S. Africa)
Mwanawasa (Zambia)

Those who will definitely NOT win:

muggz mugabe (Zimbabwe) - Human Rights abuses & decrepit economy
bashir (Sudan) - Darfur genocide
geddi or something like that (Somalia) - He is sitting pretty in Kenya!
kikwete (Tanzania) - Short-sightedness in economic matters
museveni - blew it with 3rd term!

Wednesday, October 25, 2006

Can we sue the NSE for their idiotic errors?

How a comma can be very expensive!

From Canada... a story on a comma that could cost C$1 Million...

Blogger Problems --- pondering shift to Vox or WordPress

I am tired of issues with Blogger... they have grown so huge, so fast that it seems they have too many hackers, etc...

Anyway... so I am thinking of moving... I am NOT a techie so I prefer less functionality but easier maintenance/updates!

HASH suggested Vox
m suggested WordPress

Any other suggestions?

I want to keep the old entries when I transfer over... any tips?

Tuesday, October 24, 2006

NSE makes simple (idiotic) errors...

Does the NSE hire folks who flunked their Math classes?

This is NOT calculus but note the following!

October 19th (Thursday) TPS (Serena) share prices were shown as follows:
High - 94
Low - 85
Average - 84

This information was from the Excel File the NSE had on their website for Price & Trades downloads.

Since when was an AVERAGE lower than the minimum value in the data range?

As noted by dudej;
I do not need a Bsc in Maths to show that the if high is 94 and low is 94,the average statistic of 84 is misplaced. Even the lowest weighted average for would have to be 85. Perhaps someone accidentally replaced 94 with 84 on the average price.

It is pathetic to note such errors! What other errors are "hidden" from us?

There was another mega-goof in the past month when the price list had Olympia at 3/-.... Someone could have placed a BUY order at market expecting the maximum 10% to kick in but instead buys at 5x the price coz of a IDIOTIC error!

As dudj asked "Aren't these costly mistakes? and who is paying for them?"

Dudej, all I can say is definitely not the NSE...

Lee Kuan Yew for President (Again)

Apparently, Lee Kuan Yew went to Harvard in the early days to talk to the economists (among others) to figure out HOW he can lead his country to greater heights.

What was kenyatta doing? He was touring Kenya to figure out how much more land he could grab!

moi was no better...

There is a difference between LEADERS (like Yew) and CROOKS who pretend to be leaders (like kenyatta & moi)...

Don't give me the BS about kenyatta dealing with multiple tribes & political expediency.

If Kenya had had leaders, the ethnic problems would not arise. Its the CORRUPT that render Nations apart.

Cosomopolitan leaders like;
Tom Mboya (who was a Nairobi MP thus supported by more than just Luos)
Joseph Murumbi (who quit after seeing how kenyatta & his cronies were out to screw Kenya)
Pio Gama Pinto (the first high-profile politician to be murdered)
JM Kariuki (who was the only prminent Kikuyu politician to go for Mboya's funeral)

were all killed or sidelined...

I hope we choose someone who is a LEADER not of the same mold as the presidents of the past!

Just imagine if we had a Yew as president!

Monday, October 23, 2006

Eveready (among others) prepares for IPO

Updates posted 25 Oct 2006

When is another IPO one too many?

Eveready does not seem to be a "growth" company but it might have its oft-mentioned IPO soon!
We will have to wait for the prospectus but the shareholders in Sameer Africa (formerly Firestone EA) who bought into the IPO almost 10 years ago have little to show!

Will this be any different?
The IPO price was 35.50 & the current price is 16/- thus a DROP of 50% over 10 years!

Family Finance is preparing for a Private Placement but will favor its Account holders (does that include loanees?), Board Members & Staff...

It seems the competition for funds will be intense since the following IPOs/Rights Issues/Private Placements/Offers for Sale are supposed to take place by June 2007:
  • Safaricom {IPO/OfS} for Sale by Mar 2007 (mwasjd tells me it will be delayed thru 2008)
  • KenRe {IPO/OfS} by Dec 2006 but possible delay to 1Q 2007
  • Diamond Trust {Rights Issue} in Nov 2006
  • Olympia {Rights Issue} by Mar 2007
  • Telkom {IPO/OfS} by Jun 2007 (IMHO unlikely to happen till 2009)
  • Mumias {OfS} by Nov 2006
  • Eveready {IPO/OfS} by Dec 2006
  • Family Finance {PP} by Dec 2006
  • Midlands {PP} in Nov 2006
Others:
  • Acacia Fund in 2007 (Thanks to Bankelele)
  • Deacons {IPO/OfS} in 2008 (Thanks to Sizzla). They had a private placement in 3Q 2006
  • Nakumatt {IPO/OfS} in 2009 (Thanks to Bankelele)
Please send me additional info if you have better info than my estimates above.

At some point, there will too many IPOs chasing too few funds esp if the mega-IPO of Safaricom sucks up the cash! The cash will recirculate into the economy but the funds will be concentrated in fewer hands.

Wednesday, October 18, 2006

ICDCIC announces a 10:1 split... and great results

On 19 Oct, the next trading day after the announcement, ICDCIC shares traded between 420/- & 800/- for an average price of 553/-.
I am speechless! Well, good luck to the buyers!

Share splits (not banana splits) are all the rage!

Kenol started it off with a 10:1
EABL followed with a 1:5 bonus followed by a 5:1 split
E.A.Cables did a 10:1 split
Now, ICDCIC announces a 10:1 split!

ICDCIC closed at 391/- on 18 Oct 2006...
EPS: 11.03 (+106%)
Div: 4/- (+33%)
NAV: 112/- (+23%)

The AGM is on 12 Jan 2007 (which is quite late considering the year end was June 30 2006) & the split shares start trading on 22 Jan 2007.

Price on 1 Jan 2006 was 72.50 thus the price has increased by 450%, while profits 106% & NAV only 23%.... The "real" NAV is probably higher since they have some great investments whose value does not fully "show" up on the Balance Sheet.

Bottomline:
The NAV is probably higher than shown since some assets are shown at "cost" or "directors' valuation" that could be conservative. Included among these unlisted investments are shares in Eveready & General Motors (K) among many others.

ICDCIC did not provide a breakdown of the income from sales of shares. These gains may be one-time gains if ICDCIC cannot replace the "sold" shares with other investments that will attract similar gains/returns in future years.

ICDCIC has indicated a Rights Issue was possible to raise funds. The split will "reduce" the price to "manageable" levels for many investors.

Since it remains an investment firm, the premium to the NAV is (IMHO) too high unless the unlisted firms' are valued at much higher prices/multiples.
Nevertheless, I expect the price to rise on a SPECULATIVE basis.

IMHO there is little value/upside at current prices even though the firm is expected to do well in 2006-7.

Monday, October 16, 2006

Olympia Capital Holdings zooms ahead!

OCHL has been one of the "quietest" counters on the NSE but it has zoomed ahead after the announcement of an acquisition... Now it has become a "hot" stock as the trade volumes have significantly increased.

OCHL has been trading in the KES 14-17 range from 1 Jan 2006 through 8 Oct 2006. The current price rise started on 9 Oct 2006 (16/-) to the current 25/- (16 Oct 2006). The current high is 26/- which beat the 2005 high of 25/-.

I had posted a link that would have provided the 1H 2006 Reports
Here is my original blog entry on 28 July 2006.

OCHL (listed in Kenya) owns 53% of OCC (listed in Botswana).
OCC (B) plans to acquire 74% of Plush Pty Ltd of South Africa.
Price is approx KES 160 Million (depends on the exchange rates). Rand, Pula & KES...

1H 2006 Results for OCHL were released on 28 July 2006. They are available as a free download courtesy of Investing In Africa.

The Kenyan operation performed much better while OCCC (B) posted higher revenues but a lower profit during 1H 2006 vs 1H 2005.

OCC(B) has issued a cationary on the SA acquisition earlier in the year as well as mention it on the 1H 2006 Results' commentary.

OCHL is planning a Rights Issue to fund its portion of the SA acquisition -through a OCC(B) Rights- as well as upgrading its Kenyan manufacturing plant.

S.Africa will host the 2010 FIFA World Cup thus the construction sector is likely to see a boom as roads, buildings, stadiums & other infrastructure is refurbished or newly built.

Fun Stuff
BTW... on Page 18 of Nation's Smart Company (17 Oct 2006), the "Pick of the Week" claims OCHL has a Namibian subsidiary... Hmmm... just coz Namibia borders Botswana does NOT make Botswana part of Naimibia! Is Kenya in Uganda?

Some Kenyans complain that Americans think "Africa" is one country... well some Kenyans think Botswana is in Namibia!

Friday, October 13, 2006

East African Federation - Is this an April 1 joke?

From the Nation (14 October 2006)

My comments & observations in RED

Leaders launch campaign for E. African federation


Publication Date: 10/14/2006

A campaign to rally public support for the proposed East African Federation was yesterday launched in the three countries. President Kibaki set the ball rolling in Nairobi, as Uganda's Yoweri Museveni and Tanzania's Jakaya Kikwete did the same in Kampala and Dar es Salaam, respectively.


The campaign to popularise the plan for political and economic union is scheduled to take six months. The initiative seeks to explain the benefits of the federation to the region's 105 million people, leading to a referendum to be conducted in each of the three countries.

Why bother with a political union between countried when Kenya & Uganda have massive internal political problems including:

  • Lack of true National parties as opposed to tribal gatherings (Kenya)
  • A faulty constitution which needs replacement (Kenya)
  • A constitution that is changed at a whim to let the president "extend" the term of office (Uganda)
  • Tribal clashes even in this day & age (North Eastern Kenya)

If approved at the referendum, then East Africa will become a federation in 2013. The significance of the federation is that the region will have a common president, flag, anthem and currency. The presidency will rotate among the three presidents.

Why should we spend BILLIONS on a referendum that will,IMHO, fail. The EU/EC are still navigating the ECONOMIC federation/union before taking steps to a launch political federation. Furthermore, they have not been able to successfully navigate those waters even after trying for more than 15 years, let alone the 2013 target (only 7 years away)... This is a process & it can't be rushed. These funds need to be spent on improving the infrastructure connecting the various countries. I think a new rail system, better ports & open skies will do more for "natural" integration than a referendum!

The federation president will be a symbolic figure, as each country will retain her president, national flag, national anthem plus its own economy within the union. The federation will have an enlarged Parliament and will allow free movement of people and easy trade among the members.

Apart from the economic factors like free movement of goods & people, there is no benefit but ANOTHER parasitic parliament that will remain toothless.

What is the point of a symbolic president?
Why spend more money on a parliament that will have few powers?

I see more wastefulness as witnessed by the GREEDY MPs in Kenya!

Tanzania has been belligerent towards Kenyan firms, drivers, traders & media. Why would they suddenly give up political control when they can't even loosen the economic chokehold?

Why not strive to ease the economic bottlenecks e.g. investment restrictions first?

Members of the East African Legislative Assembly will be elected directly by the people unlike today, when they are appointed by political parties and approved by respective parliaments.

Please don't waste my time & money! What issues will these MPs run on? Will they have a CDF as well? What more will they want for benefits?

President Kibaki unveils the East African Community flag at the KICC yesterday. Photo by Anthony Kamau
Yesterday, President Kibaki said: "We have committed ourselves to shaping a new future; a future in which East Africans will live together, united in peace and prosperity. "The process we are launching today aims at revitalising the spirit of East African unity in the minds and hearts of our people. We want to shift the discussions on the East African Federation away from conference halls to the urban streets and rural villages of East Africa."

He can't even get this country behind him! Shelve the political federation & work on getting Tanzania back into the EAC & COMESA rather than SADDC. In the meantime, they should open the borders to Kenyan trade.

President Kibaki said even as the national consultative process was rolling out, Kenyans should remember that a political federation "was a complex matter as it involved important issues of sovereignty which the people must decide on." He said during the launch at the Kenyatta International Conference Centre, Nairobi: "It is, therefore, important that the subject of political federation is adequately discussed and appreciated by all the people of East Africa. Thus, we should not forget that the sovereignty of our individual states is derived from the will and self-determination of our people."

This is too complex to handle before we are economically ready. Behemoths like W.Germany had a difficult time with integration. The "stronger" W. Germany was weakened substantially by the cost of the reunification. Kenya has the strongest economy of the 3 but remain minnows in comparison to mnay European & Asian countries.

Bottomline:

This is a waste of Taxpayers' money. I think kibz will use this referendum as a means to campaign for himself & his cronies. They will tour the country pushing the referendum but actually raise their profile for the elections!

It is far better to negotiate for favourable trade terms with other countries while following a reciprocal policy of opening our borders completely to economic activities.