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CFC Restructuring
Rank: Elder Joined: 6/27/2008 Posts: 4,114
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There is a plan to separate the insurance and the banking businesses of this group to create a new holding company for the insurance business. I wonder what will happen to the share price... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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I must say this is proof that 4 out of 5 mergers only serve to destory shareholder value. Kenya doesn't seem to be an exception. Wasn't the merger launched as an act of brilliance amidst alot of fanfare?
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@muganda; does the reverse hold true? Will a separation increase shareholder value? Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/15/2006 Posts: 3,905
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@mukiha, once read an interesting article...
M&A Needn't Be a Loser's Game
by Larry Selden, Geoffrey Colvin
Three out of four acquisitions fail; they destroy wealth for the buyer's shareholders, who end up worse off than they would have been had the deal not been done. In evaluating acquisitions, companies must look beyond the lure of profits the income statement promises and examine the balance sheet, where the company keeps track of capital. It's ignoring the balance sheet that causes so many acquisitions to destroy shareholders' wealth. Unfortunately, most executives focus only on sales and profits going up, never realizing that they've put in motion a plan to destroy their company's true profitability--its return on invested capital.
Often in the case where company is going through problems, a spin-off of profitable divisions releases trapped value resulting in greater sum of the parts.
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Rank: Veteran Joined: 11/30/2006 Posts: 635
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This merger seams to have gone completely wrong, especially on the banking business. I was a customer of Stanbic when this happened and woke up to find lots cash sitting in my account...which usually had negative balance..to date, 4 years later, these guys havent relaized the error. Several friends have confided in me having faced similar 'payments'
There was also a highly publicized retrenchment in their broking division recently. Cant a company retrench quetly like all other stock brokers did, without having to put up ads in the dailies?....methinks, the management also is still living in the old days
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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I picked up a few more CFC today @ sh44, using cash generated from KENGEN (sold a small portion at 15.20). Now my average buy price is just a few cents above 70....not bad for some one who started from sh115!!! We are getting there... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Now my eyes are on EQTY (18.5) and KENRE (15). If these levels are reached, my re-structuring will be complete. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Chief Joined: 1/3/2007 Posts: 18,118 Location: Nairobi
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CFC Stanbic Bank has almost 2x the balance sheet of Diamond Trust, NIC or I&M Bank... yet it generates the same profit as the above 3 banks... So... does that mean there is value in CFC Stanbic IF they get their act together ama the other 3 are showing CFC Stanbic a clean pair of heels? DTB & I&M have been expanding in Kenya & regionally thus eating into CFC's customer base. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Good point @VVS. Large assets were a result of the merger. Also, CFC alone [pre-merger] had additional assets in the insurance business. I am betting on the proposed divorce of the insurance business from the banking one. Hopefully; the two separate businesses will create more value than the combined outfit Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Veteran Joined: 11/30/2006 Posts: 635
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Aam with Mukiha on this one. when you have such a conglomerate, inefficiencies in one division are hidden in the other.Wwhereas insiders are aware of what business id thriving and what is not, outsiders can hardlly tell. This is complicated by presence of smooth talking executives and PR people.
If the two operate as seperate entities, the management of each will be easy to compare with other entities of similar size and in the same industry. To date, this has not been possible
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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That merger has not worked well. There is a massive exodus of good customers away from what is perceived to be an insensitive new management team. Business opportunities are like buses,there's always another one coming
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Offloaded some KENRE today at 14. 15 seemed too far away so lowered my limit price kidogo...after seeing the spike at CFC this morning! Proceeds of the sale will go to, you guessed it, my CFC Project. Hoping to get it at 44/45. It opened at 47 today but cooled down immediately to close at 45.50. Let's what happens tomorrow Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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THIS IS OUT OF CONTEXT, but I need you to look at this thread and give suggestions: http://www.wazua.co.ke/f....aspx?g=posts&t=5817Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Some one wake me up when EQTY touches 18.... so that I can sell Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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@Mukiha i also exited kenya re @ 14 having gotten in @ 10.50 last september...cfc stanbic is making one cardinal sin, implementin the same business model that would work in southern africa...history has shown that what works in southern africa doesnt work here...look @ steers n mr price its only now that the locals r startin 2 appreciate their products, unless cfc stanbic adopts a kenyan approach its goin backward so ride with me on coop,hfck or mumias...
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@the deal; That worries me as well, but I have a chunk of CFC that I started buying when it was 115! By the last purchase last week, I had averaged that down to 70. I am hoping to take that further down to about 65 without injecting any new cash into the portfolio. This is why I am using profits from other counters. I am in MSC - entered at about 9.50. I'm watching this one as well... Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Chief Joined: 1/3/2007 Posts: 18,118 Location: Nairobi
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Warren Buffett says you should buy (at a fair price) firms that make the items you consume... So... who do you bank with? Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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@VVS; I&M is my main bank, It is not listed, though City Trust has a small share in the bank (about 9%). And City is one of those counters that are lucky to get a deal in a month! But I also have small accounts with Co-OP and SCBK. UPDATE: Picked up another lot of CFC yesterday at 45. My average is now 68.50 Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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This bank will either go bust or earn big monies for investors. Am speculating on the later and will add 'just a bit' more to my portifolio. Life is short. Live passionately.
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Rank: Member Joined: 1/9/2008 Posts: 537
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why are u averaging? adding gud money to bad?
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