Saturday, 1 August 2009

What's wrong with NIC Uganda?

Phew, so long an there’s not been anything going on in the investment world. Well, over the past two months we got back to Kampala, the land of all nice things served with pot-holes in all roads. But it is lovely. Although, it is somewhat interesting when you do not necessarily have to rely on the internet to access the goings-on.

Anyhow, I have a lot of beef as an investor and on behalf of other investors. I’ve recently been trying to assess the viability of long term investing on the Uganda Stock Exchange. All indicators are that it is possible within certain constraints.

The last time a company dilly dallied with regards to an IPO, several investors (both seasoned and amateurs) got burned. Now, on getting to Uganda, one would have expected that the NIC IPO would be in the air with all the publicity. HELL NO! Apparently, these chaps just couldn’t piece together a comprehensive prospectus. It is at this point that a certain Safaricom comes to mind.

When newspaper reports suggest that NIC’s financial statements for the year ended 31 December 2008 were qualified by the auditors, it begs the question? Is the company worth selling to the general public especially given the fact that financial deepening is the ultimate goal of the Capital Markets Authority/Government? Either way, I still would not expect any company to submit a prospectus with unsigned reports from accountants, auditors, lawyers and valuers.

I have never ever invested in a company whose audit opinion was qualified in any way, shape or form but given the scenario and rumour surrounding NIC, this may be a first for me and I’m sure for several investors. I honestly can’t wait to see the prospectus though I believe the 162 million shares on offer (40%) are very few which gives the company to misprice the IPO.

Thursday, 14 May 2009

Foreign Banks and the Invasion of the Ugandan Banking Sector

I am looking at the Ugandan Banking Sector in 2009, with cautious pessimism, if at all there is such a thing.

Performance for 2008
The rankings below are based on the bank profits according to annual financial statements for 2008*.

1. Stanbic Bank Uganda Limited: Ushs 78bn

2. Standard Chartered Bank Limited: Ushs 60.1bn

3. Citi Bank Limited: Ushs26.7bn

4. Crane Bank Limited: Ushs25.8bn

5. Centenary Bank : Ushs20.4bn

6. Bank of Baroda: Ushs13.4bn

7. Dfcu: Ushs13.1bn

8. Housing Finance Bank: Ushs6.9bn

9. Tropical African Bank: Ushs6.2bn

10. Kenya Commercial Bank: Ushs5.6bn

11. Bank of Africa : Ushs3.7bn

12. Diamond Trust Bank: Ushs1.9bn

13. Cairo International Bank: Ushs1.1bn

14. Fina bank: (Ushs 1.4bn) loss

15. United Bank of Africa: (Ushs 5bn) loss

16. Barclays Bank of Uganda: (Ushs 14bn) loss

*excludes the results of Equity Bank which I couldn't source at the time of blogging.

With the sporadic entry of foreign banks, the Ugandan banking landscape makes for an interesting review. I must admit that I would love to glean the strategic plans of Equity bank (in relation to its acquisition of Pride), or of United Bank of Africa, KCB my intention being to understand the principal source of generating value over the next few years.

Saturday, 9 May 2009

Uganda Stock Exchange Annual Results Special

Its been the results reporting season in Uganda and I took some time to obtain and review the financial results for 5 of the companies listed on the Uganda Stock Exchange (USE). Not the easiest process though we did get there in the end.

My only wish if for the Uganda Stock Exchange to post the financial results of each listed entity in their entirety as lots of information that is important to investors is lost or hoarded. Case in point, one has to look at the announcement provided by the USE for BATU results. (See

Date of release : March 2009
· Customer deposits have increased by 20% to UGX.1,289,674B (2007 = UGX.1,072,857B)
· Loans and advances also increased by 6% to UGX.108,722B (2007 = UGX102,335B)
· Profit after tax at UGX.78,550B rose by 48% (2007 = UGX 53,017BN)
· Earnings per share up by 48% and growth in shareholders funds by 40%.
· A Dividend pay out of UGX.5.86 per share (2007 = UGX 6.64 per share).

The key question for Stanbic was really why the dividend was reduced by 20% despite the 45% increase in Earnings per share. The MD suggested this was a precautionary measure which would possibly be re-reviewed at interim to assess the impact of the credit crunch on the Ugandan Banking landscape. There should be an interim dividend declared by Stanbic soon. Lets get ready to rumble.

Investor information quality

+ Excellent with respect to shareholder communications. For more o this, see Bankelele’s post here (

Date of release : March 15 2009
· Customer deposits have increased by 56.45% to UGX.254.7B (2007 = UGX.163B)
· Loans and advances also increased by 23.19% to UGX.282.8B (2007 = UGX 229.5B)
· Profit after tax at UGX.13.1B rose by 54.17% (2007 = UGX 8.52BN)
· Earnings per share up by 49% and growth in shareholders funds by 19%.
· A Dividend pay out of UGX.21.13 per share (2007 = UGX 13.09 per share).
· Cost to Income ratio down by 20.55% from 73% to 58%

Investor information quality

+ Investor information section on the group’s website provides the required information. However should consider taking the Stanbic Uganda approach of email communication with shareholders

- Unlike in prior year’s the company did not post annual reports and relevant proxy forms. Wonder whether this had something to do with cost cutting?

Date of release : April 27 2009
· Customer deposits have increased by 23.43% to UGX.214,132M (2007 = UGX.173,477M)
· Loans and advances also increased by 31.03% to UGX.112,715M (2007 = UGX. 86,022M)
· Profit after tax increased by 24.73% to UGX.13,474M and earnings per share grew by 24.73%.
· A Dividend pay out of UGX.8.00 per share (2007 = UGX 7 per share)

Investor information

- No positives to report in this respect for this company.

- I find it difficult to understand this bank’s reporting. The outgoing MD KK Shukla provided unaudited figures for the bank’s performance as early as January 2009 to all the local press in separate interviews.

- Companies that release their results on the last day allowed by the Capital Markets Authority are always fishy. There is always lots of haggling, adjustments, changes and errors that are being exchanged between the auditors and management and ultimately the financial statements are always a product of forced consensus by both the auditors and management to avoid breach of CMA reporting rules. My advice: STAY AWAY FROM THEM UNTIL THEY GET THEIR ACT TOGETHER. The financial year ends on 31 December 2008 for goodness sake. You do not need 4 months to complete an external audit.

- BOBU has no website. Local investors are always referred to the Baroda India (parent company) website is irrelevant for investors on the Uganda Stock Exchange. Infact there is hardly any mention of Bank of Baroda Uganda on that website. I guess this is the same with all of those big banks Barclays, Standard Chartered etc Management should style up with respect to this.

Date of release : April 15 2009

· Sales have increased by 16% to UGX.185,865M (2007 = UGX.184,555M)
· Profit after tax decreased by 2% to UGX.3,244M (2007 = 6,140M).
· No dividend payout declared.
· EPS decreased by 11% from UGX125 to UGX 66.
· Total equity increased by 57% to UGX600M (2007=UGX -2,291M)
· Current liabilities increased by 80% to UGX 112,213M (2007 = UGX 90,841M)

Current PE is approximately 5 which is high given the recurring losses that BATU has been making over the year. It is worth noting that current year profitability was materially affected by foreign exchange fluctuations i.e appreciation of the dollar relative to the U shilling resulting in over UGX10bn worth of exchange losses. I would have liked to question the FD about the possibility of hedging but I won’t attend the AGM.

Investor information quality

+ BATU is the only USE listed company which provides minutes of the previous annual general meeting as part of the annual report pack sent to shareholders before the meeting which I feel is a big plus especially if one did not attend the prior AGM.

- Between last year’s (2007) and this year’s (2008) annual report, the company MD Serhat Eroglu, who we felt had done a great job somehow left the company. A new MD Ricardo Fonseca joined the company. However there is no mention of when Serhat Eroglu left and why throughout the entire annual report....Not even in the Corporate Information, Chairman’s report....NADA. Is this a slip????? So I ask myself whether he was fired, promoted, transferred. Not even in the local press was anything been mentioned over this.

- The BATU website is CRAP. This appears as on the back cover of the annual report. Management should style up with respect to this.

Date of release : April 30 2009

The main business is the production and sale of building clay products in housing and construction, including; roofing tiles, bricks, blocks, decorative gilles, ventilators, floor tiles, pipes and cable covers.

UCL released an interesting set of results for the financial year ending 31 December 2008
· Sales have increased by 16% to UGX.13,548M (2007 = UGX.11,699M)
· Profit after tax increased by 2% to UGX.2,152M (2007 = 2,108M).
· No dividend payout declared.
· EPS decreased by 11% from UGX3.05 to UGX 2.7.
· Non current liabilities increased by 57% to UGX2.,351M (2007=UGX 12,993M)
· Net Current liabilities decreased by 80% to UGX 2,166M (2007 = UGX 10,657M)

Current PE is way in excess of 45 and I’m still reluctant to delve into this company.

It is clear that financing costs and loan repayments for the massive debt issued to fund the construction of a new factory in Kamonkoli have taken their toll on a once debt free company. While the debt itself is not bad, it remains to be seen if the debt has been put to good use . Only time will tell.

Investor information quality

+ Uganda Clays advised its shareholders that; Annual reports and audited financial statements would be posted to the shareholders on or before 30 June 2009 together with notice of the Annual general meeting to be held on Friday 24 July 2009 at Kamonkoli Mbale at 11.00am. This is a good chance for current shareholders to have a look around the new factory which is responsible for introducing mammoth levels of debt to the balance sheet of a once pristine company and gem in the formerly unknown rough of the Uganda Stock Exchange. I suppose such efforts are to be commended.

- However, the company needs to understand that only a few shareholders have the ability to travel from Kampala (or Entebbe for that matter- where the head offices of the company are situate – in the name of attending an annual general meeting.

- Naturally, the shareholders of the company, given the nascent stage of the bourse, will be grumbling about the lack of a dividend especially given that Uganda Clays has traditionally been one of the companies with the highest dividend yield 9before the splits and rights issues). In my view an AGM 5 districts away is a recipe for disaster but I will endeavour to attend if only to make heads or tail out of it.

- As an investor, I still have a problem with the company’s website. There is no investor information for the website. Someone needs to raise this at the AGM.

- Companies that release their results on the last day allowed by the Capital Markets Authority are always fishy. There is always lots of haggling, adjustments, changes and errors that are being exchanged between the auditors and management and the financial statements are always a product of forced consensus by both the auditors and management to avoid breach of CMA reporting rules. My advice: STAY AWAY FROM THEM UNTIL THEY GET THEIR ACT TOGETHER. The financial year ends on 31 December 2008 for goodness sake. You do not need 4 months to complete an external audit.

Elsewhere, I have now given up hope of participating in the NIC IPO (if it ever happens of course). I have negative affinity for melodrama associated with listings especially since Safaricom debacle. Investors end up paying top dollar for mediocre companies and valuations are never reasonable due to lots of hype.

Also Reuters reported that Uganda expects to sell its 49 percent stake in Kinyara Sugar Works in two years time, its 40 percent stake in the National Insurance Corporation (NIC) this year, its 31 percent in Uganda Telecom (UTL) in three to four years and its majority stake in the Sheraton Hotel within four years.

Sunday, 1 March 2009

Buffett, death of heart of Africa fund and the National Insurance Corporation of Uganda IPO

It’s been a tough 50 days or so.


Warren Buffett’s (he of the Berkshire Hathaway Inc) letter to shareholders for the financial year ended 31 December 2008 is out and for only the second time since 1965, there was a reduction in the book value per share of Berkshire (9.6% decrease per share to be exact. Contrasted with the S&P500 which declined by 37%, Buffett still outperformed the Index by 27.4%. Not bad given the tough times we are in.

Naturally, I was interested in the investments section of the letter. A closer examination indicates that basically, all the none-core equity holdings- you know –those that Buffett either has only recently acquired or probably does not consider really long term have depreciated in value. Here we are talking about investments like ConocoPhillips (which Buffett actually takes time to admit having been a mistake), Johnson& Johnson, Kraft Foods, Tesco and US Bancorp. Otherwise all long term investments are still way in the money.

Two main themes are important to me from this letter. i) value investing is mainly long term (as if i did not know this already) and ii) the belief that cash is king is short sighted. The one bit I can’t believe is what on earth Buffett could have seen in Irish banks. But then again, I have a few investments which would have my partners wondering what on earth i was doing with their money.

Death of a sub saharan fund

Its mourning time for me.

As readers may recall from my last post, mention was made of some big fish going belly up. Well, it’s now official. The New Star Heart of Africa fund has finally decided to throw in the towel. Apparently, “having temporarily suspended dealing on 9 December 2008, it finally became increasingly apparent that to reopen the fund to dealing would significantly disadvantage the remaining investors, who would be left with a residual portfolio of increasingly illiquid stocks.”

Who is to blame? .....the credit crisis, low trading volumes, illiquid markets and poor prospects for new inflows to the fund were it to reopen meant there was little likelihood of the situation improving in the short term. As a result, New Star and the fund’s depositary agreed that an alternative route must be explored to provide liquidity to investors. After due consideration, and in consultation with the Financial Services Authority, it was agreed the most appropriate course of action was to seek a winding-up of the fund. A process of communication with investors is underway with a view to winding up the fund and returning the proceeds to investors.


Are these not the factors that make sub Saharan Africa worth investing in at this point in time? In my opinion, these should not be presented as excuses to an investor. Of course the investor should not be submitting redemption requests as early as this. Recall that this fund was launched on November 27, 2007 shortly before we started blogging about our escapades in search of value in Sub Saharan Africa.

Make no mistake about HOA. This was a fund which had been set up to achieve long-term capital growth for “sophisticated investors” by investing principally in the securities of companies which in the opinion of the Investment Manager, exercise a predominant part of their economic activity in, or derive a predominant part of their income from, sub-Saharan Africa, excluding South Africa. Is there a part of long term capital growth that these sophisticated investors did not understand or appreciate?

This was also an actively managed fund for which the fund manager charged Initial fees of 5.25% annual fees of1.75%. On top of this, Performance fees (where applicable) were set at 20% of out-performance relative to three month – sterling Libor plus 3%. The fund fell 20.4% during the month of January. Now with a minimum investment of $10,000 and any additional subscriptions fixed at a minimum of $5,000, this clearly means that regardless of performance, the value of one’s investment will have significantly declined to such a low that I’d have expected any investor worth their salt to hold on at least until the market stabilises. After all, we all know that investment losses are not losses until we lock them in by liquidating our positions. But the tongue in cheek view of this grim situation, is that in substance, the fund manager has been paid fees for nothing since the launch of the fund. Surely value investors should avoid these situations.

Anyhow, now we know why our markets are taking such a big hit. It is these so-called sophisticated investors getting out of the kitchen because they can’t stand the heat. Thanks to them, we will continue to pick up bargains on the cheap in sub Saharan Africa.

National Insurance Corporation Uganda IPO

Following on from our last post again, the IPO of National Insurance Corporation of Uganda Ltd is scheduled for April 2009.

NIC was established by an Act of Parliament under the National Insurance Act 1964. In order to pave way for Privatisation, it was incorporated as National Insurance Corporation Ltd (NIC) in November 2000. In June 2005, the Government of Uganda successfully divested 60% of its shares in NIC to Industrial and General Insurance Plc (IGI) of Nigeria through an international bidding process.

The Government retained 40 % shareholding after privatization in 2005 which it intends to sell through an initial public offer. The listing of NIC is another milestone in the privatization program embarked upon by the Government of Uganda. The offer for the sale of 40% of the shares of NIC is aimed at providing the members
of the public resident in Uganda and foreign investors with an opportunity to own shares in a leading insurance company in Uganda.

In 2006 NIC was rebranded into a major corporate refocusing initiative and repositioned as the insurance company of choice in the insurance subsector. NIC has the reputation for exceptional competence in the delivery of customer-centric service and product innovation.

National Insurance Corporation Limited has witnessed tremendous growth since its privatization in 2005 due to the introduction of customer centric products and service excellence. Within three (3) years of privatization, NIC’s gross premium income grew by 100% from Ushs6.5billion in 2005 to Ushs13billion in 2008. Within the same period, profit after tax grew from Ushs981million in 2005 to Ushs2.3billion in 2007.

Asset base has grown more or less been consistent on average from Ushs50billion in 2005 to Ushs53billion in 2007

NIC has an asset base of over Ushs.50bn
NIC has the reputation of exceptional competence in the delivery of Customer centric services and product innovation; recent products introduced include the School Insurance plan and Employee Insurance Plan.
• Because of its strong asset base, NIC was able to settle the largest ever claim in the Ugandan Insurance Industry history to the tune of Ushs11bn to the Government of Uganda for the loss of MI-172 Presidential Helicopter
• To increase its presence in the region, NIC opened a subsidiary in Southern Sudan which was launched in 2007
• To bring services closer to the market, NIC maintains the largest network in Uganda with over 15 Branches spread across the country.
• In 2007 & 2008, NIC was awarded a certificate as the most innovative company in Product Development in the Uganda Insurance Industry

The above numbers compare well with peers in the industry. Case in point is Jubilee Holdings and Kenya Reinsurance Limited.

The corporation also does seem to have some really good re-insurers which is critical for any insurance company. These include:

Treaty Reinsurers: Lloyds, Africa Reinsurance Corporation, Swiss Re of South Africa, East Africa Reinsurance Company Ltd , Globe Reinsurance Company Plc, Hannover Reinsurance Company Limited, South Africa , PTA Re-insurance Company (Zep Re), Organization of East & Southern Africa Insurers (OESAI) Non Life Pool

Reinsurance Brokers: Marsh Limited UK, Aon Group, Willis, United African Insurance Brokers

My only hope and prayer is that National Insurance Corporation: - endeavours to maintain an up-to-date website unlike its peers mentioned above, doesn’t report investment gains and losses through the Income statement like Kenya Re to avoid the earnings volatility associated with in investments (much like Centum in Kenya which carries these through reserves)

Chances are that this may not happen given that management does not necessarily appear to have the highest regard for the general public. Any potential investor will want to know what exactly went on with the Ushs14Bn Makerere University pension scheme which in my opinion appeared a case of NIC wanting to fleece university pensioners, Much as we say the beginning of this conflict here we did not see the resolution of this dispute so I guess it may come back to haunt them. But if the history of sub-Saharan IPOs is anything to go by, then I should expect the IPO to be successful whether or not these questions are answered. Besides, I believe that up to now, Safaricom Kenya investors still do not know who owns Safaricom.

For further information on NIC (U) Ltd, please see

Cold Tusker has an interesting SWOT analysis on Kenya Airways (KQ) here I must say its one of those investments where you're damned if you do and damned if you don't. So I leave that to ardent readers to consider. ...but remember that while Warren Buffett says he doesn't do airlines, he's the same dude whose portfolio includes Netjets and Flight Safety

I would concur with ColdTusker that KQ at Ksh19.5 and a forward PE of 3 is a great long term buy. The only problem I foresee is a situation whereby KQ's management is hesitant to hedge the oil price in future as a result of the losses they have had to suffer due to the current ineffective hedges in place as the oil price tumbles.

Friday, 2 January 2009

To suspend investment dealing or not?

These have been interesting times. One of my pioneer fund managers suspended dealing on 11 December 2008 citing the increased redemptions from investors, weakened liquidity in Sub Saharan markets and naturally the credit crunch. Apparently these big fish were heavily invested in Nigeria and Ghana (at 30% and 21% respectively).

From my experience such actions are usually self defeating. If I recall correctly, when the Nigerian stock exchange imposed a circuit breaker on the falls in value of its constituent stocks sometime back, the temporary stabilisation in values during the short period, which had all along been representative of a drizzle became more of a storm as the subsequent loss in value took to levels unheard of before.

Whereas we all appreciate the fact that these are tough times, I've never really believed that micro managing the market will beget sensible results. In my experience it always results in a vicious cycle of downward spirals that are even much harder to address, let alone control, than the initial circumstances.

However, the most disappointing aspect about all this is not necessarily the reaction of the fund managers but rather the investors. Hedge funds have historically been required to notify investors of the levels of risk; which they do or at least try to do. I've always understood that any funds that an investor (or even a speculator) will need in the short run (read one to 5 years) do not belong in the stock market. Apparently the definition of short run has now been shortened to 3 months. I now know that hedge funds and their investors are the biggest speculators of all.

Did we have a silver lining in all of this? You betcha - as the very powerful Sarah Palin once said. I recently picked up on the habit of coat tailing which has proved quite excellent in these dim times.

I took part in the Coop Bank IPO in Kenya and it was undersubscribed, we got our 100% allocation and are watching the situation very closely. There have been some discussions that the share price is being artificially propped up in some other fora.

Moreover, we are finally getting confirmation that the NIC Uganda IPO, which I highlighted in my earlier posts is finally kicking off sometime in the first quarter. The positive news about this is that the responsible investment bank sponsoring this IPO has come to terms with common sense and reasoned to postpone an IPO until after this credit crunch nonsense. Number crunching on this will be presented a little closed to the listing time.

As ardent readers will have noticed, we've been away for quite some time. Details of what we were up to will be provided in the next blog.

Sunday, 5 October 2008

Value in Malawi - Get over Safaricom Kenya

.,,....................Rising inflation, rising interest rates, rising food prices....How far we've all come:

The performance of the various markets in 2008 doesn't tell so bad a picture compared to what's happening out there.

Nairobi Stock Exchange Loss - 18%
Uganda Stock Exchange Gain - 9%
Malawi Stock Exchange Gain - 15%
Botswana Stock Exchange Loss - 15%
Zambia Stock Exchange Gain- 18%

The much touted Safaricom turned out to be an excellent choice for speculators. Apparently, any one who managed to offload their meagre allocation within the first 2 months did manage at least 20% to 40% return. Since then, Safaricom has been playing only one role and that is to draw the NSE 20 index as low as it can get.

So I did some soul searching and realised that this IPO was merely meant to shed light on one of the key principles of value investing as preached by Warren Buffett. One of his key principles, and which he touts year after year in his letters to the shareholders of Berkshire Hathaway, only invest in companies you understand.

Seeing the value of Safaricom plummet to Kshs 4.6 or thereabouts, I did ask myself the following questions:
i) did I really understand the goings on in Safaricom (of course other than the basic airtime/telecom crap);
ii) did management of Safaricom provide all the information I would have needed to make an advised decision;
iii) did the company have comparative advantage in the long time?

At the time of the IPO, some of the answers to the above questions were positive.

Unfortunately, over time the answer to these questions have since become NAYs. Seeing the company engage in unending price wars, coupled with the fact that 'scarcity of the share' is almost non existent have convinced e that I would be uneasy if the market closed for 10 years with my funds invested in this company.

I have convinced myself that this was a mistake but its not the end of the world. We will be looking to exit this share as soon as it gets into positive territory. (Of course this is to uphold the No 1 rule of investing:-never lose money).

It is on the backdrop of this that I'm introducing the discovery of potential value identified in Malawi.

Apparently, the Telekom Networks Malawi Limited ("TNM") announced the commencement of its initial public offer for subscription of 1,290,450,000 ordinary shares of MK2.00 each from 7 October 2008 and closing 17 October 2008. Results of the IPO are expected on 28 October and listing on the Malawi Stock Exchange on 3 November 2008. The free float after this IPO will be 20%.

A couple of pointers caught my attention:
i) TNM expects to distribute between 40% to 60% in August and investors in this IPO will participate in the second interim dividend in December this year. I personally prefer to place a significant level of emphasis on the company's ability to declare and pay dividends because as we all know, the company requires cash to do this. Of course I reinvest my dividends as I so wish and thus enable the compounding effect to work its magic. With respect to TNM therefore, this will play an even bigger role in my investment decision because of the fact that Telecoms is a cash consuming (hence the presumed question mark)
ii) The company seems to understand the value of providing timely reporting and information the its various stakeholders.
iii) Currently one of two wireless network operators with competition from Zain.

As always, there are some negatives:
i) In the event of an over subscription, the shares will allotted at the sole discretion of the directors.
ii) EBITDA is growing but with reducing margins due to its aggressive marketing policy
iii) High operational risk due to rapid growth and development over a short time.
iv) Investors in Malawi need to be mindful of the restrictions with respect to funds restriction in Malawi. This is occasionally implemented by the government as part of monetary policy.

Naturally, if you wish to crunch the numbers, you're better off checking out the prospectus in detail as per the link highlighted above.

My take - Never miss out on a sub saharan IPO; and more especially not in these crunch times. Now, while this may sound like a positive review, the timing of the exit is what will determine any investors gains or losses........and using the lessons learnt from Safaricom, this is most definitely one for the short term.

DISCLAIMER: This blog does not constitute investment advice. Though utmost care has been taken while preparing this blog, I do not accept liability for investment decisions made as a result of this blog

Tuesday, 16 September 2008

In pursuit of happiness during dire straits

Rudyard Kipling’s poem has the most inspiring message I’ve heard in the recent past. The last time I heard it being recited was when the great man himself (ROGER FEDERER was on the cosh during the greatest tennis match in history) To put it into perspective, the great man was losing 2 sets to love when the rains came.

The message is really to keep your head when all about you are losing theirs. After all, this aint the first time we are experiencing these surges. Bill Miller said it best in his letter to shareholders

From the east to the West, investors, bloggers, fund managers, journalists and even innocent bystanders all we hear are wails and cries about the substantial loss of value. Some have even taken it a step further to proclaim the demise of equities as a share class. I had hoped that I would not have to blog about this but unfortunately there’s too many naysayers out there that I ‘ve had to say a word or two.

My portfolio which is fully invested in Sub-Saharan markets has lost a whopping 15% since 1 January 2008. Now, make no mistake about the significance of this loss in value terms. It is huge. Naturally some would beg to differ depending on the size of their portfolio and also the principles of stock picking applied. As a result of this situation, I chided the value investor in me for putting me in this mess. I’ve therefore had to go back to the drawing board and revisit all the investment decisions I’ve made and guess what, I noted the following:

i) all the share prices are currently weak;
ii) I still like the businesses I’m invested in;
iii) The businesses are even more undervalued now than they have ever been;
iv) The share prices are still under-performing

At this point I concluded that the fundamentals are still true. My investment analysis thus has me doing only one thing; BUY MORE .