@shigidi
My brother i am fine, jus been a bit busy thats all.

Mr. Risky:

My Peace,
Sorry, my last statement in my earlier post concerns ONLY CORNERSTONE, not Mutual Benefit, Crusader or others. Cornerstone is a great insurance company relatively speaking, but their profitability has not been impressive like its peers. For instance here is their performances so far:
MUTUAL BENEFIT (six months result = N448m)
CRUSADER (six months result = N593m)
WAPIC (Though no result yet, but they are expanding even beyond the Nigerian shores)
AIICO (recently merged with two others, and promises to do fine, and they are generous with bonus and dividend)
Cornerstone (six months result = N276m)
Staco (six months result = N301m)
Standard Alliance (six months result = N301m)
Sovereign Trust (six months result = N222m)
LASACO (Six months result = N560m)


This is what I have personally gathered from my findings about them. Although they all do not have the same figure as their shares outstanding, but you can even see that Staco, a new comer to the market did better than Cornerstone in their 6 months result. Methinks their profit results matters in one's analysis.

Mr. Risky:

to Add Others are:

Custodian & Allied (six months result = N435m)
NEM (six months result = N213m)
LAW UNION (six months result = N274m)
NIGER INSURANCE (Six months result = N354m)

Others I am not very interested for now

Talking about profit while not taking the outstanding issues into consideration distorts the picture.

AIICO is not generous. When they were facing reduced profitability, they were issuing bonuses to prop up the price. Can't remember the last time AIICO declared a dividend. Same for NEM.

UNIC is another good company that is set to gain from its investment in UNIC health. They are also opening a club at VGC.

The insurance companies should do well. The question is whether the current prices are right and justified.

I dont see anything wrong with the prices so far, i reckon, like temmie10 above has said, that the insurance sector will catch up with the banking sector over the next 20yrs at the most because the rate of expansion and growth is alarming.

[quoi used VETIVA you ca call them on 234-1-4617521-3 and 2700657-8 FOR ME THEY ARE SOLID AS ROCK.]
Bigboy how long have you been with Vetiva? For all Between Afrinvest and Vetiva which one will be the best option for someone that is a biginner

hI WanajO,
With all due respect, if AIICO was giving BONUSES when they were not doing well profitably, it confirms my statement that they are GENEROUS. Unless you are saying the word GENEROUS has suddenly changed in meaning. If they were doing well and were giving bonus that would be a different thing. Here they were not doing well, according to you, and yet they were giving their shareholders bonuses. Are you saying if they return to profitability, they will withdraw those bonuses? I don't think so, hence I MAINTAIN that AIICO is GENEROUS. Regards

shigidi:

its amazing how the market can act sometimes.
access was on net bid fo two months,at 19 naira and after all the excitement with the ts been lifted ,it moves a bit and goes straight back to 19. i hope no one here bought at a premium. to think we were all saying it should hit 25naira this week. my bad.
still, at 19 naira, it looks very good going forward, would advise people to take position now, because it looks relatively cheap at this price.
and whats with intecontinentals sudden run.

I believe Access was on net offer during the TS because some investors wanted to sell their current holdings to buy the PO at a "discount".

After the offer closed, the attraction was no longer there. With the current dip in price some of these investors may now decide to sell all the same,

Mr. Risky:

hI WanajO,
With all due respect, if AIICO was giving BONUSES when they were not doing well profitably, it confirms my statement that they are GENEROUS. Unless you are saying the word GENEROUS has suddenly changed in meaning. If they were doing well and were giving bonus that would be a different thing. Here they were not doing well, according to you, and yet they were giving their shareholders bonuses. Are you saying if they return to profitability, they will withdraw those bonuses? I don't think so, hence I MAINTAIN that AIICO is GENEROUS. Regards

It's the word "bonus" that has changed in meaning. Bonus means something extra for free but in the NSE a bonus means taking my cake, cutting it into smaller pieces and telling me the same cake should be sweeter because I now have 12 slices instead of 6.

Reminds me of the Yogi Berra story: A waitress asks Yogi if he wants his pizza cut into 8 slices and he answers "I don't think I can eat 8 slices, why don't you cut it into six". The same pizza!

The point is AIICO gave bonuses to distract you from the fact that they were not profitable. Bonuses don't mean anything, they never have and never will. I'd never buy a money-losing company even if they were giving 100-for-1

pumping777:

I believe Access was on net bid during the TS because some investors wanted to sell their current holdings to buy the PO at a "discount".

After the offer closed, the attraction was no longer there. With the current dip in price some of these investors may now decide to sell all the same,

Nice theory. I think I buy it. I also believe we are seeing how deep the market really is. All the funds the banks have raised this year have depressed the sec market in the 2nd half and continue to do so with PO after PO after PO.

I was high on Access (still am). A little disappointed I couldn't turn it around for a profit quickly but if it drops anymore, I getting some more. It's the cheapest bank on a forward PE basis (assuming the PO is not heavily oversubscribed); the only one with a forward PE under 20 (incl. PO shares) and has a PEG of 0.15

Mr. Risky:

hI WanajO,
With all due respect, if AIICO was giving BONUSES when they were not doing well profitably, it confirms my statement that they are GENEROUS. Unless you are saying the word GENEROUS has suddenly changed in meaning. If they were doing well and were giving bonus that would be a different thing. Here they were not doing well, according to you, and yet they were giving their shareholders bonuses. Are you saying if they return to profitability, they will withdraw those bonuses? I don't think so, hence I MAINTAIN that AIICO is GENEROUS. Regards

A company does not really need to be doing so well to issue bonus shares. This can be an acid test for a company that declares dividends but not for bonus shares. At least a company must be making real profit to declare dividends since there is a pay out that comes with it.

Issuing bonus shares should indicate that a company is growing but this may not always be the case.

Issuing bonus shares can also mean a company has mostly paper profit and does not have the cash to back it up yet. Yes, we made profit but we have nothing to give you yet. A company that gives bonus should be able to give dividends except the company is growing at such an alarming rate that it needs the shareholders funds to keep up.

For instance think of a company that is heavily owed by debtors. If some of these payments go bad, then the bottom line is no longer the same as the declared profit will never be realized.

easimoni:

It's the word "bonus" that has changed in meaning. Bonus means something extra for free but in the NSE a bonus means taking my cake, cutting it into smaller pieces and telling me the same cake should be sweeter because I now have 12 slices instead of 6.

Reminds me of the Yogi Berra story: A waitress asks Yogi if he wants his pizza cut into 8 slices and he answers "I don't think I can eat 8 slices, why don't you cut it into six". The same pizza!

The point is AIICO gave bonuses to distract you from the fact that they were not profitable. Bonuses don't mean anything, they never have and never will. I'd never buy a money-losing company even if they were giving 100-for-1

Thanks for helping me explain in a way that can be understood.

whitelexi:

I don't see anything wrong with the prices so far, i reckon, like temmie10 above has said, that the insurance sector will catch up with the banking sector over the next 20yrs at the most because the rate of expansion and growth is alarming.

No problem. To each his own. Someone said the same thing when buying NEM insurance at 6.37. Now NEM insurance is  < 3.00. Water will always find its level.

Many companies are doing well and will continue to do well. However, when they are OVER VALUED, you may need to take a step back and bid your time till when they are fairly valued or undervalued.

@ Wanaj0,
give us the gist on First Aluminium. Saw on the other forum that you might take a position. Are you expecting a turn-around v soon?

easimoni,
Where is it that 'bonus' don't mean anything? Is it in NYSE, LSE or NSE? To bring our discussion to reality, in NSE bonus mean EVERYTHING. Otherwise, how come it drives the prices in most cases beyond the roof? If Dangote Sugar was giving quarterly BONUS where do you think the price will be by now? True, bonus may mean nothing, but in NSE it is not seen that way. I think market psychology is also a factor to consider when trading in stocks!

easimoni:

@ Wanaj0,
give us the gist on First Aluminium. Saw on the other forum that you might take a position. Are you expecting a turn-around v soon?

Not quite. First Aluminium was trading above 3.00 and the guy recommended a BUY. I told him then that First Aluminium is not making profit that I expect the price to drop to 1.50. The guy called me out that I was saying nonsense. The post was just to remind him of the price of first aluminium now. The initial discussion was had in August.

First Aluminium is a stock with potential but until ALSCON is up and running I will stay clear. While potential is good, one need to be careful!

Mr. Risky:

easimoni,
Where is it that 'bonus' don't mean anything? Is it in NYSE, LSE or NSE? To bring our discussion to reality, in NSE bonus mean EVERYTHING. Otherwise, how come it drives the prices in most cases beyond the roof? If Dangote Sugar was giving quarterly BONUS where do you think the price will be by now? True, bonus may mean nothing, but in NSE it is not seen that way. I think market psychology is also a factor to consider when trading in stocks!

On paper a company does not need to be very profitable to give bonus.
However, in a nigerian setting, bonus is a huge psycological factor that influences stock price movement.
So both sides have a point. Even in a bearish market, a good bonus will still puch the stock price up like we have seen.

Fundamentally, bonuses are not good for the long term eps except a company can increase profits very well consistently (and some companies can do this). Easimoni has a point because many times the idea of bonus is abused in Nigeria i.e. when a company's profits are redusing and yet more bonuses are being issued.

In a Nigerian setting however, announcements of bonus sparks rallies and where there is no bonus, very little reaction occurs (the price may even take a beating) many times so you're right in saying that bonus carries weight

Temmie10:

On paper a company does not need to be very profitable to give bonus.
However, in a nigerian setting, bonus is a huge psychological factor that influences stock price movement.
So both sides have a point. Even in a bearish market, a good bonus will still puch the stock price up like we have seen.

Fundamentally, bonuses are not good for the long term eps except a company can increase profits very well consistently (and some companies can do this). Easimoni has a point because many times the idea of bonus is abused in Nigeria i.e. when a company's profits are redusing and yet more bonuses are being issued.

In a Nigerian setting however, announcements of bonus sparks rallies and where there is no bonus, very little reaction occurs (the price may even take a beating) many times so you're right in saying that bonus carries weight

Bonus without commensurate growth in profit is a recipe for disaster. Go and ask NBL shareholders and they will tell you.

A particular year, UNIC declared a 3 for 1 bonus. They are yet to recover from it!!!!!!

AIICO was not doing well when they were declaring bonus issue.

If you will not declare a bonus, you can declare GOOD dividend. NESTLE, TOTAL hardly give bonus. See where they are.

Performance must back up whatever benefits you give out. You can't deceive people for so long!

@wanaj0

The issue of giving these kind of bonuses just create an opportunity for discerning shareholders to benefit.
Its no point arguing about corporate governance, we are in stocks to profit abeg.

By declaring bonus, investors have profited from the ability to sell aiico at a very good price and make good profits.
Will it affect the company in the long run? will they recover?

My answer is "If the shareholder is so pissed off about the bonus declaration, he should take his handsome profits and go and buy Nestle or Total".

Gentlemen: WanajO, easimoni, and Co

All that you guys have said about BONUS are very, very correct.

Why, though, I said AIICO is generous is because even when they were gradually returning to profitability, in their last year rewards, they also gave 1 for 6 bonus. So in good and bad times, they give what majority of Nigerian investors prefer - BONUS.

So as their performances continue to improve, their shareholders who have been loyal to them stand to benefit.

But the wahala with BONUS is well seen in the case of Nigerian Breweries. In discussing here sometimes it is good to know what tone to employ, because, SPECULATORS (traders) and LONG TERM investors can speak in disparaging languages sometimes, you will agree. GOOD NIGHT GUYS

Temmie10:

My answer is "If the shareholder is so pissed off about the bonus declaration, he should take his handsome profits and go and buy Nestle or Total".

Personally, If any company I own declares a bonus, I watch it rally for a few days and then issue a DUMP (not SELL) order! I can't stand  to wait around for my shares to show up (have a colleague waiting for a Conoil bonus from 3 yrs ago) or to see the fundamentals get bungled by the host of innumerate (mathematically illiterate) analysts who won't (or can't?) factor new shares into the EPS/PE calcs. I always get chastised for the attitude but I believe bonuses are simply a distraction. I hope ALL the companies I own give a bonus at the FY so I can watch the rally and then DUMP them.

Mr. Risky:

Gentlemen: WanajO, easimoni, and Co

All that you guys have said about BONUS are very, very correct.

Why, though, I said AIICO is generous is because even when they were gradually returning to profitability, in their last year rewards, they also gave 1 for 6 bonus. So in good and bad times, they give what majority of Nigerian investors prefer - BONUS.

I get it, I just wonder why anyone hangs on to a company losing money just because of a bonus. I know they do it (and that we can benefit from such market sentiments) but I think people will ultimately start to see the light as the market gets more sophisticated (and it will).

easimoni:

. I hope ALL the companies I own give a bonus at the FY so I can watch the rally and then DUMP them.

100% with you on that one

@ Wanajo, easimoni, Mr. Risky and Co.

this is the best lesson on "Bonus and Stocks" that i have received in my life time, and for free for that matter.

only God will pay you people back.

Welldone.

I hope ALL the companies I own give a bonus at the FY so I can watch the rally and then DUMP them.

exactly what i did with my firstbank as it was pushing up after the ts was lifted

easimoni:

Personally, If any company I own declares a bonus, I watch it rally for a few days and then issue a DUMP (not SELL) order! I can't stand to wait around for my shares to show up (have a colleague waiting for a Conoil bonus from 3 years ago) or to see the fundamentals get bungled by the host of innumerate (mathematically illiterate) analysts who won't (or can't?) factor new shares into the EPS/PE calcs. I always get chastised for the attitude but I believe bonuses are simply a distraction. I hope ALL the companies I own give a bonus at the FY so I can watch the rally and then DUMP them.

amen to that.
i dont see any more banks giving bonus anymore, except maybe UBA or union. i think a lot of people do the exact same thing as easi says and let other people wait around for a while.in the near future, i think people wont be foled by bonuses anymore.

aimlove:

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aimlove:

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Samuel

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aimlove
Your yansh!!

wats the sudden love with ibtc shares its gone past the 16naira tender offer. despite its modest fundamentals.

Easimoni - Thanks for the reassurance on Access. I also went in expecting it to hit 26.
The day after it started dipping, I was in the reception are of a broker and I heard a guy instructing his broker to sell Access to buy Dangote Flour, so I figured that people were selling to buy IPO/POs and that was causing the price to drop. I have no doubt in its fundamentals so I will hold on.

Anyone have anything on ASL. I am wondering when would be the best time to enter. They have not done an IPO yet.

shigidi:

wats the sudden love with ibtc shares its gone past the 16naira tender offer. despite its modest fundamentals.

Hmmm. Maybe Stanbic brings more to the table than we realize. If the addition of Stanbic enables IBTC to double earnings, it's well worth 20 bucks. Only time will tell. Not a chance I'm willing to take.

All,
hope you saw Law Union & rock's 9 mos results. 537M over 9 months. With 3.437B shares, that's an annualized EPS of 21k. Not bad for a N3 stock. Hope other insurance companies will release similar results.

Easi, just noticed your signature, big Heroes fan eh?

shigidi:

amen to that.
i don't see any more banks giving bonus anymore, except maybe UBA or union. i think a lot of people do the exact same thing as easi says and let other people wait around for a while.in the near future, i think people wont be foled by bonuses anymore.

While I agree with easimoni and co that bonuses should not count for much, I think that the signalling effect it has may be one reason why even institutional investors would place a higher value on a coy that issues bonus. Take Zenith for example, they are not known to issue bonuses and for them to have done so this year may have been as a result of management's consideration that they would generate enough profit to support the current dividend level well into the future.
Also the idea of dumping a good coy's stock just because it issued a bonus does not sit well with me. You may find it pretty difficult getting back in at a good price.
My advice- even if you dont believe it, take measures to profit from it