Saturday, March 22, 2014

Replicate and Imitate

What one man can do, so can another, what has been accomplished in a country can be in another. It may provide a great sense of achievement and satisfaction at having composed a new song, solved a maths problem or devising a new contraption or even setting up a new institution.

For the investor however, wise men admonish against seeking thrills and adventure in capital market land. There is no need to feel ashamed at being an ape, lack of originality isn't a sin or cowardice. Welcome to the industry where wimps and copycats are well rewarded.


Simply apply the developing country formula (potential of greater realisation of human creativity as order and civil liberty rights are restored) and mix a whiff of MNC concoction for minority investor friendliness (corporate governance + high dividend payout + free cash flows + market leadership)  and you  have a successful recipe. Simple as that.

There are a large number of bargains in Next Eleven despite the recent sensational performance. It may feel we have missed the bus but I believe the real money is yet to be made. Few companies in Nigeria fit the wealth creation bucket categorized above. There are only two problems with this formula, a) Interference throws a spanner in compounding, sit for decade/s, it asks you to do nothing, read no financial news, watch no tv channel, wistfully hold securities for 10 years or longer, just get rich by doing nothing, better find some hobbies other than investment to engage your mind in b) what to do with the excess returns.


Pasting charts of some of the stocks I missed in Nigeria (A mistake I hope to fix in coming weeks and months) followed by a couple that I do own that fit boring formula of do-nothing--cowardly-capitalist-sit-on-couch-for-decades. My bias should be understandable. Long all stocks. Focus on the Green or Red percentage returned per annum, then compare against BSE SENSEX, DOW or FTSE if you wish.




PEPSI COLA


Previously mentioned several times CROWN PAINTS KENYA & GSK BANGLADESH.


CROWN PAINTS KENYA

GSK BANGLADESH 100% return this year, 1200% in this decade