2010 May | Riba Capital

by Riba on May 25, 2010

Ghana:
Of-course the Ghana story is well documented and commented upon, with commercial oil production scheduled for the end of this year and plenty of foreign firms and investors flocking Ghana.
The Ghanaian Cedi changes at a rate of 1 Ghana Cedi = 0.70 USD, after dropping four zeros in the past few years.
The country is hailed as a model democracy in Africa, a position Kenya once pretended to hold until, we fought and killed each other…

Well, hopefully oil dollars won’t throw Ghana into this trap. And should they continue on the growth trajectory they are positioning themselves for, then am very bullish on the Ghanaian stocks especially their banks and oil companies.

Uganda:
This is another oil story with a twist, the country still has rebels engaged in guerrilla warfare. That worries me somewhat, that even if there will possibly be an oil windfall, this could send the country into more chaos.

But should Museveni hold it steady and steer the country out of this path( a big ‘if’), then this forms a good country to also consider. And Uganda is currently implementing a central depository system and most of the shares are being immobilized, this has been one of the things that has slowed me down when investing in Uganda as I have to sign sale orders, follow up to receive share certificates and lodge them when selling.. terrible admin which was Kenya a few years back. After the share immobilization in Kenya, traded volumes increased and market liquidity improved, this is an effect am hoping will be replicated in Uganda in the next few weeks.

I am positioning myself here for the local companies, not the cross-listed Kenyan companies. For those I don’t need to take a currency risk since I can still be exposed to them with the shilling.

These are two countries I will keep a close eye on in the coming months, with a view to accumulate.

Random Thoughts and Stocks Picks:

by Riba on May 10, 2010

Housing Finance: Merger arbitrage opportunity?…. or not.

If Equity Bank is serious on buying Housing Finance then accumulating the stock presents a potential windfall in the near term should Equity Bank go out on a fully fledged hostile bid. Where they will have to bid at a premium to the prevailing price so that they can buy out as many small holders as possible and using the accumulated position to bid for all of the companies outstanding shares. Should this scenario materialize then current holders of course stand to gain.

Agricultural Stocks: Is it time to sell.. as in lock in the profits already booked?

I have been pro the tea stocks especially since Sept 2009, when I looked at them keenly. Possibly there is still some juice to be extracted from these shares and if you are not in, then choose very carefully before going in as a lot of the positive outlook is already priced in in these counters. However the weaker shilling to the dollar and high tea price continue to be great drivers, as well as the increased output/production in terms of tea tonnage…

KPLC: A great stock but with dilution concerns similar to the current fears on National Bank. But I think once the dilution conversion of the govt. held preference shares into common stock has been facilitated and priced to the stock, which I strongly feel most people are ignoring at the prevailing price(Around Kshs:180), I will continue circling this stock, waiting for the right time to close in and accumulate. There are a few things I think they are doing right, and on top of this list is the ultimate impact of the prepaid meters which they have been pushing through with a vengeance(watch impact of a bird in hand that earns interest before service provision..). Further, this is one utility company we will not be getting enough of their services any time soon. A few other positive notes include the fact that their costs have come down since we have sufficient water levels in the dams which keeps the diesel powered generators away and the shillings firmly in Mr Njoroge’s control.