March was certainly a roller coaster month with stock prices in my portfolio trading laterally. Most of my holdings lost during the month while the rest gained in prices. The price gain and lost was quite insignificant and the value of my total portfolio remained virtually the same, though International Energy Insurance price loss was rather steep. I did a little portfolio reshuffling within the month, a process that is still ongoing.
The sideways trading of the stocks has been attributed by analysts to be caused by institutional investors who are selling off to balance their quarterly books and if that is true, that means we should expect a jolly ride this month when they return to the market. We are still waiting for the budget to be passed and for the N850 billion pension funds to hit the market. Microfinance banks are getting ready to boom and provide mouth watering interest rates for investors who want to use OPM.
Lots of stocks, especially in the banking sector are at their rock bottom prices at the moment and are good to go. I presently have Oceanic bank and UBA on my radar because I expect them to create wealth for their shareholders in the nearest future. I am presently looking at adding Oceanic bank to my portfolio before the end of the month.
International Energy Insurance
Although, as I had analyzed before, I never really believed that this stock was going to create a lot of value in the short run but I still have it in my portfolio. It was N6.80 at the beginning of the month and it has slid to N5.90 as at yesterday. I bought it before the reconstruction in November 2007 and the stock seems to have a price resistance above the point where I got it. I bought at a post-reconstruction price of N5.40.
This is one stock that I knew was overpriced when I bought it but still went ahead to buy because of the belief that I have in the management and the fact that they are the most capitalized insurance company on the exchange meaning that they have a lot of cash at their disposal to invest and make us, the shareholders, smile in the long run. It is also worthy of note that a company that sends its staff to Lagos Business School for training really means business. There are still unconfirmed rumors that they are coming to the market to raise more funds. Its current PE is 42 so it is still expensive.
Crusader Insurance has been on technical suspension at N7.50 for over a month in preparation for its public offer. It was billed to start before the end of the first quarter but the second quarter has started and it is yet to commence. No one seems to have any idea of when it will kick off. The full year projected PE at the current price is 32.60. I was quite happy to buy it at N4.72 six months ago.
The way the shares of this company was traded during the month was quite amazing to me. There was this time when it was on supply for over two weeks and then there was a heavy demand for it within a few days and before I could bat my eyelid it was suddenly on supply again. What’s going on?
This is one stock that has made a serious impact on my holdings within the past few months. I bought it at N7.70 a few months ago and it traded at N14.00 at the beginning of March but it is now N14.02. There was a time it went as high as N16 during the month but I guess institutional sales reduced the price and it seems to have a resistance at this particular price. I am still waiting for their year end results, which I believe is going to be good and will ultimately push up the price. I am bent on selling off at the most profitable price and use the proceeds to get more of Deap Capital. I am looking at selling at N18.50.
This is another stock that had been on a roller coaster ride during the month of March. It started the month at N38.83, from where it went up to N40 before coming down to as low as N34.99 and now it is back up to N37.49 with a projected year end PE of 34.97, which makes it a bit expensive compared with most of its peers in the banking industry. I believe that the bumper harvest, which we are expecting for their year end results for February 2008, has kept it liquid and it is still the toast of investors. The bank has been consistent with dividend payouts and bonus issues for the past three years and we are expecting more of that again this year.
There is news that they intend to pay 70K per share as dividends and that their results are currently with CBN waiting for approval. I am waiting eagerly for it too as I anticipate the price to go as high as N44. I intend to sell and buy Oceanic bank, which I believe is currently undervalued. I bought this stock three months ago at N30.28.
I bought this stock about two months ago at N51.40 and since then the price has been playing around N47 - N50. I am not too worried because at the current price of N49.66, it is seriously undervalued and I expect market correction to take place as the year goes on, when investors begin to come back to their senses and discover the value in this stock.
This is the only company that is presently under the Other Financial Institutions Sector and it has enjoyed patronage since it hit the floor of the NSE. It has also been on technical suspension for over a month at N8.70 because of the N17 billion they want to raise from the market. I liquidated my shares in Ashaka cement to purchase it and I still intend to buy more of it when I sell off C&I Leasing. The figures in my earlier analysis have shown that this company has good fundamentals and will be a good place to put my money. My expectations are moderate but I will not be surprised if I am surprised.
Mutual Benefits Assurance
This is one company whose potentials show that purchasing their shares will be mutually beneficial from one of my previous analysis. I had to liquidate some of my Intercontinental bank shares, which I was able to finally get to verify to buy into this company at N4.40 a week ago and it is presently N4.92. Although I have a moderate amount I do not intend to buy more but I am going to keep this one for a long time. I believe that this company will yield a lot of money for short, medium and long term investors but the longer one stays the more one will get. I may buy more if I have some loose change though.
I have been buying into this company a little bit at a time with loose change for over six months now since it had been on technical suspension at N7.28. I have had my eyes on it for a while before then. This bank bounced back from a result declaring a loss to massive profits within a space of one year post consolidation. They have sound fundamentals and were approached by Ecobank for a merger.
I wanted to buy as much as I could with spare change and keep for the long term but the story changed a few weeks ago when it went from offer to a bid position and was no longer available for ordinary investors like us to buy. That is what our stockbrokers tell us.
We are still waiting for the result of the merger between them and Ecobank. This process is taking too long already. The Group Managing Director of Sterling bank, Mr Yemi Adeola, said they had conducted due diligence and will let us know what was going to happen at the end of March, but this is the beginning of April and we are yet to hear anything. Well, whenever they are ready, they will let us know and I am not really bothered about it anyway since I am in this one for the long haul.