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windywendy (f)
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You can hold the same stock for short term and long term purpose.
To use this I adopt a principle called arbitraging. It involves taking advantage of a differences in the price of a security in two different markets.
I used this principle recently and reaped a handsome reward.
I had intercontinental shares which I bought at the 2004 PO. When they came out with their 2006 offer the price on the floor was N16.13 while the PO price was N13.5 So I placed my shares on the market and simultaneusly bought an equivalent number of units at the primary market locking in a handsome profit. At the end of the day the shares were sold for N16.94 resulting in a profit of over N3.44 per unit on that transaction alone. When my dividends and bonus are taken into considertion , the figure goes higher.
Frank, can you expain further how this arbitrage thing works? becos from my experience, it is often difficult to sell shares of a company on the floor once the company is doing a public offer, esp. since most offers are at a discounted price. Also, ever heard of margin trading? I'm about venturing into that and was wondering if I could hear from someone who's done it or is doing it currently. |
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frankiriri (m)
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@windywendy
Its not impossible to sell shares during a public offer. The fact that most shares are sold at a discount makes it difficult but if you look at the statistics even when a share is on technical suspension trades still go on. Most of the trades that are reported are basically cross trades.
that is the buyer and the seller use the same broker so the broker is just crossing the shares from one person to the other. In such trades it is only the commission and charges that are done at the market price. The buyer and the seller settle the actual price paid between themselves.
People may decide to buy shares on the floor in spite of a public offer to take advantage of any price gain that may accrue after the conclusion of the offer. Also the shares offered in most POs dont rank for dividend.
So if you know someone that wants to buy your shares you can negotiate a price.
As I said to do arbitrage all you need is to know that two different prices exist in the market . If they are not sold during the IPO then after the IPO it will be executed once it gets to the stated price. Mine was actually sold after the IPO because I gave a price that was above the market price so they had to wait until that price was reached( and even exceeded. )
I have heard of margin trading.
I know a couple of banks and brokers in Nigeria offer the facility.
In a bullish market its alright to use margin trading but I will suggest that you use it with care. It is a doubled edged sword. Imagine investing in cadbury and having that scandal wipe out 50% of the value of your investment. The banks will call in your loan immediately and you will be forced to sell at a loss.
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nkc (m)
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b/w oceanic and uba which will invest into
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LoverBwoy (m)
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Can the recent tumble in world stock affect Nigeria at all?
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nkc (m)
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i don't realy know, the gurus in this post r all sleeping  |
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4 Play (m)
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Can the recent tumble in world stock affect Nigeria at all?
If it is prolonged,it will.The "tumble" seems to be a correction in the markets after stellar growth.It will soon blow over,we had a similar thing last May and it did not affect Nigeria Should be more worried about how political developments might the market. If we have a smooth transition then expect a bullish market. |
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LondonCool (m)
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b/w oceanic and uba which will invest into
I'm buying into both of them for long term HOLD |
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frankiriri (m)
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***yawns and stretches out*** toot, toot who dares disturb a sleeping giant  As I said earlier will comment on the offers in the market when I have had the time to study their prospectuses. But my first hand impression of UBA is that it is too pricey while oceanic has a lot going for it. |
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frankiriri (m)
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1. A specific need must be funded with specific assets dedicated for that need: If you are saving for a car which you expect to buy in a years time then, then invest in one year bonds and treasury certificates. 2. Develop appropriate sources of investment information: Subscribe to financial magazines like businessday, financial standard, stockwatch and moneywise. 3. Choose a broker with a large and well respected research department: The broker should be one that does a large amount of institutional business so that you will have access to the ideas that are making the rounds in the investment community. 4. Confine stock purchases to companies that appear able to sustain above average earnings growth for at least five years: Consistent growth not only increases the earnings and the dividends of the company but may also increase the multiple that the market is willing to pay for those earnings 5. Never pay more for a stock than its firm foundation value: Though it is difficult to gauge the exact value of a stock, it can be estimated by comparing the multiple the stock is selling at with the market. Buy stocks whose multiple are low relative to their growth potential. If the growth takes place you will get double benefit as earnings and the multiple increase. Conversely beware of stocks with very high multiples and many years of growth already discounted in its price. If earnings decline rather than increase you will get double trouble as the earnings and the multiple will fall resulting in heavy losses for you. 6. It helps to buy stocks with the kind of stories of anticipated growth on which investors can build castles in the air: Investors are emotional beings driven by hope, gambling instinct, fear and greed in their stock market decisions. The key to successful investing is being where the other investors will be several months before they get there. 7. Trade as little as possible: Frequent trading reduces your overall return as you have to pay transaction costs to get in and out. http://frankiriri.bloggerteam.com/ |
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Tmoni (m)
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i just got the news that the DANGOTE SUGAR offer would be listed today at N18, is that not wrong as it is suppose to have appreciated since december.
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LoverBwoy (m)
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Thats true, it should have gone up!!
they normally have stocks on suspension during IPOs but it should have gone up after the IPO hmm
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frankiriri (m)
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The dyamics of the market is what influences the price at which the sock will be listed. I can bet you that the stock will rise to N30 in about two weeks time.
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Tmoni (m)
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frankiri, i respect your take on the stock market
do u advise us to sramble for more of it now?
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frankiriri (m)
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@ Tmoni
Well, if you can get it by all means do Dangote Sugar is headed northwards.
Its the kind of stock people can build castles in the air around and it has solid fundamentals. Dangote is also a monopolist so its a sure bet.
My fear is that the stock will be too scarce until the price is very high.
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Tmoni (m)
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1. hw long do u thnk i shld stay in it
2. is it true that GTb is also going to float a public offer, i thought they just secured a sort of loan which i know is cheaper than equity
Ps--is there sth wrong with the lanlines in VI, cant get through to my stock broker
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Tmoni (m)
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if dangote gets to N30, should we sell hoping it comes down again for a buy- back
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frankiriri (m)
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@ Tmoni
Sorry, I dont give market timing advise on publc forums. I beleive more in long term investments. If I have to do in and out then I weigh my risk. I can't be sure that you will do the same so my answer is 'No cant do'.
If you thik it is a good buy then get it and hold it until you have a reason to sell.
GTB may be wanting to reach the $1b capital requirement that CBN has imposed on banks that want to partake in forex management.
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frankiriri (m)
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you can send me a mail
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pamit (m)
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Hi guys,
A new entrant, But I have always been reading your posts. Respect to the profs in the house!. I don't know if anyone in da house knows something about the services of BGL Ltd and LeadCapital. I am considering opening a stock broking acct with them. It seems to me that BGL doesn't have a strong stock research unit, may be I am wrong sha. Anyone can also recommend any other strong research firms. Thanks and Kudos to you all
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kingzy (m)
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Plz, does anyone know whether intercontinental and dangote have started issuing their share certificates
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Tmoni (m)
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dangote appreciated the full 5% today,
hope to get some tommorow
looks like it might hit the roof before people get their certificates!!!!
@frankiri, opinion pls
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frankiriri (m)
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The Dangote offer was 139% subscribed. All applications for 50,000 shares and less were alloted in full. The certificates will take a while in getting to you. But if you can get it to buy now then please do as the share will definitely hit the roof. To avoid missing out on price appreciation it is best that you fill out the name of a stockbroker of your choice and your CSCS no on the application form so that the shares alloted to you will be credited directly to your CSCS account.
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Tmoni (m)
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how will send it to CSCS, spoke with my stock broker and he said i might not be able to buy dangote 2moro but will try, could u shed more light on your theory above and how a NRN can apply it cheers, so i might not have been alloted in full  |
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frankiriri (m)
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@pamit
BGL is one of the biggest stockbroking houses. IBTC is the only broker that I respect more than BGL so in my opinion I think that you are in good hands.
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frankiriri (m)
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Starting with the Intercontinental bank issue, investors were given the option of stating the name of their broker and their CSCS number on the application forms that they submitted. Investors that provided these info will not be issued share certificates but will have the shares alloted to them paid directly into their CSCS accounts. Thus they wont need to wait for certificates and then verification. If you did not supply this info then you will get a certificate.
If you bought more than 50,000 units you wont get all the shares you applied for.
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Tmoni (m)
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that has been agreed on,
what do u think are the chances of getting it today?
thanks for all the info
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egoldman (m)
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Oga Frank ,thank you for the way you have been helping us here ,now i have me some questions too .
1, prior to buying shares for me ,my broker had registered me with the CSCS and gave me the registration number and the account number ,but after buying the shares ,i wanted to log into my cscs account so i could monitor the stocks there ,but my broker told me that i would be able to do this in about a month time , so do you think this is ok or should i be concerned ? should i as an individual investor be able to log into my cscs account at anytime i want or should this be done by my broker only ?
2 , my broker "bought " shares for me more than the amount i deposited with them ,when i got the statement i asked why and was told that they did that cos the shares (first bank ) is scarce ,so i asked what if i don't have the money to pay for it,what will happen ,she said that in that case they would sell it when the price go up and take their money back,i don t really like this cos i don't understand how shares that i didn't pay for should be bought in my name, is this normal ? is it legal ? should i be concerned ?
3,now that i have scsc account number ,if i buy IPOs ,and asked that it be credited to my cscs account ,how long would this be done ,i ask this so i should know which is faster between crediting my cscs account and waiting for the certificate to get to me if i had chosen to receive the physical certificate .
4,what is the average transaction days from the day that i ask my broker to sell my shares and the time the money would hit my bank account ?
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frankiriri (m)
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that has been agreed on,
what do u think are the chances of getting it today?
thanks for all the info
very slim. The people whose money will be returned may try to buy on the floor and thus create excess demand |
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Tmoni (m)
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thanks, lets hope 4 the best i sent u a mail earlier on, any stock worth taking another look at u have really been helpful |
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