It will be agree that the stock OKOMUOIL on the NSE rose from N50 to N106 between the month of March and May(13th to be precise). However, yesterday 14May2013, there was a sudden drop in the value of this stock to N50.4; this more than 50% decrease.

My questions are:

Is there not limit to price change in the NSE?

Ever since I started monitoring the NSE index since Feb2013, the maximum change is ±10%.
If the maximum change is ±10%, what kind of magic occurred in the OKOMUOIL stock?

Is this magic a sort of re-base of the stock value such that the owners will own double of their original stock?

Is their any development from the OKOMUOIL group?


Anyone with good information should assist.

^^^ The reason for this price adjustment is because Okomu Oil declared a bonus of 1 for 1 meaning that a shareholder will get one share for each share held by him or her. For example, if someone is holding 10 shares, he will get 10 more (20 in total). The shareholders do not pay anything for these shares.
Usually, after the bonus issue, the share price of the company gets adjusted according to the bonus ratio. Since the price before the bonus issue was about N100 and Okomu Oil issued bonus shares in the ratio of 1:1, the post-bonus share price will be N50, which means that the total market value (2 x N50 = N100) remains the same.

I think what happened is ''price correction'' because of the 'market making' in the NSE. Some stocks are ovevalued while some stocks are 'undervalued ' so when buying a stock, do ur own research weather that stock what the price u are buying it or not. The price of okomu oil is really overvalued. So the price correction took place which is normal. Another stock that may suffer 'price correction' is nestle plc. The share price of Nestle plc is overvalued which may suffer price correction very soon. So the investors in Nestle are hereby advised to sell their shares before the crash.

alexvatt: I think what happened is ''price correction'' because of the 'market making' in the NSE. Some stocks are ovevalued while some stocks are 'undervalued ' so when buying a stock, do ur own research weather that stock what the price u are buying it or not. The price of okomu oil is really overvalued. So the price correction took place which is normal. Another stock that may suffer 'price correction' is nestle plc. The share price of Nestle plc is overvalued which may suffer price correction very soon. So the investors in Nestle are hereby advised to sell their shares before the crash.

Alexvatt,You were very wrong.There was no price correction on Okomu Oil rather as Laz correctly explained,it was a price adjustment for the Bonus and dividend recently declared.

laz_inc: ^^^ The reason for this price adjustment is because Okomu Oil declared a bonus of 1 for 1 meaning that a shareholder will get one share for each share held by him or her. For example, if someone is holding 10 shares, he will get 10 more (20 in total). The shareholders do not pay anything for these shares.
Usually, after the bonus issue, the share price of the company gets adjusted according to the bonus ratio. Since the price before the bonus issue was about N100 and Okomu Oil issued bonus shares in the ratio of 1:1, the post-bonus share price will be N50, which means that the total market value (2 x N50 = N100) remains the same.

Correct!

laz_inc: ^^^ The reason for this price adjustment is because Okomu Oil declared a bonus of 1 for 1 meaning that a shareholder will get one share for each share held by him or her. For example, if someone is holding 10 shares, he will get 10 more (20 in total). The shareholders do not pay anything for these shares.
Usually, after the bonus issue, the share price of the company gets adjusted according to the bonus ratio. Since the price before the bonus issue was about N100 and Okomu Oil issued bonus shares in the ratio of 1:1, the post-bonus share price will be N50, which means that the total market value (2 x N50 = N100) remains the same.

Thanks a lot for your response. Your response is inline with one of my questions as quoted below.

saintneo:

Is this magic a sort of re-base of the stock value such that the owners will own double of their original stock?

However, I have searched the internet for official statement from NSE or OKOMUOIL to prove the 1 for 1 offer to the customers.

Nevertheless, I appreciate response from alexvatt; based on the price correction theory, I would like to see some official info.

saintneo:
Thanks a lot for your response. Your response is inline with one of my questions as quoted below.


However, I have searched the internet for official statement from NSE or OKOMUOIL to prove the 1 for 1 offer to the customers.

Nevertheless, I appreciate response from alexvatt; based on the price correction theory, I would like to see some official info.

http://www.nse.com.ng/Financial_NewsDocs/OKOMU%20OIL%20CORPORATE%20ACTION.pdf

^^^^ thanks a lot.


No wonder that stock skyrocketed within two months. People were aiming to benefit from the 1 for 1 opportunity. Thus, if someone bought 1000 units of OKOMUOIL in February at about N48 per share (N48,000), the person has gained additional 1000 units. Thus making his or her investment now N100,000.
Powerful gain.

I think what happened is ''price correction'' because of the 'market making' in the NSE. Some stocks are ovevalued while some stocks are 'undervalued ' so when buying a stock, do ur own research weather that stock what the price u are buying it or not. The price of okomu oil is really overvalued. So the price correction took place which is normal. Another stock that may suffer 'price correction' is nestle plc. The share price of Nestle plc is overvalued which may suffer price correction very soon. So the investors in Nestle are hereby advised to sell their shares before the crash.

Why do people delve into subjects they know NOTHING about? The above response is wrong, not just wrong, it smacks of serious ignorance. There is nothing wrong in asking to know, but a lot is wrong is proferring answer on a matter you are COMPLETELY ignorant. Next time, please be sure of your fact before posting a response. Okomu is not going through any price correction. Its the 1 for 1 and dividend declaration that brought the price down to N50.40. Okomu is on its way back to where it came from after a wonderful performance (N80 - N100). Presently Okomu has gained 10% at the Exchange. If you have money go and buy Okomu.

saibuhari: I think what happened is ''price correction'' because of the 'market making' in the NSE. Some stocks are ovevalued while some stocks are 'undervalued ' so when buying a stock, do ur own research weather that stock what the price u are buying it or not. The price of okomu oil is really overvalued. So the price correction took place which is normal. Another stock that may suffer 'price correction' is nestle plc. The share price of Nestle plc is overvalued which may suffer price correction very soon. So the investors in Nestle are hereby advised to sell their shares before the crash.

Why do people delve into subjects they know NOTHING about? The above response is wrong, not just wrong, it smacks of serious ignorance. There is nothing wrong in asking to know, but a lot is wrong is proferring answer on a matter you are COMPLETELY ignorant. Next time, please be sure of your fact before posting a response. Okomu is not going through any price correction. Its the 1 for 1 and dividend declaration that brought the price down to N50.40. Okomu is on its way back to where it came from after a wonderful performance (N80 - N100). Presently Okomu has gained 10% at the Exchange. If you have money go and buy Okomu.

This might be a time to pullout actually, because, I see this okomuoil dropping down to N25 before September.

saintneo: This might be a time to pullout actually, because, I see this okomuoil dropping down to N25 before September.

when i visited thier plantation and from what i saw 50 naira per share is very high. And i dont want to call that coperate fraud. 35 naira per unit will be okay.

Redoil: when i visited thier plantation and from what i saw 50 naira per share is very high. And i dont want to call that coperate fraud. 35 naira per unit will be okay.

Please let us know what you saw at their plantation. It may help some discerning investors to take informed decisions. Stocks not driven by core fundamentals are likely to crash sooner or later.

Did the company experience a higher turnover than expected based on better output/demand, reduce its overheads based on efficient production, receive additional local or foreign investment, etc.

Well I guess their AGM will answer some of these questions and many more. The era of stock price manipulation should not return to the NSE.

Peterwins:

Please let us know what you saw at their plantation. It may help some discerning investors to take informed decisions. Stocks not driven by core fundamentals are likely to crash sooner or later.

Did the company experience a higher turnover than expected based on better output/demand, reduce its overheads based on efficient production, receive additional local or foreign investment, etc.

Well I guess their AGM will answer some of these questions and many more. The era of stock price manipulation should not return to the NSE.

i may not be able to give detail analysis i belive that sec saw it too that is why they called them to order. Ask ur self are they the first to give bonus unit in nigeria no dividend and share split have being on since time inmemorial why are thier own different. Sec pouposly force them to drop the price and gave a sweet reason for it. Go and check the price of presco that has a bigger plantation than okomu and nifor combine they are all in thesame line of business run by indians and european except nifor that is own by federal gov. My ANALYSIS MAY NOT BE ACCEPTED.

Redoil: i may not be able to give detail analysis i belive that sec saw it too that is why they called them to order. Ask ur self are they the first to give bonus unit in nigeria no dividend and share split have being on since time inmemorial why are thier own different. Sec pouposly force them to drop the price and gave a sweet reason for it. Go and check the price of presco that has a bigger plantation than okomu and nifor combine.

Thanks. I also hope their financial reports are not heavily doctored (misrepresented). I wish I can lay hold on their financial reports ASAP. I will look into it if I have the time. Once again, the SEC and the NSE should never allow any company to manipulate their stock price.

Redoil: i may not be able to give detail analysis i belive that sec saw it too that is why they called them to order. Ask ur self are they the first to give bonus unit in nigeria no dividend and share split have being on since time inmemorial why are thier own different. Sec pouposly force them to drop the price and gave a sweet reason for it. Go and check the price of presco that has a bigger plantation than okomu and nifor combine they are all in thesame line of business run by indians and european except nifor that is own by federal gov. My ANALYSIS MAY NOT BE ACCEPTED.

Even though your analysis may not be accepted, your raw observations are very helpful. Prior to the stock market burst of late 2008/ early 2009 undiscerning investors were purchasing stocks of "technically dead/under-performing companies" as a result of doctored financial reports that were heavily cooked, baked and even fried.

Thanks for your observations. I wish others that have visited their plantation can also give their objective opinion.

My prayer is that the big sturbon lion who is heading sec will not allow that unlike are predecesors who collect thier own share and allow them to go scot free.

Peterwins:

Thanks. I also hope their financial reports are not heavily doctored (misrepresented). I wish I can lay hold on their financial reports ASAP. I will look into it if I have the time. Once again, the SEC and the NSE should never allow any company to manipulate their stock price.

Redoil: i may not be able to give detail analysis i belive that sec saw it too that is why they called them to order. Ask ur self are they the first to give bonus unit in nigeria no dividend and share split have being on since time inmemorial why are thier own different. Sec pouposly force them to drop the price and gave a sweet reason for it. Go and check the price of presco that has a bigger plantation than okomu and nifor combine they are all in thesame line of business run by indians and european except nifor that is own by federal gov. My ANALYSIS MAY NOT BE ACCEPTED.

Thank you for confessing that your biased and misleading analysis MAY NOT BE ACCEPTED.
To say that Presco has bigger plantation than okomu is absurd? Go online to google maps (Edo state) and compare the actual size of both plantations. With all the above explanation of price adjustment, you still come to type "Sec pouposly force them to drop the price and gave a sweet reason for it".

Dont forget that presco also buy palm kernel seeds from people of delta state and edo state in a very large quantity to add to thier natural inpute my take on this issue is that @Red oil, though his analysis may not be totatly correct methink their are at least 60% truth in what she wrote or what can you say is the posible reason for the sharp drop in their price level by half. Arumah oteh may be trying but she should try more so has to earn investors confidence.

question:
Thank you for confessing that your biased and misleading analysis MAY NOT BE ACCEPTED.
To say that Presco has bigger plantation than okomu is absurd? Go online to google maps (Edo state) and compare the actual size of both plantations. With all the above explanation of price adjustment, you still come to type "Sec pouposly force them to drop the price and gave a sweet reason for it".

My obversation has shown that investors in Nıgeria are becoming wiser day by day. Gone are the days where somebody can just come and deceive people just like that. Notwithstanding nigerian stock exchange remains the best market to be. Invest ur money wisely.

Why did dangote spent over 80 million in legal fee just to retain the chairmanship of NSE. What happen to transcop wema ABC transport i want to believe that they ar not the only one affected by the downturn. I have my reservation for stocks like nestle i dont want to say what is in my mind.

alexvatt: My obversation has shown that investors in Nıgeria are becoming wiser day by day. Gone are the days where somebody can just come and deceive people just like that. Notwithstanding nigerian stock exchange remains the best market to be. Invest ur money wisely.

@alexvatt might be right most of the stocks are over valued. Ask ur self why will dangote spent over 90 million naira in legal battle just to retain his high ranking position in nse . (dangote cement the highest price in the industry)

saibuhari: I think what happened is ''price correction'' because of the 'market making' in the NSE. Some stocks are ovevalued while some stocks are 'undervalued ' so when buying a stock, do ur own research weather that stock what the price u are buying it or not. The price of okomu oil is really overvalued. So the price correction took place which is normal. Another stock that may suffer 'price correction' is nestle plc. The share price of Nestle plc is overvalued which may suffer price correction very soon. So the investors in Nestle are hereby advised to sell their shares before the crash.

Why do people delve into subjects they know NOTHING about? The above response is wrong, not just wrong, it smacks of serious ignorance. There is nothing wrong in asking to know, but a lot is wrong is proferring answer on a matter you are COMPLETELY ignorant. Next time, please be sure of your fact before posting a response. Okomu is not going through any price correction. Its the 1 for 1 and dividend declaration that brought the price down to N50.40. Okomu is on its way back to where it came from after a wonderful performance (N80 - N100). Presently Okomu has gained 10% at the Exchange. If you have money go and buy Okomu.

BLOOMBERG WEBSITE:
Okomu Oil Nigeria Rises to Record on Dividend: Lagos Mover
By Emele Onu - Apr 4, 2013 2:53 PM GMT+0100


Okomu Oil Palm Plc (OKOMUOIL) of Nigeria rose to the highest on record after it announced a plan to pay dividends and bonuses to shareholders, according to Lambeth Trust & Investment Co.
The shares gained for an eight day, rising the maximum daily limit of 10 percent to 96.49 naira by the close in Lagos, Nigeria’s commercial capital, the highest since at least February 2002 when Bloomberg began compiling the data. About 7.2 million shares were traded, or more than 16 times the three- month daily average.
“The company notified brokers yesterday of its intention to pay a dividend of 7 naira per share and issue 1 for 1 bonus for last year,” David Adonri, chief executive officer of Lagos- based Lambeth, said by phone today. “Investors are buying its shares to partake in the impressive distribution.”
An e-mail sent to the company’s secretary wasn’t immediately returned. Okomu is yet to release its full-year results. It plans to double output of palm oil to 60 tons an hour from 2013, Chairman Gbenga Oyebode said in December.
The company’s shares have more than doubled this year, compared with a 22 percent rise in the Nigerian Stock Exchange’s All-Share Index. (NGSEINDX)
To contact the reporter on this story: Emele Onu in Lagos at eonu1@bloomberg.net
To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

http://www.bloomberg.com/news/2013-04-04/okomu-oil-nigeria-rises-to-record-on-dividend-lagos-mover.html

This news article goes to prove the reason behind the rise in OKOMUOIL. NSE investors are interested in dividends, they rush to buy dividend stocks thus driving the stock price higher.

For the only true gainers in this investment remains the sellers. Buy low, sell high.

Alexvatt may be right in his analysis, if one looks deeper. Why would a stock price be reduced just because there is an offer of 1-for-1? Makes no sense to me. This must be price adjustment strategy.

Please moderator kindly move this topic to the frontpage so that we may get diverse view of what happen to the okomu and other stocks

Ok,ok,ok,ok,ok,ok,ok,ok.

What happened in okomu is what we call price adjustment or market down.
When a coy brings out their corporate action, you will see qualification date / close of register. The ppl dt their names are in d register on close of business day are d ones to benefit from bonus/dividend if declared.
A day after close of business day, the price is marked down to reflect d bonus and or div paid. Eg, if fidelity bank pays 50k as dividend and the share price on end of day on close of register is 3naira, the next day, the price will be marked down to 2.50 . Frm their, if the stock is still in hot demand, the price will increase further. Bt if d demand is low, it will start falling frm there.

For okomu, since they gave 1 for 1, they will divide the price by 2, they will also remove the amt they paid for d div frm the resultant price.

If u don't want to keep the share for long, u might sell b4 close of reg.

Dats my observatn.

Finally, my topic makes it. Glad the willie that bans me with impunity is not the MOD here.

Common guys, let's contribute. Knowledge is very important. I wanna beat Dangote by 2019.

You might be right but i want you to give an example with any other company in the history of NSE. For i know that their are always reserve for bonous issue in every financial report (i stand to be corrected). What is the rational of declare dividend and deduct it from the share price.

mercylicious: What happened in okomu is what we call price adjustment or market down.
When a coy brings out their corporate action, you will see qualification date / close of register. The ppl dt their names are in d register on close of business day are d ones to benefit from bonus/dividend if declared.
A day after close of business day, the price is marked down to reflect d bonus and or div paid. Eg, if fidelity bank pays 50k as dividend and the share price on end of day on close of register is 3naira, the next day, the price will be marked down to 2.50 . Frm their, if the stock is still in hot demand, the price will increase further. Bt if d demand is low, it will start falling frm there.

For okomu, since they gave 1 for 1, they will divide the price by 2, they will also remove the amt they paid for d div frm the resultant price.

If u don't want to keep the share for long, u might sell b4 close of reg.

Dats my observatn.

saintneo: ^^^^ thanks a lot.


No wonder that stock skyrocketed within two months. People were aiming to benefit from the 1 for 1 opportunity. Thus, if someone bought 1000 units of OKOMUOIL in February at about N48 per share (N48,000), the person has gained additional 1000 units. Thus making his or her investment now N100,000.
Powerful gain.

A 1 for 1 stock dividend or stock split means if you had one share before, you'll end up with 2 (1 original +1 bonus share). If you had 1,000 shares, you'll end up 2,000.
The price of the share will halve, so that you will end up with the same monetary value as before.
Assuming the 1,000 shares you had were worth N100 before the split, giving you 1,000 x 100 = N100,000 as the value of your shares, they'll be worth N50 after the split, giving you 2,000 x 50 = 100,000 as the value of your shares after the split.

Okomu Oil had a fantastic ride 2011-2012 hence the reason for the stellar rewards in bonus and dividend payouts (N5 in 2011 and N7 in 2012 payout). However, declining global commodity prices has really affected their Q1 2013 performance and analysts are further estimating a further decline in commodity prices so Okomu Oil might be in it for a long haul (over 59% of their revenue is from international sales). For those who have access their Q13 results, you will see that there has been a decline in all indices. I would recommend a gradual reduction in portfolio holdings for the above mentioned for those that bought to enjoy the windfall. For people like us, who bought when it was around N42.50, we have already checked out before the closure of the register making over 100% ROI. Finally, the 1:1 bonus and N7 dividend is the reason for the “mark down” in the market price. Funny though that the price is climbing gradually even when their performance is dropping. I guess “HERD MENTALITY” is at work.

Good to know Okomu oil come out in a mega profitable way like this. I may have to think of cashing in on the remnant oando has turned my money into and add some to buy from Okomu oil

san001: Good to know Okomu oil come out in a mega profitable way like this. I may have to think of cashing in on the remnant oando has turned my money into and add some to buy from Okomu oil

You shuld have bought in january not now