KA-INVESTOR

• Mid 2007 Green List Performance

  Posted: June 27, 2008, 7:47 pm by ka-investor

  Last year I picked some stocks that I expected to perform exceptionally and placed them into my ‘green list’. A year later out of the four stocks I picked only one performed dismally while the other three have performed exceptionally, surpassing the market average of 12.30%. In fact they are the best performers for the period. They performed as follows:
  
  

  Stock	Start price	End Price	% Gain	Other information
  AccessKenya Group	13.35	35.00	+162.17%	The only post election effects survivor
  Equity Bank	139.00	300.00	+115.83%	Eminent split
  KCB	24.00	31.50	+31.25%	Issuing rights
  E.A.Cables	46.00	41.50	-9.78%	No known activity

  1,000 shares in each counter would have made you Ksh.185K richer, a whooping 83% gain. Who ever says last year was a bad year is a speculator. Considering the little effort it took to analyze the stocks I picked for the green list, then only a speculator could have made losses last year by buying stocks blindly. All an investor need to do is understand the counter he intend to buy in – management, business strategy and numbers (though I’ve discovered that historical numbers don’t count that much)

  Soon I will post "the 2008 green list" after some analysis. I feel that after the Safaricom IPO there is a small ‘breath’ in the market that may lead to a correction like the one experienced in 2007 March. But no cause for alarm, I could be wrong.
  

  {Disclaimer - this is a personal market opinion and list of my preferred stocks. It does not indicate certainty and anybody reading this should consult their investment advisor/ broker before making any investment decision}

• The Last Man Standing

  Posted: June 27, 2008, 6:03 pm by ka-investor

  
  I have no words for this guy...............................................

• Celtel/Zain on the Roll

  Posted: June 11, 2008, 7:10 pm by ka-investor

  Celtel Zambia has started trading on the Lusaka Stock Exchange (LuSE) today concluding the company’s IPO. The share rose 13.3% to highs of 725 kwacha (Ksh.12.50) for the listing price of 640 kwacha (Ksh.11). The IPO was 150% oversubscribed. Allotment preference will be given to the Zambian Public and Zambian institutional investors. On offer were one billion shares, 20% of Celtel Zambia, at a price of 640 kwacha (Ksh.11) per share. Applications for the ordinary shares were for a minimum of 700 ordinary shares and thereafter in multiples of 100 ordinary shares.
  
  Zain, Celtels parent company, is seeking to buy 3 African mobile operators after concluding a US$5 billion IPO in an unspecified European stock exchange. There are possibilities that the multinational may be targeting the South African and Egyptian markets, which are some of the richest on the continent. Zain’s Q1 2008 results indicated that their customer base reached 45.7m, while their net profit rose 10% to US$270 million. Their borderless roaming services, where customers do not pay any premium for using their phones when roaming in certain African countries in East and Central Africa is something watch.
  

• Inflation Horror in Zimbabwe

  Posted: June 10, 2008, 3:42 pm by ka-investor

  Here are some horrifying facts about inflation in Zimbabwe:

  • This month two years ago there was alarm in Zimbabwe because the inflation rate had reached 1,000%
  • In January 2008 the inflation rate was 100,000%
  • This month (June 2008) it reached 1,000,000%. That's over:
  • 83,000% per month.
  • 2,700% a day.
  • 100% an hour.
  • 2% per minute
  • If you get $1,000 at 2pm today and spend it at 3pm the same day, it will be worth 50% less.
  • According to the third source above, a small pack of coffee cost Z$1 billion last week. A decade ago, that would buy 60 new cars.
  • A loaf of bread cost Z$200 million last week; enough for 12 new cars a decade ago.

  Here's a 1994 Z$50 - now worth less than the ink used for the "50"
  
  

  Here's a pre-Z$5 note - worth more than US$5 at the time; closer to UK£5.

  Here's a Z$ 2 note. You need 100,000,000 of these to buy a loaf of bread.

  
  

  Here's a Z$ 50,000,000 notes (check the expiry date)

  The Z$ 500,000,000 "bearer cheque" is the biggest denomination at the moment and a Z$1bn note will be issued in the next few days. The Z$ 500,000,000 note is now worth about US$0.20 at the official rate and 2c or so at the black market rate. To make maters worse the note expires at the end of June 2008 (just 5 months after being issued).

• Mergers & Rogue Employees

  Posted: June 4, 2008, 6:54 pm by ka-investor

  What is it with company mergers in Kenya? The recent few mergers have been faced with very gruesome legal battles that have left the merging companies with very heavy bills to foot. In the case of the Stanbic-CFC merger where Stanbic bank lost a court case and was forced to pay Ksh.532 million in fines to their former employees and Ksh.200 million in forced security to a certain creditor who will be paid once the merger is concluded.
  
  Another merger that has run into similar trouble is the merger between Ecobank from West Africa and EABS. Ecobank is planning to take over 75% of EABS at a cost that is estimated to be worth over Ksh.1 billion. Similarly, 30% of there employees who were retrenched way back in 1996 have gone to court to block the merger from taking place before they are fully compensated.
  
  So is this a new strategy by all former employees to sue their employers once they cite a merger in the offing? It’s widely known that many employers are shrewd when it comes to making contracts that favour the company over its employees. Like in the case of EABS where an employee who had worked for over 5 years was only entitled for 17 days compensation. What a reap-off! But it seems employees are not taking these lightly and companies are paying dearly for not having their contract tight enough.
  
  2007 Government Funds Beneficiaries
  
  I’ve been looking around for someone who got the youth or women’s fund or someone who know someone who benefited from these funds. It seems I’m not alone on this quest, Enterprise Kenya are also looking for these funds beneficiaries. If you applied for the youth fund or the women development fund how much did you get? Please send your answer to enterprisekenya@ktnkenya.com and also drop me a mail at kainvestor@gmail.com

• Safaricom IPO: The Aftermath

  Posted: June 3, 2008, 8:44 pm by ka-investor

  The cookie has finally crumbled with the Safaricom IPO being oversubscribed by 532%. Over Ksh.226 billion (Ksh.160.6 billion from local investors and Ksh.76 billion from international investors) was put in applications for the Ksh.50 billion IPO. The allocations were made out has follows:

  Type of investor	Amount Allocated
  Local/Retail investors	21%
  QII’s & Safaricom dealers	31%
  Safaricom Employees	84%
  Foreign investors	15%

  Retail investors are now left holding on to a mere 21% of their application (in most cases 420 shares). Sorry for the investors who took loans to finance their applications and for those who opened multiple accounts to ‘maximize’ on their allocations. It is time for them to learn the bitter lessons of the better option IPO. 21% is 21% no matter how many accounts you applied with, the only difference is if you had applied with one account, you would not be chasing around for several refund cheques.

  Not all those who took loans to finance their application will feel the pain of paying back almost all the money with interest, while their merger allocations are held by the bank as collateral. Borrowing a leaf from Ssembonge its clear that the more an investor borrowed and invested the less the burden and the higher the yield.

  loan amount	cost of loan	No. of shares allocated	Cost of shares allocated	Break Even price	Profit at Ksh. 20	% Yield
  10,000.00	2,885.60	420.00	4,985.60	11.87	3,414.40	34.14%
  20,000.00	3,441.20	840.00	7,641.20	9.10	9,158.80	45.79%
  50,000.00	5,108.00	2,100.00	15,608.00	7.43	26,392.00	52.78%
  100,000.00	7,886.00	4,200.00	28,886.00	6.88	55,114.00	55.11%
  200,000.00	13,442.00	8,400.00	55,442.00	6.60	112,558.00	56.28%
  500,000.00	30,110.00	21,000.00	135,110.00	6.43	284,890.00	56.98%
  1,000,000.00	57,890.00	42,000.00	267,890.00	6.38	572,110.00	57.21%
  2,500,000.00	141,230.00	105,000.00	666,230.00	6.35	1,433,770.00	57.35%
  5,000,000.00	280,130.00	210,000.00	1,330,130.00	6.33	2,869,870.00	57.40%
  10,000,000.00	557,930.00	420,000.00	2,657,930.00	6.33	5,742,070.00	57.42%

  Form the table its clear that after some point – at about ksh.1,000,000 loans, the incremental value of the yield from loan becomes negligible. This simply confirms that some investors (animals) are more equal than others. Large investors will keep on gaining from the stock market as small investors’ loose out in almost every deal they make. It’s also clear that any price less than Ksh.6.33 will not be good for any one.

  IPO Politics

  To some extend the ODM and Africog caveat emptor on the IPO was right. Looking at what has happened to many poor Kenyans who ignored the warnings and went forth to borrow from banks, at hefty interests to be able to participate in the Safaricom IPO; one is only left feeling sorry for them. Contrary to the government promises that Kenyans would be given priority in the event of a massive oversubscription, the same government has ignored them and praised how the IPO has attracted foreign investors (both institutional and retail) at such times is when I wish we had a grand opposition to make noise. Such government excesses will not go unabated with a strong opposition in Kenya.

Blah blah blah

Fish cakes

Alas a fish cake.

Yet more fish cakes

Guess what ... yeah ... fish cakes.

The end of the fish cakes