Looking for AIICO...

On friday, I instructed my broker to sell some units of my GTB, Presco, UTC, Livestock Feeds and First Aluminium. The entire proceeds from these sales would be used in purchasing AIICO. I called late friday afternoon, but couldn't get any detail on these transactions.

I have to say, it's quite hard giving the order to reduce my GTB and Presco holdings. When we talk about fundamentals being right, these companies are near the top of the pack. The future of both companies is definitely in the "black" from the short to medium term. But my current "market" behaviour is strictly driven by my goals and objectives! I am keen to play short term trades for this year as I believe the potentials are definitely huge. In another 3-5 years my strategy may be entirely different, and God willing I'll discuss this future plan with you.

So why did I sell UTC and Livestock Feeds? I'm I anticipating a fall in their prices or do I think they have gotten to their peak already? The answer is NO! I believe these stocks are still rising and may continue for some time to come. Selling these stocks for me was a big test. Before I bought these stocks I had a threshold selling target. This is a very important lesson we all have to learn when we choose the short term trading route. You need to set your taget and try and resist the temptation to hold for much longer than expected. I expected a 30-40% gain in these stocks over a month period. Livestock has done 46% while UTC has returned 77% (initially falling by -5% in 2-3 days) over the one month target. I just had to sell these stocks to be true to myself (it doesn't matter to me if tomorrow they do over 500% return).

Also, I have to say, what made the decision to sell now quite easy is the fact that my unit holdings were not so huge. So it was a perfect opportunity to test if I am only driven by money or by the overaching principle of goal setting. The next big test for me is if I can give an order to sell Equity Assurance(as at Friday, it has returned over 99% in a month!). I think I will give the order....i think!

So what about First Aluminium? Why sell some units of a stock you bought a few days before? Well, I bought some units early in January and this has returned 65%. I thought it necessary to sell some of these units. I still anticipate more price appreciation of this stock and thats why I still hold significant units of the stock.

So I have asked for AIICO...yes I did. This stock should easily do 40-50% in another month. Amongst many reasons, there is a huge demand for Insurance stock out there, and it just seems there is not enought to go round! Furthermore, AIICO did a public offer late last year, the price for this offer was an unbelievable steal(@N2.20 or something close...)! Ofcourse, I did not buy the public offer, because I'm losing patience with the certificate or no certificate drama, I'll rather pay premium on the secondary market and know I can take full ownership of my purchase in less than a week.

I'll let you know if my broker gets through with my purchase...otherwise, I have to come up with another stock...

Wishing you a lovely week ahead...enjoy!

NB: Does anyone know how to insert a table here or create a link for people to b eable to download a table I have created listing possible stock picks for the week/month...if you have any ideas, please let me know.

New Investing Strategy and Jan 2008 Stock Performance

One of the things I chose to do this year is to try and stop using just my “head” and begin to use the ‘pen”. This made me write down increased activity on the stock market as one of my objective for this year. I don’t intend to be sentimentally attached to any stock this year (I actually wrote it down…and also I need a wallet too…). Well, not to say I have been docile before now, but I was rather conservative in my approach. I always picked good stock, carefully analysing the value (seen and unseen) of a stock before making my choices. The choices always turn out right. But this year I chose to do something different, and my interim plan is to have it this way for another 3-5 years before revisiting my strategy again.

On many occasions in the past, I was never disturbed by volatility in the market (even though in most cases, it has been upward volatility for me). I buy a stock for medium to long term reasons. Whatever happens to the price of a stock, I just won’t sell a stock because I try to come in when the price is relatively low. However, upon review of last year’s performance, I didn’t do too badly (an average of 50% over my entire portfolio), but also found out missed opportunities. With the same money, I could have gotten far more returns if only I had adjusted my strategy a bit. I needed to make my “blood” flow faster than it does currently. I needed to hound my broker a lot more to buy and sell like a “proper” trader would.

So I commenced active trading in January this year, and the results have been quite impressive. I made a choice between income stocks and growth stocks. Some of the stocks I held were in the long term growth stocks but in the short to medium term were income stocks. Some other stocks I figured out were growth stocks both in the short to long term, but there is a caveat, they could be quite risky. I will be targeting only growth stocks for this year. I acted immediately on this strategy commencing in the 2nd week of January.

First thing I did was to sell my Nigerian Breweries and Union Bank shares. I had the Union Bank for over twelve months, while the Nigerian Breweries, I guess for over a year and a half, maybe even 2 years. Don’t get me wrong, I got decent returns on these stocks, but I considered I could do much more. So what did I buy? I went for Livestock Feeds and UTC. I considered these stocks to be appropriately priced and believed they could appreciate by at least 30-40% in a month’s time. Do you want to know the results? Two weeks after, Livestock had returned 43% while UTC clocked 40% returns by the last day of January (UTC initially returned -5% after 3 days before picking again). Confessions: I am yet to offload these stocks as I planned, but will definitely do so shortly (one thing I have prayed for is to have the discipline to sell when my set objective is met and take the next “big” decision.

A week after I sold the Nigerian Breweries and Union Bank, I took another bold step. I sold some units of UBA, GTB, Unilever, and my beloved Presco shares (and all my Crusader Shares). I instructed my broker to use the entire proceeds to buy…guess? Equity Assurance! It was such a divine choice. I had no access to any fundamental analysis to make this decision, but comparing the price of the stock vis-à-vis other stocks at that time, I told myself, this will definitely be a slam dunk! In less than a week, I was over 35% in value. As at yesterday (3 weeks after), it was over 60% in value. During the same time period, I also made a purchase of First Aluminium in the 3rd week of January, and by 1st week in February, it was 36% up in value. If you think I am excited, you are damn right!

I need to point out the basis of my excitement, its not the returns per se, it is the fact that I took a decision and immediately acted upon it, and the results are showing. I believe this will be the hallmark of my life this year and beyond: to make a decision, act on it and stand by it!

If you noticed from above, the stocks I picked in the last one month were quite peculiar. Well, the common parlance is to call them Penny Stocks, I won’t challenge that nomenclature, but I’m not popular with that usage. I’ll rather say my plan is to go after appropriately priced stocks that I believe have 20-40% growth potential in a 20-30 day period. I have asked God for wisdom to do this with excellent results this year; I believe he will help me.

Do you want to come on this journey with me? Some choices I make this year could scare you but something tells me we will have so much fun while doing this.

Enjoy…

NB: if you are interested in seeing the list of my Buy and Sold activity in January, leave a comment behind and include your email address. I am yet to figure out to load a table on this blog, and the picture quality when converted to Jpeg just didn't cut it.

Japaul, Fidelity Bank and International Breweries Public Offers - Dilemma?

It seems to be another mild season of raising additional investment capital out there now. With Fidelity Bank, Japaul Maritime, International Breweries Ilesa(IBI) engaging prospective investors with their public offers. Dangote Flour IPO just closed about this week, I hope you got yours, if not you can still parley your broker to slot you in as compilation is being done at the moment. They have like another 2 weeks to submit the various applications to the issuing houses party to the offer.

I wont classify any of these stocks (Fidelity, Japaul and IBI) as hot, so I understand the rather subdued tone with which they are all approaching the market right now. In fact they appear to be the least hyped public offers in the capital market as far as I can remember in the last 2-3 years. I suppose that's ok considering they are not raising capital up to the the size of Togo's GDP as various banks have attempted to in the past (just kidding!) . so the question then is: should they be ignored?

As much as I share the lack of enthusiasm surrounding these offers ( I particularly shilly-shally when it comes to IPOs or POs), I will not particularly be quick to wave them all off as complete no good! Agreed they are not the best "chicks" in town...but sometimes we need to realise that gold doesn't always come as yellow.

I have been beset by people I hold dearly to partake of Fidelity Bank shares and my immediate reaction was to tell them: "not interested". Don't get me wrong, its not a complete no-no, I just can't invest in every company listed on the exchange and in the immediate term Fidelity doesn't fit into my plans. I took the time to study the abridged prospectus of the bank today, the things I saw did not particularly sway me and most likely my initial position hasn't changed (unless of course my loved ones insists!).

The intended use of the proceeds and the gestation period for the possible impact of the funds and management's expectation makes me look elsewhere to realise my medium to long term objectives. While the forecast for the PAT, EPS and DPS over the next 3 years are quite mouth watering, reading through the prospectus I fail to see any key strategic plan to be put in place by the management that will help achieve these targets (I know they owe me no explanation, especially with 80% of the offer already underwritten by the issuing houses...full subscription is a definite!). What I found further intriguing is that 11% of the offer will be invested in subsidiaries which the prospectus describes their contribution to the PAT as "insignificant" (3.74% as at 2006). However I will not totally rule out the possibility of some sort of capital gains in the stock in the short to medium term, but this will not necessarily be attributed to "great" fundamentals...it wont be the first time things like that happen on the stock market!

On IBI, the truth be told, I have looked for the prospectus and just can't lay my hands on it. So I have no fundamental basis for placing a judgement on the stock, my basic instinct will say keep away. However, I will spare IBI just a little more thought...just a little thought. Some German investors bought into the company lately and committed some capital to turning the place around. I am also aware that the company holds significant market share (recently a report from the company claimed it cant meet the demand for its product...that is some healthy news!) in the Osun state region and its particularly adored in its area of operation. While all that is sentimental information and really shouldn't decide where you put your money, the clincher for me is the offer price. At less than N1 (not sure now, but I think N0.81k), you almost cant get it wrong. I think it holds some great prospect for growth in the medium to long term. In any case there hasn't been much growth prospect in the Brewery sector lately (largely an income sector growth dominated by dividend payments from Guiness Plc and Nigerian Breweries Plc), so it might not be bad to take a position with this "unknown" stock. My plan is to sell off some of my Nigerian Breweries stock which has become rather sluggish (and dividends quite pitiful!) in the past 12-18 months and take a "quick and dirty" ride with IBI.

Japaul, without gainsaying looks the most attractive of the current POs. The price looks right(at 50% discount to its current price on the stock exchange), almost a steal! Japaul strolls its terrain without much indigenous competition and the current government's local content initiative in the domestic oil and gas industry is bound to smear a favorable aroma on the operations of the company in the future. I consider the proposed utilisation of the offer as strategic in nature while judging the stated threats and weaknesses as largely surmountable. Japaul holds great potential as a growth stock...and I intend to take to take some stake in it.

One conclusion I have come to about these stocks is that they all hold strong potentials in the medium to long term, I will be visibly impressed if any of them provides any sensational short term excitement. The market has been tepid lately, and more and more investors are asking vital questions from custodians of their capital. We are definitely far from market sophistication and the potential for stupendous capital gains in the Nigerian stock exchange has been called to court lately, but the overall picture looks bright...the potential undeniable...the opportunities, still limitless.

Enjoy!

My Investment Philosophy

Is investing just about making money and securing a good/bright future? What should drive me when I invest? What really should be permanently etched on my mind? I believe these are some of the key questions anyone who intends to make success of investing (of any kind) needs to ask and deliberately find answers to. Whatever answers we find (and I hope we find the right answers!) should shape the pattern of our thinking when we commit our time and sweat to answering the deep questions that emanates from that "mild" but "needed" greed that aspires everyone of us to seek a better existence.

I see investments/investing within the larger context of life itself. If you are married, close to getting married or plan to get married someday, then you will understand the simple analogy we will use to set a tone for our investing activities in the days, months and years ahead. Investing can be likened to a marital relationship. The truth be told, when you choose to start investing for the purpose of wealth creation, you are announcing to your self the birth of a relationship. A relationship that will require a lot of care, patience and love. Any mindset lesser than this sets you on a guaranteed path of failure with your investments (be it time or money). Investing is treasure hunting, and you better have your heart in it! The whole essence of marriage is to value a "life" and to be valued back in return - you don't get what you don't give!

Investing should be about creating value: spotting a value creating opportunity, nurturing that opportunity, committing to that opportunity and then spreading that opportunity. Money (and lorry loads of it!) happens to be one of those things that you get splashed with in the process of enjoying your investing life (ask all the richest men of the world...they'll tell you the same). So does that mean I invest with the hope of not making money?....pleeease...I'm not crazy or some feel good lunatic! We all want to make money - The difference is in the "how?"!

I believe in staking investments with organisations for the sole reason that increasingly, these corporations have become greater agents of change than the governments of today. When you invest in an organisation(or start one), what you have indirectly done is provide the means for these organisations to effect these changes. If after investing in any company you complain against the Capitalist "west", you've missed the point...You just became one yourself, and the earlier you start enjoying that status, the better for your investing future. When you invest, you join with a large band of stakeholders, some known to you and others, you never even realise you are joined with in the same cause. I have come to admire some of the great investors of our time, ranging from the likes of Warren Buffet, Kerkorian, Soros, Fola Adeola etc. and how the various organisations they invested in have become massive agents of change. These guys staked something deep with the organisations they've been involved with, and for every dime of their wealth celebrated today by you and I, the value created by them has influenced our societies for the better.

I hope I'm not sounding off point here, because like I said in my last post, this is a journey - a long journey (no quick fix promises). Let's agree on our principles before we start...it will save us a lot of headache in the future and will bring us the returns we desire.

(it's getting close to that part of the month where I need to put some cash in the market, I will be ruminating on some basic financials of listed companies over the weekend to decide what order to give my stockbroker next week. So you can look forward to the recommendations I'll be giving in my next few posts!)

- Gbolade Shoyemi

Welcome to Investing

Now to the business of the day!

I'm so glad I finally connected my heart and hands to start posting on this blog. I've wanted to do this for a very long time; many times I've constructed in my head situations that would have been of immense benefit to all who will click on this blog, and as frequent as those times, brutally deconstructed the execution from same head.

This blog is largely going to be about investing: stock investments. No theory! Simple plain practical playing the Nigerian capital market; this will be our starting point, later into the future we will take a pitching point into the rest of Africa.

My approach on this blog will be simple. I wont complicate what is not...and what others try to make cumbersome , I promise to use plain laity language. I wont claim expertise where I don't have, and you will also find out I wont portray ignorance. I promise you no quick abracadabra, but indeed mind blowing consistency in wealth creating opportunities. It's going to be decent work, hard work, but as results unfold, you'll find out its also fun work!

I intend to listen to you, hear your opinions, and gossips(financial gossips!) if you have any. In return I won't hold back from you. In most cases, I will be putting out my neck on some bets and pickings, I'll make available some tools I use for playing in this market, some crude...and some, just plain genius - none of which I'll claim right to. I will let you know whenever I buy a stock, why I'm buying the stock, and I will advice you do the same. If I sell, I'll also let you know, basically, you will be privy to the way the game is played in my mind. we will experience some interesting time together as you will discover, the market "always" play to your advantage. we will see what others don't see and reap from what we've sown( I love miracles, but don't believe in magic!). We will make investment decisions together and we'll track over time measuring our expectations against actual performance.

I realise I have a gift...I know what is good on the stock market, I've given opinions and practical investment advice to friends and colleagues before now. Consistently, we beat the market. Some based on hard core data and analysis of fundamentals of companies...and some, just based on simple plain logic and common sense. And in some occasion, guts...a great God and a good heart gives performing guts! You will find out as we progress, we wont lack any of this!

Before we delve into the business of playing in the stock market and staking a future in it, on my next post, I'll share with us my investment philosophy...from that point we will understand the basis for the numerous investment decisions we will be taking.

I'm looking forward to this, and loving every thought of it!

I welcome you to my journey...ooops...I meant "our" journey.

Na me be dis....Gbolade Shoyemi