I had to make a lot of portfolio reshuffling during the month of May when the market went haywire. The bears overpowered the bulls and with the kind of market we have in Nigeria, investors have very limited options. One can only make money when the prices go up. If they come crashing down, everybody loses. No one can use call or put options or any of those esoteric and fanciful manipulations that are common in the advanced market. It is generally a two way traffic here, up or down. All investors smile when the prices are going up while most are sad when they come down. Some smart ones are happy when the prices fall, depending on their investment strategies and how they want to navigate the jungle.
My portfolio balance hit an all time high during the month of May despite the withdrawals I had to made to meet some personal emergencies, not because the stocks i bought did fantastically well but because of the Costain public offer I bought in December, which finally hit my accounts during the month. 233% returns in five months is definitely something to smile about. I had to sell and get out very fast once it hit my CSCS account and retrospectively, I see it was a smart move as Costain has come crashing down.
The bearish season also saw a bullish run for UBA which lasted for a few sessions. I ended up making only about 15% returns from it after holding tight for almost five months. I wanted to have a balanced portfolio with some strong blue chip stocks, which have all disappointed me. It all started with Ashaka Cement, which I was lucky to exit with 7% gain after several months. I was lucky enough to sell when I sold because two days after that Ashaka Cement has not been able to rise up to the point where I bought it up till now. GTB has also been struggling with the price after holding for several months. I presently have about 10% on it and I am waiting for them to declare their definitive year end results for February 2008, not the profit before tax results they released a few days ago.
I had an eye opening experience this month of May that totally turned my perspective around. I believed in all these experts in all these investment houses that reel out figures and quote numbers, simply because they have been at the game for a long time, perhaps longer than before I was born, but I felt let down last week. I think I am going to believe more in my judgment than theirs from now on. I am not going to totally count them out but I will reduce the effect they have on my decision making from 75% to 25%.
When UBA released their half year results and declared a 1 for 2 bonus issue and 25K dividend, all the analysts held a short term opinion of N70 for the company before closure of register. I even analyzed it and got a figure of about N72 but my instinct told me that it was not likely to happen. I decided to hold on because they were all so excited about it and there was no single one that did not believe it would happen. They all felt there was going to be a scramble for purchase before then but then the scrambling for sale far surpassed the one for purchase, which ended up with a slide in price after a few sessions. UBA got to about N63 and then started coming down. I was lucky enough to get out at N58.
Now I have seen some analysts predicting a figure of N45 for GTB but if the lesson I learned from UBA is anything to go by, I will be taking my exit at about N35 - N37.
Ikeja Hotels public offer, which I bought in 2006 at N3.00 and for which I gave my stockbroker the share certificate in mid-2007 finally hit my CSCS account. When I analyzed the fundamentals of the company, I had to buy more at N8.30, with part of my Costain loot, because I believe they will do very well in the medium term with a fair value of N13.
I also bought Red Star Express at N9.90 with part of the Costain gain and last time I checked it has fallen to about N8.60. Wow! The fair value is N15 because of its few share float of about 590 million units, based on their last quarterly results.
ABC Transport was another security that I bought with the Costain proceeds at N5.95 and guess what, the last time I checked it has fallen to about N4.80. Hey, what is going on? There is no cause for alarm because by my calculations I see it hitting N10 in six months
Deap capital that has been on technical suspension at N8.70 for quite a while was another security that I accumulated with Costain proceeds. I had some units there before but decided to buy more because I also see it hitting around N14 in six months.
I still have some cash from UBA, which I got last week waiting for the right time. If ABC falls below N4.50 and head towards the N4.00 zone, I will buy more to average out the amounts that I bought at N5.95. Now, while a lot of investors might not be happy with the falling price, I am actually praying for it to fall to like N3.80 so that I can buy much more, since I have already earmarked the same amount that I used to buy the initial amount. That simply means I will be able to buy almost double of what I initially bought and bring down my average price to about N4.80. I am also waiting for Red Star express to fall further before I pull the trigger to buy more.
I am also currently holding on to Diamond Bank, Sterling Bank and Crusader Insurance. I have been making efforts to offload Crusader Insurance for a while but people are not just interested in it and it has become a dead weight in my portfolio.
We will see how events unfold and I am highly optimistic that my strategies will work well.