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Does ownership matter, in listed companies?
Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Truely stumped by this one. And some would say why bother with the issue anyway? I need Wazuans help to figure out to what extent the ownership of a listed company determines its outcomes.
1. Does good fortune automatically follow Aga Khan businesses? JUB, TPSEA, NMG, DTK
2. Long ago it always made sense to invest in old foreign owned bluechips? BAMB, EABL, BBK, SCBK, BAT, Safaricom
3. But maximum respect to the denizen of enterpreneur owned companies: ARM, SCAN, CFCStanbic, Access
4. Perhaps safely in the arms of a government led one: KCB, KPLC, MSC, Kengen, NBK, EAPortland, KQ
5. To me there's a crop of firms that emerged from Moi insiders like Merali (Eveready, Sameer), Kirubi (Centum), Biwott (KenolKobil), Kulei (Standard), Kirieini (CMC), Ndegwa (NIC)
6. Lastly but most important, the new kids on the block, scorned by old establishment, with the numerous intertwined interlinked companies: EQTY, TCL, HFCK, EACables, Britak
7. Or a neutral one where no one really reigns supreme? Carbacid, COOP, Uchumi
Perhaps your history doesn't matter, it all boils down to whether the firm has transitioned and where it is now heading to.
Would really love to hear your sentiments Investors.
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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Aga Khan firms: Not good fortune but great management. All the key positions (esp finance) are handled by guys seconded from AKFED. That I like! CFCStanbic is majority owned & controlled by Standard Bank of SA. Not entrepreneur owned or operated. Did you mean Equity Bank? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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It only matters to the extent that the shareholders are willing to interfere in the running of the business. Back in the days it was safe to invest in foreign owned blue-chips it was always a safe bet. The government led firms were always the one prone to manipulation, KCB used to have a large bad debt from politicians, NBK almost experienced a run by depositors in the late 90s. The neutral ones which lack an anchor shareholder run the risk of hostile takeover CMC and uchumi with good and bad results. for me it always boils down to the dynamics of history and the management of a company in kenya management serves the interest of the shareholders not necessarily that of the company
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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I think ownership matters. Ask VVS why he wouldn't touch Sameer, Eveready or Sasini  But for me I look at who's on the helm. I think in our market you have to watch the CEOs. For example, many investors consciously or unconsciously bought into SCOM because of MJ and Equity because of King James NBK, Marambii, KQ Titus, KK, Segman etc.
BBI will solve it :)
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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Add some others! I am avoiding TCL until 2013 [to get a better sense of ownership's respect on Minorities], EACables falls in the same category now... Of course, there is Olympia! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Cheers guys, appreciate feedback so far.
It seems it was much clearer in days past, what to steer clear of. And from @mkonomtupu I inefer, owners determine the board who then determine management.
Now none would argue with the CEO effect on company performance. But if I wanted a long-term go-to-sleep play, I'd find the CEO dead.
@VVS, agreed on CFCStanbic in current status. I grouped Equity with the new kids on the block no 6.
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Just thought to add: In Japan - a study of foreign takeovers shows no correlation between firm profitability and local/foreign ownership In Nordic countries - foreign owned multinations generally outperformed by local multinationals in R&D, innovation In Germany and UK - absence of a strong share block holder seems to have no effect on the long-run performance of business In US - acquisition of their firms results in lower sales and employment with rising profitability In India - Performance of domestic banks has not yet reached the level of foreign banks in terms of both cost and revenue efficiencies. But the foreign banks contribute little in extending services to rural areas. Recent study in KenyaIn 2009, by Vincent Ongore, Ownership Concentration and Government Ownership have significant negative relationships with firm performance. On the other hand, significant positive relationships with firm performance, related to: 1. Foreign ownership 2. Diffuse ownership 3. Corporation ownership 4. Manager ownership http://www.primejournal.org/BAM...11/feb/Vincent%20pdf.pdf
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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@muganda - asante! Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,921 Location: nairobi
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@Nyangande. How is KCB 'goverment led'?? Please get ua facts right.
COOP ABP 15.85; IMH ABP 35.55; KQ ABP 5.75; MTN ABP 5.20
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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@obiero - What % of KCB does GoK own? How many directors does GoK appoint or heavily influence the appointments/elections? Who is KCB's #1 shareholder? Who is #2? What is the difference between the voting power of each? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/23/2009 Posts: 13,921 Location: nairobi
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VituVingiSana wrote:@obiero - What % of KCB does GoK own?
How many directors does GoK appoint or heavily influence the appointments/elections?
Who is KCB's #1 shareholder? Who is #2? What is the difference between the voting power of each? GoK holds a mere 17.74%. Surely, this cannot be a significant amount to claim the bank is led by govt. Remember 50+1.. And as for a director's seat; GoK only has one, that of PS treasury.
COOP ABP 15.85; IMH ABP 35.55; KQ ABP 5.75; MTN ABP 5.20
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Rank: Chief Joined: 1/3/2007 Posts: 18,261 Location: Nairobi
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@obiero - 17.4% is significant when it comes to voting. Say a director's seat is up for grabs. You have the 'government' candidate (unlike PS Treasury, which is an office, this could be a friend of kibaki, uhuru, etc). So already this chap has 17.4% Say VVS decides to stand for the seat. I am already 17.4% behind. At KCB AGMs perhaps the total 'votes' that come in are 50% (most retail shareholders don't show up). So the GoK chap has 38.8% before he even starts! So all he needs is a mere 7.6% to sweep the election. Some idiots will vote for him coz the chap is of the same tribe or serikali knows best! So 50% is ideal but for most listed firms, you don't need that. BTW, who is #2 shareholder? What %? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Can't argue with that @obiero, noting though that Government+NSSF account for over 25% and board of directors shows a good number of government approved members...
Peter Muthoka, Chairman
Joseph Kinyua, Permanent Secretary
Catherine Kimura, earlier was alternate to PS
Joseph Adongo, Chairman BCLB
Eng Musa Ndeto, Director Kengen
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Ownership thoughts this Monday morning:
Though the study I quoted earlier throws bouquets of praise on foreign ownership, would you take the gamble of being associated with an indigenious business?
Over a decade ago, a poultry farmer walked from his Barclays Bank branch, crossed the street to an upstart Building Society. Many of his friends laughed at his decision, but he thought to himself:
"here is a Kenyan owned, Kenyan bred enterprise offering similar services like I am getting from a multinational."
"Although it was a risk venture, I opted to take the risk"
A black swan...
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Kiereini is now out as chair of EABL and CMA is hunting him out of boards of CFC, Unga etc. I'd say judging by fortune of Kiereini/Merali, this is definitely 1 strike against this class of companies: Quote:5. To me there's a crop of firms that emerged from Moi insiders like Merali (Eveready, Sameer), Kirubi (Centum), Biwott (KenolKobil), Kulei (Standard), Kirieini (CMC), Ndegwa (NIC)
http://www.businessdailyafrica..../-/11pxespz/-/index.html
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Rank: Member Joined: 2/3/2007 Posts: 43
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Muthoka is in kcb after how he bungled cmc.....cma should kick him out first
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Rank: Elder Joined: 9/15/2006 Posts: 3,906
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Eeeh different gentleman, even forced to place newspaper adverts to disassociate himself from his namesake. mukoya wrote:Muthoka is in kcb after how he bungled cmc.....cma should kick him out first
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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muganda wrote:Eeeh different gentleman, even forced to place newspaper adverts to disassociate himself from his namesake. mukoya wrote:Muthoka is in kcb after how he bungled cmc.....cma should kick him out first I was even about to dump all my shares when I heard this one.. Thanks for the clarification @muganda Mark 12:29
Deuteronomy 4:16
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Does ownership matter, in listed companies?
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