₦airaland Forum

DeRuggedProf:
I envy your brokers...

Brokers need to chop too.

If her timing is OK, then there is no problem.

After peaking last month, the stock price declined by more than 30%, but it gained all of that back and then some, with another 10% or more on top.

While someone who simply rode the ups and downs of transcorp would be up 70% to 80%, someone with good timing should be over 100%, even after paying the broker's fees.

@Ginalex if u did above 90%, be posting ur entries and exits abeg

ositadima1:
Everyone is entitled to their opinion. That is the beauty of a forum.

If you are one hundred percent invested in one individual's assertion, you could also short crude and make a lot of money.

Since crude is about to fall so much that it will take the whole market with it.

I am not trying to shade anyone. I got the idea from a movie I watched over the weekend called "The Big Short." In the movie, hedge fund manager Michael Burry predicted the 2007 U.S. housing market crash back in 2005.

He went to the big banks and proposed shorting the housing subprime loans. The bankers thought he was a fool and took the bet. They were even laughing at him.

To cut a long story short, in the end, he made $100 million for himself and $700 million for his shareholders when the bubble burst.

By the way, this is a true story.

seyisanya:
Well said! I laugh when all these ''monikers'' throw subtle shades. If it begins to lose 10-10% now, we no go hear pim. Dem go all disappear!

Everyone is entitled to their opinion. That is the beauty of a forum.

If you are one hundred percent invested in one individual's assertion, you could also short crude and make a lot of money.

Since crude is about to fall so much that it will take the whole market with it.

LordAdam16:
Maybe you don't have plans to ever wear a Brioni. Or stay at an Aman. Or buy La Mer for your wife. Or fund your kids/grandkids down payment or tuition in part or in full. Or comfortably pay for world-class medical care when you're frail.

-Lord

Lol, if you couldn't afford this lifestyle when you exchanged your naira for dollars at 180, how do you think you can afford it now?

Will this lifestyle become less expensive because the naira is devaluing? Some people sef. Unless you earn in dollars or live abroad, exchanging naira for dollars to buy foreign stocks will not suddenly make you dollar rich, naira rich maybe.

Afromentalist:
You have a point there but it is not entirely true. There is plenty of research and evidence on this topic.

Stocks do not adjust 100% to inflation even in the very long run. The reason is, very high inflation can make consumers turn to alternative solutions or even stop patronizing the firm altogether. Hence stocks usually adjust to part of the inflation rates especially when the inflation is very high and sustained ... Which unfortunately is the case of Nigeria.

Good companies can raise prices and maintain their profit margins, or even increase them. For example, Dangcement has significantly increased the cost of a bag of cement in the last 8 years, as have other "good" companies. Good luck finding alternatives.

As I said before, inflation affects almost everything. Goods and services are repriced, and more profit is made. Eventually, the profit will put you on par with where you were before.

The dollar has increased in value by 3 times or more in the last 8 years. Some "good" stocks have done even better, while others have decimated investors' money.

I believe that selecting good stocks can beat inflation.

Neverlosemoney:
At the bolded…The Environment is very bad. Raising cost cannot save this companies, maybe; in the short run. There is a limit on the amount of cost a company can pass on to the people before it start to crumble no matter how great they are. Well, I do hope people make educated choice.

In your previous post, you said that 200 naira could buy 4 loaves of bread, but now 495 naira can only buy 2 loaves. Are you contradicting yourself? Is inflation not the general increase in the cost of goods and services?

YoungBuffet:
Pls is fidelity ok at the current price?

I would rather invest in access and uba, as I believe they are undervalued compared to fidelity. Looking at fidelity's chart, I guess it will correct to 5 or lower before moving up again.

Neverlosemoney:
Five Years Ago A Loaf Of Bread Was Selling For #50. You Were Given #200 To Purchase 4 Loaf Of Breads To Eat, You Decided To Put The Money Into An Investment Account Yielding 20% Per Annual. After 5 Years Of Compounding, Your #200 Is Now Worth #498 Before You Congratulate Yourself On A Job Well-done. A Loaf Of Bread Is Now Selling For #200, Your #498 Will Buy You Just 2 Loaf of Breads. Yes! You made great return on your investment, you might feel richer but you won't eat richer.

Investing should not be focused on making money but beating or keeping up with inflation or devaluation through any means necessary. I can't help but notice Most people focus on the former. As long they are making money they doing a great job. That is a wrong way of seeing investing.

Investing in solid companies, keeping track of their performance over time, and rebalancing your portfolio is just as good as investing in foreign markets. This is because, even if it is a slow process, good companies must revalue the cost of the products they provide to their consumers, which will result in better profits. In short, sooner or later, every good stock you see on the NGX will move up to adjust to inflation and exchange rate. This is inevitable.

If you have 200, invest it in a good stock instead of bonds or treasury bills to fight inflation. If you are a good trader, you can do even better.

kalkah:
@ositadima1,

Thanks for the information. I want to learn. How did you calculate the fair value using the metrics in the table (Equity growth, ROE, PE, VPD ).

Thanks

I used a very simple idea. If I owned a business, what minimum return would I expect to earn on my invested capital? One way to estimate this is to set the risk-free rate of return, such as the yield on treasury bills, as a floor (plus a premium for the business risk).

From the company's PAT, we can work our way back to what my capital should be hypothetically, and then I call this fair value because everyone else calls their estimates fair value.

Note that this is why I cannot make estimates when a company has negative PAT and I have only ratios and comparative analysis to fall on.

Also, there are very complex methods that use multiple inputs from the financials spanning several years, but I do not have the time or the will to stay in one place doing data entry when at the end of the day you will still need to estimate and project some values.

You can ask the Oga's to give you their more elaborate and probably more accurate method.

I guess talk plenty without answering your question.

onegentleguy:
Great input bro!

Here's the thing though...
Since you used PE, perhaps it would be better to work with their Q1, 2023 figures with a conservative projection of the balance of 3 quarters in 2023 or that of the trailing 12 months period to March 31st 2023, again using a conservative approach.

But I totally agree with most of your estimate.
Well, except for a few which seems a bit exaggerative and GTBANK, where I disagree completely. ...check well.

Fantastic job you did there though.
Regards

Thank you, Sir. What I did there is child's play compared to what you do, trust me on that. I have quite a lot of things to improve on in my free time.

emmanuelewumi:
Another question, how did you get your equity growth. Was it year on year, 4yr CAGR or a blend of 2yr, 3yr and 4yr CAGR

For the EPS I use the 5 years average and also the normalized EPS based on the average 5 year return on equity.


We are on the same page concerning Dangote Sugar, Total, Vitafoam, Nahco and APR fair value, but not on the same page as the others

Let me start by saying that the work of a fundamental analyst is very hard, which is why most analysts go for technical analysis. Gathering and studying company financials in detail is no easy task. Therefore, I decided to base all my data on one set of financials at a time, meaning by year. All of the data is from 2022, except for the current price.

I simply calculated equity by finding the percentage difference in equity from 2022 to 2021. EPS and ROE are based on 2022 alone. PE varies as current price varies.

I believe that if a company has done well with equity growth and ROE, it is likely that this will carry over to the next year.

emmanuelewumi:
Good job, why will you ascribe a PE of between 4 to 4.5 to GTB and Zenith. Even stocks with zero growth and return on equity of 10 will have a PE of 8 to 8.5

PE, or Price to Earnings Ratio, is a financial metric that compares a company's current stock price to its earnings per share (EPS). It is not an estimated value.

BabsO2:
I feel and like this VPD thing and must have been using it intuitively in stock selection without knowing that I was using the concept. On your picture was the VPD calculated based on your estimated fair value PE dividend by current market PE ?

estimated fair value

Agbalowomeri:
Great use of data!
For completeness you may want to add model performance parameters. I am not sure though how useful this is practically

You are right, Sir. As it is, there is not much use for it, except when there is a considerable deviation of either stock or both from their normal relation. In this case, one can sell one and buy the other, which is a form of arbitrage. This is assuming that the agent that caused the correlation is still in play.

Here are some stocks, their fair values, and their divergence from fair value (VPD). I used 2022 reports as my source. PE was as of yesterday. You can see that I sorted them in order of rising PE.

First, I want to take the time to point out that this is not a recommendation, but simply an observation from my tinkering. It is not for everyone, but rather for a few like-minded tinkerers. Please do not quote me if this is not your thing, and it is not mandatory to reply to every post.

I noticed an interesting relationship between Zenith Bank and UBA. They are very correlated, meaning that they tend to move together over a sufficient amount of time. In fact, their correlation is about 0.87, measured from 2021 to date. I attached a scatter plot of UBA vs Zenith Bank, which shows how the prices align neatly. I then ran linear regression, which you can see as the red line. Linear regression means fitting a straight line to data when there is suspicion that the data has a linear relationship.

The linear regression line, like any straight line equation, has a slope and an intercept. If we put these together, we get the equation U = 2.66 + 0.22*Z, where U is the UBA price and Z is the Zenith Bank price.

U = 2.66 + 0.22Z is a model describing the linear relationship of UBA and Zenith Bank.

Because the line was fitted, if you impute Z, U will vary from the actual UBA price. This is where we can benefit from the equation. Eventually, either the UBA price will come down to meet the estimated value or Z will go up to match the estimate. How do I know this is true? Below is another plot showing the UBA price minus U over time. You can see that the UBA price is always within +0.75 Naira to -0.75 Naira of U Naira.

This suggests that the linear regression model is a good fit for the data. We can use this model to make predictions about the future prices of UBA and Zenith Bank. For example, if we know the current price of Zenith Bank, we can use the model to predict the future price of UBA and and the other way round .

Agbalowomeri:
Still won't generate value Lol. Just dey gather inefficient assets everywhere

Says the guy who spends most of his time on NSEMPA threads dropping one-liners.

So, according to you, Access Bank just woke up one day and decided to invest millions of dollars in a project to catch clout?

I bet you didn't read where Access Bank clearly mentioned that this was some form of solution for some Francophone African countries where it is currently present.

Baddestguyp:
Netflix needs to pay for this crime
How TF are these ancient Egyptians

Crime against whom? Why don't you create your own show? You're waiting for Netflix, an American company, to portray your culture in all its accuracy for Americans.

Although most of the cast look more like everyday Nigerians than Egyptians.

Karleb:
Are Egyptians black? Northern African are not blacks so why make a story about their history with black casts.

I see a lot of black people falling for this woke thing easily because of racism. Just leave their history and culture alone.

There are enough movies that celebrate blacks and our cultures, let's enjoy those without complaining about everything.

Imagine if black panther was acted by a white actor.

It is just a show, people! One that was primarily made for the North American audience. If Egyptian viewers don't like it, they can either make their own version with what they believe to be proper, or simply not watch it at all.

Cleopatra was definitely not black, but nothing stops any ethnicity from playing the role. It is not even a documentary.

Agba - lowo - meri.

What is the meaning of "meri", I have always wanted to know.

mendes911:
You keep misunderstanding and misinterpreting statements up and down!

That's the point, I don't know why you keep quoting me.

mendes911:
Na you wake up go begin find OGG trouble, calling Caverton a 20 Kobo stock.

And as if that wasn't enough, you went for an "oracle" as well.

#PicksBike!

Mendes911, don't use me to settle old scores with Ogg. Be bold and face him like a man with balls.

anomaly20:
Which broker do you use

Morgan Capita

I don't know what is wrong with me today. I sold Caverton at a loss, and I have been verbally attacked by a couple of jocks and a chick right here on this forum. Nothing seems to be going well today.

seemples:
You sef
He meant he used a stone to settle 2 birds

Are you his girlfriend or something?

mendes911:
One stone, two birds!

Okay, so we are throwing stones now. Don't start what you can't finish.

You may as well have answered the guy. He was asking if the (T-3 rule) applies to withdrawals.

mendes911:
Funds are never ready for withdrawal immediately after sells, it takes a couple of days to clear. For an additional fee though, most brokers can credit your account even when the funds are yet to get credited to them. Also, some brokers do allow their clients to trade with the proceeds of funds immediately after a sell has gone through.

I sold my remaining Caverton shares this morning, and the proceeds immediately appeared under my available balance, along with other funds. Since I started investing in shares, I have not made a withdrawal, so you may be right in that respect.

Ibrahim505:
I sold my stock on Friday, is my fund available for widrawal today? (T+3 rule)

To my understanding, your funds should be ready for withdrawal immediately after you sell, depending on how fast your broker processes transactions. The (T+3) refers to the days it takes for your stock to be registered or deregistered on the CSCS ledger.

Agbalowomeri:
You don turn 360 come jam Oracle
Do not mess with the gods

I told ya, I don't shoot civilians.

Marketapprentic:
Guy, bend down, you will see ABA.

I bet, u missed the fun in that comment

OK, I see what he did there. We can get things wrong sometimes, it is part of being human. Even Ogg..., only Oracle no dey ever agree him bleep up.

Agbalowomeri:
Dey find soldier man wahala

I no dey shoot civilians.