₦airaland Forum

emmanuelewumi:
Your total Asset is everything you have weather you have fully paid for it or not.

Eg assuming one has a house worth N50 million, cars worth N20 million, jewelry worth N10 million, financial assets worth N10 million, land worth N10 million. His total asset his N100 million.

Assuming he has outstanding mortgage of N30 million on his house, debt of N10 million on his car, outstanding debt of N3 million on his financial assets and yet to balance N2 million on the land he bought. His total liabilities is N45 million.

That means his networth is N55 million.


Meanwhile his total assets of N100 million is held by the bank.

In his case the total liabilities is almost 0.9 times of networths. Provided his sources income is guaranteed he should not have a problem servicing his loan provided he is earning reasonable income

He did not have a diverse range of investments and was exposed to a lot of risk. The large amount of borrowing he did made the risk even bigger. It also made him extremely vulnerable if the market went down.

But that is likely how he grew his wealth initially - it is not easy to make billions by playing it very safe. If u doubt am go get your own.

Maybe he should have stopped taking large risks after becoming wealthy, but the desire to be the next Warren Buffett was very strong.

But wait o, 20 billi out of 100 billi, bank go just give you 80 billi do biz and u carry ur own billi go dey diversify for better property.

Haba, na u dey mary bank manager daughter?

Harvestock01:
In the event of a margin call, will the assets outside of the margin facility still be affected? For example if he owns a USD200 million property that was not used as a collateral?

Technically, from my research, assets not used as collateral should not be affected by a margin call, but the lender may still pursue lawsuits...

rmx:
Nah , you are wrong , said net worth , simply means the value of the stocks he had was more than his liability to the banks , at one time by upto 20b $ , till disaster struck and the value of Viacom shares plummeted and the banks came calling on his margin loan

The lesson to learn is take profit and move to other asset class , don’t keep all your eggs in one basket, it clearly shows what other billionaires do . Each to his own , I don talk my own

You make a fair point. But without knowing all the details, it's difficult to say definitively.

It's possible that a portion of his own capital, perhaps $20 billion, was required to be invested alongside the loans in order to access that level of financing.

emmanuelewumi:
I read it, that was a margin call.

Part of what was used in the calculation of his total assets was the market value of his stock position, with a highly leveraged position a 10% drop in the portfolio value can lead to a margin call.

Ok Sir, make I dey one side first, my eye never clear.

I drank agbo and ogogoro well well, yet my eyes clear pas una this morning, watin happen?

emmanuelewumi:
But losing $20 billion in 2 days get as e be. I love NGX as in you can't gain or lose more than 10% in a day.

However, in late March, after shares of ViacomCBS plummeted, banks demanded their money from Hwang's company, Archegos. As Archegos couldn’t pay, they seized its assets and sold them off, eventually wiping off Hwang's $20 billion net worth. -- Copied.



The whole story is in the link provided - are we afraid to follow links?

Despite his "baggage", Hwang would soon become the bride of banks again as many of them were reportedly eager to lend him enormous sums of money as Archegos piled up winning trades and emerged an investment sensation.

Archegos's portfolio included Amazon.com, Facebook, LinkedIn, and Netflix. In due course, with loans from various banks, Hwang built Archegos was in charge of a staggering $100 billion portfolio. Hwang's net worth rose to $20 billion. According to Bloomberg, at its peak, Hwang’s wealth briefly eclipsed $30 billion. -- Copied

emmanuelewumi:
Money Market Fund, cash and fixed income are also liquid, I guess his networth was tied to market value of his highly speculative stock positions

I shared the story of the guy whose N30 million portfolio turned to N2.5 million at a time when Naira to dollar was about N120.

If he diversified into cash, real estate, personal business and other cash producing assets he would not have been badly hit.

Someone said networth is a lousy metric and cash flow is far better. I guess that contributed to why Warren Buffett is the longest member of the Forbes list. Being there for decades.

Networth fuels the ego, cash flow fuels the yatch, jet and living expenses

But it is like you didn't read the story in full.

He was massively in debt, his positions were highly leveraged with several bank loans. Diversification would not have saved him, rather he should have eased on the loans.

chibaby1985:
Not possible...

Not all his assets... Ask Oba Otudeko

You are right, shelf companies and overseas assets may be out of reach, but any substantial assets he owns in the USA, he would be forced to vomit.

rmx:
While other billionaires have their wealth mostly tied up in businesses, real estate, complex investments, sports teams, and artwork, Hwang’s $20 billion net worth was mostly liquid; that is, not tied to tangible businesses.

The summary of the story , diversification, diversification

Wrong. Because his creditors would have still liquidated his assets to recover their money, regardless of diversification. I'm not saying diversification is bad oo.

1kinggy:
What?!

Lol, I believe Pa Emma has rightly corrected me in the following post.

What I meant is that if the initial investment is 1 million naira, then the dividend would be 770k (77%) at a share price of 2 naira. Fixed interest rate of 13-14% would provide a higher return of 1.2 million naira on current value.

emmanuelewumi:
It will bring the yield on cost to 77% and dividend yield to less than 10%.

Yield on cost is based on the average cost price of the stock, dividend yield is based on the current market.

You are right, thank you.

Agbalowomeri:
Bear will come
You could still get UCAP at half price

I understand your perspective - once the optimists have finished buying, only pessimists and neutral investors will be left holding the inflated prices. At that point, prices will start correcting.

However, there are some issues with this idea: we don't know the extent of the optimists' resources, or why they have driven prices up so drastically. We also can't predict how much they will let prices correct before stabilizing again.

You speak with conviction based on the charts, just as Oga Rabbi was certain the US economy would crash based on his bond market analysis. Yet one and a half years later, the US is still doing well.

In OGG voice, the market has a way of humbling even the most confident experts. Me I don humble teh teh.

emmanuelewumi:
A share of 2 naira or dividend of N2.

That won't stop UCAP from getting to N20 by the second quarter

I agree with you that the share price may drop later in the year, especially if better investment alternatives become available. An 8% dividend yield (2/23.9) may not be enough of an incentive for some investors.

Regarding whether 2 naira is possible, if we check UCAP's 2022 income statement, it lost 6 billion in credit losses, compared to just 450 million in 2021. I doubt the losses will be as high in 2023, and I feel 2023 was a better year overall than 2022.

So a share price of 2 naira or even higher seems possible.

Still, 2 naira would bring the dividend yield to 77%, which is well below the 128% from fixed income. Maybe that "person" will consider selling half their shares, as you suggested.

emmanuelewumi:
You rebalance your portfolio, the market can't continue to rise forever, a sound stock delivery good financial performance can be stagnant for years or might even depreciate.


Some Personal Finance experts believe we should subtract our age from 120 whatever we get is what we should have in equities. Eg a 30 years investor will have 90% in equities while a 70 years investor will have 50% in equities.

We should be able to strike a balance between safety and hope.

I will advise the guy to sell some of his UCAP shares probably about half because there is a high probability that UCAP will drop to N20 and below after dividend declaration. Doubt if the company can pay a dividend of N2.00, it paid N1.50k last year


My opinion though

UCAP's key business segments:

Investment Banking: Assists companies and governments in raising capital through IPO underwriting, debt issuance, M&A advisory, and restructuring services.

Portfolio Management: Manages investment portfolios for clients by providing discretionary management, non-discretionary advice, asset allocation, and performance reporting.

Securities Trading: Facilitates securities trading for clients through brokerage services, market research, and trade execution.

Trusteeship Services: Acts as a neutral third party in financial transactions by providing trust administration, escrow services, and registrar services. -- Copied

In the last 9 months, 1.6 trillion naira was exchanged on the NGX. Assuming UCAP's brokerage business segment has a 5% market share and charges 1.5% in fees, that would equate to a substantial 1.2 billion naira in revenue from just one business section.

Based on my layman's reasoning, I feel a share price of 2 naira or more could be possible for UCAP.

Melcapital:
If UBA bought at N6-N9 pays N3-N3.50 as annual dividends for three years and even beyond, what more would an investor seek? If the same UBA has returned 300% in price appreciation, would a trader be ungrateful?
No gree for anybody to buy gold from you in exchange for copper. Success in stocks investing is not only by being a master of hot stocks or by partaking in every lone ten bagger run.

You bought a stock like UCAP 4 years ago. Last year it returned 57.6% in dividends. The stock kept moving up. Now you look at its current value and see that if you liquidate now and invest in government bonds at 14 to 13%, you stand to get about 128% annually(on initial stock investment).

You want to do it, but you consider that 13% is fixed and once you are invested, neither your capital nor dividends will appreciate (or fall). However, the dividends have no ceiling and if the stock has moved this far, it would likely outperform the fixed returns over time.

You also realize that you may never be able to buy that stock at that initial price again. What would you do?

CC Pa Emma, Mcy56, Agba

Agbalowomeri:
Lol Zenith wey we go still buy 20 this year

OK, sir.

chibaby1985:
Wise counsel

BUA Cement will make us proud, with over 96% of the outstanding shares owned by BUA group and Abdul Samad Rabiu. Over 3% is owned by institutional investors (500,001 to 1,000,000 units each), and the remaining 1% own less than 500,000 units each. Hopefully the stock will perform very well. I am aiming for a 100% ooo.

123ABCXYZ:
I agree with your analysis on inflation but not on positive sentiments. The exit of large global corporations from the country is one big negative, no improvement of the security situation and distrust in the judiciary are serious negatives for any sentiment analysis performed by anyone and there has not been serious efforts to reform the country so I disagree. In my organisation here in the UK, we downgraded Nigeria this year in comparison to other african countries when looking at possible emerging market investment destinations.

I suppose one other factor driving investment in the stock market is the fall of the naira which has seen most financial institutions post massive forex gains and profits, providing the opportunity for short term profit hunters to take advantage of that value. I foresee a retraction post April 2024 except, inflation continues to rise and the naira continues to fall at rapid speed.

I see where you are coming from. Companies leaving, insecurity, and poor legal systems are serious issues. However, refined fuel products are Nigeria's largest expense, draining foreign exchange reserves and hurting the economy. With local refineries coming online soon and the potential to even earn foreign exchange, Nigeria is poised to see significant improvements.

I haven't delved into the details yet, but that will be my next project - analyzing how much Nigeria stands to save in foreign exchange and the potential impact on the economy.

Agbalowomeri:
What about the volume?
Distribution already commenced. I have not checked the charts but I expect divergence

The market has repriced most stocks; a new era has been ushered in. The days of Zenith at 25 are gone, so too for most other stocks, unless the government commits massive errors or something messed up happens globally.

Agbalowomeri:
What about the volume?
Distribution already commenced. I have not checked the charts but I expect divergence

In OGGs voice, you need to upgrade your techniques.

But seriously, what has happened and is currently happening in the market can be explained by macroeconomics, not just by looking at volumes of charts. I see two key factors: the massive waves of inflation and the positive sentiment surrounding the current administration.

Inflation has repriced most businesses. You may not understand this if you are a civil servant or salary earner. For example, if you used to buy your inventory at 10 naira but now buy at 17 naira, you should also increase retail prices to absorb the increased costs, including higher living expenses. Hence, I expect increased revenue going forward. Savvy investors understand this dynamic, which is reflected in current prices.

Secondly, with the new administration and upcoming refineries, the Nigerian economy looks promising.

I added a small chart showing overall performance on the NGX from May 2020 to yesterday. It indicates the number of stocks moving at least 10% up or down each month, along with total value traded.

Regarding total values, some may argue it represents money leaving the market, while others say it is new money entering. I would say it depends on the ratio of gainers to losers in that period. Let's discuss this point.

Since 2023-05, about 1.62 trillion naira (1.35 billion USD at 1200 exchange rate) entered the market in just 9 months. Do you think this much money is manipulation that can easily be extracted?

Streetinvestor2:
pls how do you go about retrieving ones old post.we don't make noise when we recommend

Here are a few ways to retrieve old posts on Nairaland:

Use the search bar - You can search for keywords, usernames, or post titles to find old posts that match your search terms. Eg "Streetinvestor Japoul"

Check user profiles - If you find an old post from a particular user, you can click through to their profile and search their post history.

ositadima1:
Yes, you are correct - either Nascon goes up or Sugar goes down to maintain the ratio. I make interpretation mistakes like this when I am busy and typing fast, but I am sure Sugar will cross 70 for another reason. Thanks!

ositadima1:
When I heard that Dangote Refinery was going to start producing products, I knew with conviction that Dangote's stocks on the NGX were going to rise. What is it that Oracle used to call it - a contagion effect? I don't think it ends there. As Dangote's refinery comes online, I believe we may see positive movement in many other companies as well, like Total and others.

When I heard that Dangote Refinery was going to start producing products, I knew with conviction that Dangote's stocks on the NGX were going to rise. What is it that Oracle used to call it - a contagion effect? I don't think it ends there. As Dangote's refinery comes online, I believe we may see positive movement in many other companies as well, like Total and others.

jaybee3:
Volume of transactions is moving the price and it’s definitely interesting to see the perceived correlated pattern emerge

I don’t think the volume of transactions (post news) that directly correlates with price, can be manipulated to maintain the deviation. Hence my correlation doesn’t always equate to causation comment

To further test your hypothesis and validate the outcome as true positive, i have basically asked that you increase the scope of period used in extracting the daily deviation. This will allow us confidently and logically conclude the behavior is somehow related to the news even though it’s still an oddity

The analysis to determine if the proposed merger terms of 12 units of salt for every 11 units of sugar were reflected in actual market prices. Here are the steps I took:

**I set up a function to represent the proposed ratio of salt to sugar prices: salt = (11/12) x sugar. This allows me to calculate the expected salt price for any given sugar price based on the proposed terms.

**I then plotted the ratio (11/12 x sugar/salt - 1) x 100 over time. This normalizes the pricing ratio to 0 when the actual prices reflect the proposed terms.

**I added a red reference line at 0 on the chart, representing perfect accordance with the proposed 11:12 ratio.
The data shows that actual market prices started aligning with the proposed ratio within +/- 5% around the time the merger announcement was made. This suggests the market began pricing in the expected terms.

**In the second chart I extended the data points back to 2020. Interestingly, there appears to be another pricing relationship from 2020 to 2022-03 of roughly 12 units of salt for every 10 units of sugar. I'm not sure if that is just coincidence.

**I can provide the Python code and data to allow independent verification of my analysis. Please let me know if you would like me to share those.

Conclusion: The market data suggests traders began pricing salt and sugar based on the proposed merger ratios around the deal announcement.

unite4real:
If Nascon should fall below 60, it means from the ratio, sugar should fall below 65.
Considering the scheme for the merger.
Since every 12 Nascon equals 11 sugar

I think as of yesterday, NASCON is cheaper to buy compared to Sugar.
Since Sugar was selling for 68.20, it means that Nascon should be about 62.5. Nascon sold at 60 which is below the price it should sell compared to Sugar.
So if price of sugar does not move by next week, investors should look at buying Nascon at current price and it should move up to be at par.
Should sugar move to 70, Nascon should move to around 64.
If the sentiment for next week is to buy either Nascon or sugar, it is advisable for investors to go for Nascon as early as possible before the price meets up with sugar rationally

Yes, you are correct - either Nascon goes up or Sugar goes down to maintain the ratio. I make interpretation mistakes like this when I am busy and typing fast, but I am sure Sugar will cross 70 for another reason. Thanks!

jaybee3:
Correlation doesn’t always equate to causation though

What’s the mean daily variance pre vs post News

Btw, are you a data analyst?

It is only logical that the two stocks must be priced in relation to the proposed announcement, even when the actual listing price is not known.

And since we know that DangSugar is the stock that is going to absorb the others, DangoteFoods' listing price should be very near DangSugar's or exactly it.

A huge variation of Nascon, especially below, from DangSugar would be a sure opportunity. So, I plotted the daily variations and noticed that it maintained close proximity to the proposed ratio.

On the other hand, I am a hobbyist stock data analyst. I ask questions and try to use statistics and stock data to answer questions as my power reach.

For comparison, I recomputed the chart to start from the first of January 2022. You can see how these two have been moving far away from each other, maintaining a very large variation from the proposed proportion.

It is very surprising how data can reveal patterns that validate logical assumptions.

Below is a screenshot showing the percent deviation from the proposed 12 Nascon to 11 DangSugar ratio. You can see how the market has maintained this deviation between +5% and -5% starting in late August, coinciding with the announcement date of August 30th.

Even though the market does not fully agree on the price given its oscillation, it has maintained proportionality close to the announced ratio.

As of yesterday, we have a +4% deviation in favor of Nascon. I can assure you that one of two things will happen next week.

Either Nascon will fall below 60 or DangSugar will break its highest level of 70.

Edited: From the chart, I also noticed that the two stocks were already moving to align before the announcement date. Is this some form of inside trading? Have some people gotten the news before others?

Locotrader:
TIP is also investing in oil companies.I think their subsidiary in Uganda own a 40% stake in Total Uganda.I will verify this info and post immediately I see it.Even the recycling business is a profitable one .They are in business with both Govt, private companies and top oil companies in Nigeria.They also earn in foreign currencies.They are unfolding their 5 years plan in this Q1,2024.

Is any of these true?

TIP is actively expanding its service offerings within the waste management sector. This includes initiatives like:

E-waste recycling: TIP operates the first and currently only e-waste processing plant in West Africa.

Sewage management: TIP has secured a 15-year concession for sewage management in a Nigerian city.

Produced water management: TIP is negotiating a 10-year concession for produced water management with a major oil company.