It was just speculation! Nothing good in this stock. Still directors and managers are quiet on controversial Dawood Rawat's stake. We are not on the know how much it was sold and at what price.

The demand you saw today was from the same speculators whom sold at 16 plus. Due to excitement of huge capital gains they have opportunely ganged up to take positions again. But here there is caution: that demand will dry up faster than they witness a rally again. Downward journey continues. Listen to wahenga wakuu!

Care to explain that?

The whole market tanked in 2015, but Britam's particularly massive plunge was caused by the market's reaction to an external event that had no effect on the company's business or future prospects (i.e. a major shareholder's activities outside the company). In my opinion, the market's reaction to something immaterial created a mispricing.

The rules and principles of accounting further exacerbated this mispricing. Conservatism is an accounting convention which requires an immediate recognition of losses (e.g., impairment charges) but delayed recognition of profits; losses are often recognised when anticipated, while profits are recognised when earned.

In Britam's case, the fair value investment losses reported are misleading. They were not paper losses attributable to bad management of an investment portfolio, they were primarily attributable to two strategic investments (i.e. Equity and HF). There are a lot of reasons why these two relationships, regardless of short term price movements, are good for the future earning potential of the company. Even setting that aside, the management has said they recognise their over exposure to listed equities and have said they are diversifying their portfolio. Good.

So that's the first bit. The second bit is that Britam's IT investment over the past few years (if the annual reports and investor briefings are to be believed) have been massive and directed specifically at making their core business more efficient and, therefore, profitable. It appears to be working. The company's core business looked good in the latest numbers. You couple that with their expansion across the region and into Southern Africa (e.g. Malawi) and things really start looking good. Just look at the numbers.

Finally, Britam is too small to attract any real overseas institutional investor interest so price is more subject to the moods, whims, and speculation of little guys who get overexcited and then panic without doing any analysis. In the end, I think Britam is a very good investment. But if you are looking to jump in and jump out, timing the market perfectly, good luck to you! It's not for me. I am holding this stock until it become overvalued which, given current numbers, is a very long way off.