Random Thoughts and Stocks Picks:

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.