An international arrest warrant against Mr Rawat was issued as Britam
began its nose dive at the Nairobi Securities Exchange. The counter fell
by 8.99 per cent on Wednesday to trade at Sh20.25 per share from
Tuesday’s closing price of Sh22.25. PHOTO | FILE
Britam: Last week, Britam’s performance at the bourse worsened
when the listed insurer hit the headlines for all the wrong reasons.
This
followed revelations that one of its director and shareholder, Mr
Dawood Rawat, may be involved in a Ponzi scheme, which may have reaped
Sh63 billion from unsuspecting investors in Mauritius.
An international arrest warrant against Mr Rawat was issued as Britam began its nose dive at the Nairobi Securities Exchange.
The counter fell by 8.99 per cent on Wednesday to trade at Sh20.25 per share from Tuesday’s closing price of Sh22.25.
However,
the counter has seen increased appetite from local investors looking to
take position at the bottomed-out price of Sh20.25 per share.
At one point, demand outstripped supply.
Nonetheless,
Britam dropped to Sh19.90 apiece before settling at an average of
Sh20.50. This was a gain of 9.88 per cent from a traded volume of 2.9
million shares.
According to Mr Eric
Munywoki, an investment analyst at Old Mutual Securities, the stock is
receiving support from local investors.
“Britam
has a huge exposure on the foreign side and with the counter getting
bad publicity regarding the Ponzi scheme, the fall was inevitable,” he
says. “This is because big investors are sensitive in the way they look
at a company’s outlook. The fall boils down to reputation and risk
management. This has been the cause in the dip from Sh30 to Sh20 per
share.”
However, Mr Munywoki notes that the counter is a good buy for medium- and long-term investors.
INVESTOR CONFIDENCE
Britam
is also embroiled in a court case with its former managers of its
assets arm British-American Asset Managers, who quit and formed their
own entity, Cytonn Investments. Britam has accused the former managers
of fraudulently transferring Sh3.94 billion from its accounts. Under
Cytonn Investments, the former bosses announced that they had won a Sh40
billion real estate deal beating Britam, which was expected to bag the
contract. These revelations saw the stock suffer 8.46 per cent drop to
Sh29.75.
This was at a time when the counter was struggling to rally to its all-time high of Sh40 per share.
“The
cases have been eroding investor confidence. Normally, if a listed
company is facing litigation, the stock faces negative impact,” notes Mr
Munywoki.
On Friday, Britam opened
at Sh22.50 per share with a gain of 9.76 per cent from Thursday’s
closing price. Over the past one year, Britam has traded between Sh17.35
and Sh40 per share range.
Home Afrika: This
is a high risk stock that investors should avoid. According to the head
of Investax Capital Limited Ndindi Nyoro, it may not be a good plan to
buy Home Afrika at the moment.
“The company is expecting to report a loss for yet another year.
This means that the price is likely to be subdued at either around Sh3 or even fall below Sh2,” he says.
The
property developer has already issued a profit warning. It indicates
that profits for the year 2014 are expected to contract by over 25 per
cent due to delays in completion of projects that are being financed
through debt issued since the start of 2014.
On Friday, the counter opened at Sh3 per share from Thursday’s closing price of Sh3.05.
Equity Bank: Last week, this column recommended a long-term buy for Equity Bank.
Well, if you heeded and took position at the then lows of Sh45.50, your investment should already be in profits.
On Last week, local investors helped push Equity Bank upwards to highs of Sh50.50.
On Friday, the counter opened at Sh49.50 before hitting Sh50 during intra-day trading.
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