In its just-released 2015 Report titled What if I Told You, Goldman Sachs touts seven "pockets of discovery value", including three most disruptive innovations, for the next future. By implication, these are sources of the greatest investment opportunity for savvy investors, who are obviously the primary target of the report -- as, potentially, clients of Goldman Sachs.
Here are the Seven Pockets:
1. The Blockchain: "the core technology behind Bitcoin". Faces roadblocks but could possibly "disrupt everything"
2. Space: "once again the New Frontier", as launch costs fall dramatically -- as a result of the work of players such as Elon Musk
3. College Education: declining average return, based on a calculation of freshers' future wages as a % of "average wages expected" for graduates
4. Gen-Z: more numerous and more influential (in the US) than the Millennials
5. Flash Crash: Another one's on the way, spurred by global disconnects in exchange regulations
6. Lithium: "the New Gasoline" and "key enabler of the electric vehicle revolution"
7. The Cloud: a promising avenue for cancer cure
READ: Goldman Sachs ~ What if I Told You...
Showing posts with label Investors. Show all posts
Showing posts with label Investors. Show all posts
Saturday, January 30, 2016
Wednesday, August 25, 2010
The Risk of Online Share Trading
Online share trading poses many risks to the investors, particularly on platforms with non-existent or rudimentary security systems. One suspects thatthere are plenty around in Kenya and elsewhere in Africa.
Occasionally "testing the system" in order to ensure security is not sufficient to give 'bankable' assurance, and so does not give comfort to the savvy investor. From the start, Online Share Trading services are typically fully covered, through carefully worded disclaimers in small-print, against litigation by their client-investors who may be hit by fraudsters. No one will fully compensate the investor who loses assets through online fraud undetected in time by otherwise aggressive service providers.
One way to eliminate this risk is to stay out of online trading completely. Another, for the more tech savvy operating in vulnerable/hackable environments, would be for service providers to offer the opportunity to buy, but not to sell, shares online. Who would want to buy shares for me, secretly? There is no palpable danger there. But a byzantine underworld of hackers may easily plot and remotely execute fraudulent "sell" orders using stolen email and share-account passwords, accompanied by illegal and lightning (and irrecoverable) transfers of funds out of investors' accounts.
It seems to me that the safest sell orders will always require long paper-trails.
Occasionally "testing the system" in order to ensure security is not sufficient to give 'bankable' assurance, and so does not give comfort to the savvy investor. From the start, Online Share Trading services are typically fully covered, through carefully worded disclaimers in small-print, against litigation by their client-investors who may be hit by fraudsters. No one will fully compensate the investor who loses assets through online fraud undetected in time by otherwise aggressive service providers.
One way to eliminate this risk is to stay out of online trading completely. Another, for the more tech savvy operating in vulnerable/hackable environments, would be for service providers to offer the opportunity to buy, but not to sell, shares online. Who would want to buy shares for me, secretly? There is no palpable danger there. But a byzantine underworld of hackers may easily plot and remotely execute fraudulent "sell" orders using stolen email and share-account passwords, accompanied by illegal and lightning (and irrecoverable) transfers of funds out of investors' accounts.
It seems to me that the safest sell orders will always require long paper-trails.
Friday, May 29, 2009
Directors' Shareholding at Cooperative Bank of Kenya: A Stink to High Heaven
Like other Kenyans, I am proud of our country's cooperative movement, which is a shining example around the world. And I am proud of the Cooperative Bank of Kenya (CBK), a state institution which had its IPO only last December. Before the IPO, only cooperative societies had a real chance of buying CBK shares in bulk. For retail investors, there was one over-the-counter route to obtaining CBK shares, for a good number of years. This was what is now Suntra Investment Bank, which is presently weakened by scandal of huge proportions.
I have just had a look at CBK's Annual Report and Accounts for 2008, which has just been released. I am talking in particular of pages 144 to 146, which, thanks to an aspect of Kenya's corporate law, obliges the bank and other publicly quoted companies to show the distribution of shares among the bank's top 10 shareholders, the bank's own Directors, and different categories of the bank's shareholders. If you peruse those pages too, you will, as I do, smell a rat that stinks to high heaven.
CBK has a total of 3,492,369,900 issued shares, and a total of 116,068 shareholders. That averages at 30,088 shares per shareholder, regardless of category. More importantly, Kenyan individual shareholders own 939,112,300 shares, and there are 112,774 of them. This averages at only 8,327 shares per Kenyan individual shareholder. Alas, among CBK'S seventeen Directors (who own a total of 138,995,700 shares), the average is a staggering 8,176,217 shares (that's more than 981 times the number owned by the average Kenyan investor).
In fact, if you compute the average for Kenyan individual investors without including the shares held by the Directors: the total number of shares held by Kenyan individuals (non-directors) drops to 800,116,600 shares, and the average among the 112,757 of them drops to 7,095 shares per individual (which is 1,152 times less than the average for the Directors).
We can look at the directors' allocations to themselves in even starker light, as follows:
1. The Managing Director owned, as at the end of December 2008, a total of 68,121,000 shares.
2. The Chairman of the Board owned 8,000,000 shares
3.The Vice Chairman owned 7,700,000 shares
4. The Company Secretary owned 5,090,000 shares
5. The Commissioner of Cooperatives owned 2,750,000 shares
6. Five other Directors also owned just over 5 million shares each
7. Three other Directors owned exactly 5,000,000 shares each
8. One Director owned 2,750,000 shares
9. One Director owned 2,310,000 shares, and another owned 2,300,000 shares
10. The "poorest Director", representing the Permanent Secretary at the Ministry of Finance, owned what you may call a "token" of 1,000,000 shares! [Currently each share sells at around KES 6.50, or US$0.083]
The circumstances under which these stupendous amounts were allocated and paid for require a forensic investigation. The Directors should step aside while this happens, for, clearly, there has been no transparency here. Previous annual reports of the company may suggest where these shares came from over the years. For at least a couple of years after the bomb blast, annual reports showed significant amounts of issued shares, without explanation as to who was receiving them. The public has reason to need to know now. At the SACCOs, and at the bank's registry, officials did not seem to ever know that additional shares were being made available each year for purchase by members. What Suntra did over the counter, as far as one knew, was to match retail buyers and retail sellers who had owned their shares for some time, perhaps even since before the bomb blast, which nearly reduced the bank to a rubble, in August 1998.
The shares previously held by individual cooperative societies, amounting to 64.56% of the total, were (wisely in my view) grouped together, just before the IPO, under a corporate entity called Co-opholdings Co-operative Society Ltd. This ensured, and still does, control of the bank by the country's cooperative movement. However, the then acting Minister for Finance, John Michuki, issued a strange edict prior to the IPO which keeps secret for some five years or so the identities of the societies (and perhaps other "entities") brought together under that corporate entity. Let us hope that there are not even more rats under cover there. Five years may be too long to find out the truth!
I have just had a look at CBK's Annual Report and Accounts for 2008, which has just been released. I am talking in particular of pages 144 to 146, which, thanks to an aspect of Kenya's corporate law, obliges the bank and other publicly quoted companies to show the distribution of shares among the bank's top 10 shareholders, the bank's own Directors, and different categories of the bank's shareholders. If you peruse those pages too, you will, as I do, smell a rat that stinks to high heaven.
CBK has a total of 3,492,369,900 issued shares, and a total of 116,068 shareholders. That averages at 30,088 shares per shareholder, regardless of category. More importantly, Kenyan individual shareholders own 939,112,300 shares, and there are 112,774 of them. This averages at only 8,327 shares per Kenyan individual shareholder. Alas, among CBK'S seventeen Directors (who own a total of 138,995,700 shares), the average is a staggering 8,176,217 shares (that's more than 981 times the number owned by the average Kenyan investor).
In fact, if you compute the average for Kenyan individual investors without including the shares held by the Directors: the total number of shares held by Kenyan individuals (non-directors) drops to 800,116,600 shares, and the average among the 112,757 of them drops to 7,095 shares per individual (which is 1,152 times less than the average for the Directors).
We can look at the directors' allocations to themselves in even starker light, as follows:
1. The Managing Director owned, as at the end of December 2008, a total of 68,121,000 shares.
2. The Chairman of the Board owned 8,000,000 shares
3.The Vice Chairman owned 7,700,000 shares
4. The Company Secretary owned 5,090,000 shares
5. The Commissioner of Cooperatives owned 2,750,000 shares
6. Five other Directors also owned just over 5 million shares each
7. Three other Directors owned exactly 5,000,000 shares each
8. One Director owned 2,750,000 shares
9. One Director owned 2,310,000 shares, and another owned 2,300,000 shares
10. The "poorest Director", representing the Permanent Secretary at the Ministry of Finance, owned what you may call a "token" of 1,000,000 shares! [Currently each share sells at around KES 6.50, or US$0.083]
The circumstances under which these stupendous amounts were allocated and paid for require a forensic investigation. The Directors should step aside while this happens, for, clearly, there has been no transparency here. Previous annual reports of the company may suggest where these shares came from over the years. For at least a couple of years after the bomb blast, annual reports showed significant amounts of issued shares, without explanation as to who was receiving them. The public has reason to need to know now. At the SACCOs, and at the bank's registry, officials did not seem to ever know that additional shares were being made available each year for purchase by members. What Suntra did over the counter, as far as one knew, was to match retail buyers and retail sellers who had owned their shares for some time, perhaps even since before the bomb blast, which nearly reduced the bank to a rubble, in August 1998.
The shares previously held by individual cooperative societies, amounting to 64.56% of the total, were (wisely in my view) grouped together, just before the IPO, under a corporate entity called Co-opholdings Co-operative Society Ltd. This ensured, and still does, control of the bank by the country's cooperative movement. However, the then acting Minister for Finance, John Michuki, issued a strange edict prior to the IPO which keeps secret for some five years or so the identities of the societies (and perhaps other "entities") brought together under that corporate entity. Let us hope that there are not even more rats under cover there. Five years may be too long to find out the truth!
Saturday, January 13, 2007
IPOs and Kenyan Politicians
Kenyan politicians must root for the small investor. It is in their best interest. There are now over 500,000 such investors. By election time later in 2007, their number will probably have reached 750,000, particularly with the expected Safaricom IPO. Most of these are young Kenyans, and there is a growing number of women -- who refuse to be left behind. Their recent involvement in the stock market will be one potent reason for them to vote one way or another at the next general elections. They will at last have something very tangible to protect, something directly and personally beneficial to them.That’s a lot of votes to lose, for those who rub them the wrong way!
The small investor is a very determined and perceptive lot. Determined because the poverty line gives them nightmares, and they are driven to stay above it – well above. Perceptive in that they have discovered two things. First, that a well managed stock market offers them the most promising opportunity for asset-building, on a scale which no politician has offered them since the heyday (some decades ago now) of land-buying groups; and for staying above the poverty line despite widespread neglect by politicians. And they know that group land-buying, part of the old ethnicity, was essentially a kitchen cabinet project which politicians in many parts of the country did not have the motivation to emulate or counter -- and no discernible inclination to match for the benefit of their own constituents, as opposed to their own personal gain!
Second, that there is real “magic of compounding” in the stock market which politicians, themselves a perceptive lot, have all along known about and quietly enjoyed but which, left to their own devices, would rather not share with wananchi. We say: Keep this gate open! Share the planet!
It is one thing to fault the 2006 IPOs on the grounds that, starting with the “book building”scam attempted during the KenGen IPO, efforts were made to favour institutional investors (and some efforts succeeded, particularly in subsequent IPOs); or to query the mystery and illegal 5% holding by a third party in Safaricom; or to take measures to ensure that CMA and NSE do not “even think about it” in 2007 and beyond. But it is quite another and dangerous thing to make blanket statements of intention to repossess for the state, presumably by executive order or through a parliamentary vote, the shares which investors bought in 2006. Repossess and then do what? This would clearly be a case of repossess and dispossess. Dispossess for whose benefit?
In an election year, in which the margin of victory is unlikely to be larger than that witnessed during the 2005 referendum, it is highly risky and probably political suicide to make 750,000 individual investors highly nervous about the future of their hard-won, and now compounded, assets; or about the future of IPOs in general. Individual (or “small-holder”) shareholding is beginning to acquire the characteristics and passions of a new ethnicity, politician beware. It is a passion, indeed, that is sweeping the whole world – including the ex-communist states of China and Russia.
The small investor is a very determined and perceptive lot. Determined because the poverty line gives them nightmares, and they are driven to stay above it – well above. Perceptive in that they have discovered two things. First, that a well managed stock market offers them the most promising opportunity for asset-building, on a scale which no politician has offered them since the heyday (some decades ago now) of land-buying groups; and for staying above the poverty line despite widespread neglect by politicians. And they know that group land-buying, part of the old ethnicity, was essentially a kitchen cabinet project which politicians in many parts of the country did not have the motivation to emulate or counter -- and no discernible inclination to match for the benefit of their own constituents, as opposed to their own personal gain!
Second, that there is real “magic of compounding” in the stock market which politicians, themselves a perceptive lot, have all along known about and quietly enjoyed but which, left to their own devices, would rather not share with wananchi. We say: Keep this gate open! Share the planet!
It is one thing to fault the 2006 IPOs on the grounds that, starting with the “book building”scam attempted during the KenGen IPO, efforts were made to favour institutional investors (and some efforts succeeded, particularly in subsequent IPOs); or to query the mystery and illegal 5% holding by a third party in Safaricom; or to take measures to ensure that CMA and NSE do not “even think about it” in 2007 and beyond. But it is quite another and dangerous thing to make blanket statements of intention to repossess for the state, presumably by executive order or through a parliamentary vote, the shares which investors bought in 2006. Repossess and then do what? This would clearly be a case of repossess and dispossess. Dispossess for whose benefit?
In an election year, in which the margin of victory is unlikely to be larger than that witnessed during the 2005 referendum, it is highly risky and probably political suicide to make 750,000 individual investors highly nervous about the future of their hard-won, and now compounded, assets; or about the future of IPOs in general. Individual (or “small-holder”) shareholding is beginning to acquire the characteristics and passions of a new ethnicity, politician beware. It is a passion, indeed, that is sweeping the whole world – including the ex-communist states of China and Russia.
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