Books etc.

[duduspace]

Not sure this is the right place for this but I have recently noticed the use of ROE to knock some stock I believed had good fundamentals so I went searching to learn more about this performance indicator and this is what I found from investopedia.

Note: ROE is still a very good measure of profitability but it doesn't tell a complete story particularly due to its inverse relationship to debt. I believe other prudent investors would be wise to take note of this.


ROE Isn't Perfect
ROE is not an absolute indicator of investment value. After all, the ratio gets a big boost whenever the value of the shareholder equity, the denominator, goes down.

If, for instance, a company takes a large write-down, the reduction in income (ROE's numerator) occurs only in the year that the expense is charged; the write-down therefore makes a more significant dent in shareholder equity (the denominator) in the following years, causing an overall rise in the ROE without any improvement in the company's operations. Having a similar effect as write-downs, share buy-backs also normally depress shareholders' equity proportionately far more than they depress earnings. As a result, buy-backs also give an artificial boost to ROE. (For related reading, see How Buybacks Warp The Price-To-Book Ratio.)

Moreover, a high ROE doesn't tell you if a company has excessive debt and is raising more of its funds through borrowing rather than issuing shares. Remember, shareholder's equity is assets less liabilities, which represent what the firm owes, including its long- and short-term debt. So, the more debt a company has, the less equity it has; and the less equity a company has, the higher its ROE ratio will be.

Suppose that two firms have the same amount of assets ($1,000) and the same net income ($120) but different levels of debt: Firm A has $500 in debt and therefore $500 in shareholder's equity ($1,000 - $500), and Firm B has $200 in debt and $800 in shareholder's equity ($1,000 - $200). Firm A shows an ROE of 24% ($120/$500) while Firm B, with less debt, shows an ROE of 15% ($120/$800). As ROE equals net income divided by the equity figure, Firm A, the higher-debt firm, shows the highest return on equity.

This company looks as though it has higher profitability when really it just has more demanding obligations to its creditors. Its higher ROE may therefore be simply a mask of future problems. For a more transparent view that helps you see through this mask, make sure you also examine the company's return on invested capital (ROIC), which reveals the extent to which debt drives returns.

Another pitfall of ROE concerns the way in which intangible assets are excluded from shareholder's equity. Generally conservative, the accounting profession normally omits a company's possession of things like trademarks, brand names, and patents from asset and equity-based calculations. As a result, shareholder equity often gets understated in relation to its value, and, in turn, ROE calculations can be misleading.

A company with no assets other than a trademark is an extreme example of a situation in which accounting's exclusion of intangibles would distort ROE. After adjusting for intangibles, the company would be left with no assets and probably no shareholder equity base. ROE measured this way would be astronomical but would offer little guidance for investors looking to gauge earnings efficiency.

Conclusion
Let's face it, no single metric can provide a perfect tool for examining fundamentals. But contrasting the five-year average ROEs within a specific industrial sector does highlight companies with competitive advantage and with a knack for delivering shareholder value.

Read more: How Return On Equity Can Help You Find Profitable Stocks

[hispy99]

Originally Posted by duduspace

Not sure this is the right place for this but I have recently noticed the use of ROE to knock some stock I believed had good fundamentals so I went searching to learn more about this performance indicator and this is what I found from investopedia.

Note: ROE is still a very good measure of profitability but it doesn't tell a complete story particularly due to its inverse relationship to debt. I believe other prudent investors would be wise to take note of this.


ROE Isn't Perfect
ROE is not an absolute indicator of investment value. After all, the ratio gets a big boost whenever the value of the shareholder equity, the denominator, goes down.

If, for instance, a company takes a large write-down, the reduction in income (ROE's numerator) occurs only in the year that the expense is charged; the write-down therefore makes a more significant dent in shareholder equity (the denominator) in the following years, causing an overall rise in the ROE without any improvement in the company's operations. Having a similar effect as write-downs, share buy-backs also normally depress shareholders' equity proportionately far more than they depress earnings. As a result, buy-backs also give an artificial boost to ROE. (For related reading, see How Buybacks Warp The Price-To-Book Ratio.)

Moreover, a high ROE doesn't tell you if a company has excessive debt and is raising more of its funds through borrowing rather than issuing shares. Remember, shareholder's equity is assets less liabilities, which represent what the firm owes, including its long- and short-term debt. So, the more debt a company has, the less equity it has; and the less equity a company has, the higher its ROE ratio will be.

Suppose that two firms have the same amount of assets ($1,000) and the same net income ($120) but different levels of debt: Firm A has $500 in debt and therefore $500 in shareholder's equity ($1,000 - $500), and Firm B has $200 in debt and $800 in shareholder's equity ($1,000 - $200). Firm A shows an ROE of 24% ($120/$500) while Firm B, with less debt, shows an ROE of 15% ($120/$800). As ROE equals net income divided by the equity figure, Firm A, the higher-debt firm, shows the highest return on equity.

This company looks as though it has higher profitability when really it just has more demanding obligations to its creditors. Its higher ROE may therefore be simply a mask of future problems. For a more transparent view that helps you see through this mask, make sure you also examine the company's return on invested capital (ROIC), which reveals the extent to which debt drives returns.

Another pitfall of ROE concerns the way in which intangible assets are excluded from shareholder's equity. Generally conservative, the accounting profession normally omits a company's possession of things like trademarks, brand names, and patents from asset and equity-based calculations. As a result, shareholder equity often gets understated in relation to its value, and, in turn, ROE calculations can be misleading.

A company with no assets other than a trademark is an extreme example of a situation in which accounting's exclusion of intangibles would distort ROE. After adjusting for intangibles, the company would be left with no assets and probably no shareholder equity base. ROE measured this way would be astronomical but would offer little guidance for investors looking to gauge earnings efficiency.

Conclusion
Let's face it, no single metric can provide a perfect tool for examining fundamentals. But contrasting the five-year average ROEs within a specific industrial sector does highlight companies with competitive advantage and with a knack for delivering shareholder value.

Read more: How Return On Equity Can Help You Find Profitable Stocks

I don't think anyone has ever said ROE should be used in isolation, just like you can't use P/E, P/B, P/CF in isolation too. You have to factor in a number of profitability, valuation, leverage, sentiment indicators before you can come to a reasonable decision.

[afolabi27]

[QUOTE=duduspace;153707]

So, the more debt a company has, the less equity it has; and the less equity a company has, the higher its ROE ratio will be.

Suppose that two firms have the same amount of assets ($1,000) and the same net income ($120) but different levels of debt: Firm A has $500 in debt and therefore $500 in shareholder's equity ($1,000 - $500), and Firm B has $200 in debt and $800 in shareholder's equity ($1,000 - $200). Firm A shows an ROE of 24% ($120/$500) while Firm B, with less debt, shows an ROE of 15% ($120/$800). As ROE equals net income divided by the equity figure, Firm A, the higher-debt firm, shows the highest return on equity.

This company looks as though it has higher profitability when really it just has more demanding obligations to its creditors. Its higher ROE may therefore be simply a mask of future problems. For a more transparent view that helps you see through this mask, make sure you also examine the company's return on invested capital (ROIC), which reveals the extent to which debt drives returns.



Gbam! I am very glad to know you read widely.

From the bold parts, you have rightly demonstrated that a firm using debt would produce a higher ROE than its all equity financed peer. This concept is well known in corporate finance as we say the value of a company is maximized at the right mix of debt and equity.

Debt is cheaper than equity, debt comes with a tax advantage that equity does not enjoy, strong organisations should mix debt with equity to maximize the wealth of the shareholders only when they are sure the rate of return will exceed the cost of debt. However, increasing use of debt beyond the optimum point begins to raise the cost (or threat) of bankruptcy particularly if the company suddenly experience an unexpected significant losses.

You asked me some questions on the Oando thread, and interestingly you have provided the answers here. Oando uses significant debt in its capital structure, yet it is characterized by a very low ROE of 7.3%, well below the industry average and inflation, the ROIC you mentioned above stands at 3.5% for Oando.

This is a terrible situation that's called double whammy. You are heavily indebted and you have a ridiculous low ROE. Such companies are not structured to give returns to outside shareholders.

But who are the debt holders?

You understand why I said Oando is only good for speculation. Oando owe its life at this time to the "generous" OandO and the bankers that are watching keenly how the right offer will play out.

[duduspace]

[quote=afolabi27;153733]

Originally Posted by duduspace

So, the more debt a company has, the less equity it has; and the less equity a company has, the higher its ROE ratio will be.

Suppose that two firms have the same amount of assets ($1,000) and the same net income ($120) but different levels of debt: Firm A has $500 in debt and therefore $500 in shareholder's equity ($1,000 - $500), and Firm B has $200 in debt and $800 in shareholder's equity ($1,000 - $200). Firm A shows an ROE of 24% ($120/$500) while Firm B, with less debt, shows an ROE of 15% ($120/$800). As ROE equals net income divided by the equity figure, Firm A, the higher-debt firm, shows the highest return on equity.

This company looks as though it has higher profitability when really it just has more demanding obligations to its creditors. Its higher ROE may therefore be simply a mask of future problems. For a more transparent view that helps you see through this mask, make sure you also examine the company's return on invested capital (ROIC), which reveals the extent to which debt drives returns.



Gbam! I am very glad to know you read widely.

From the bold parts, you have rightly demonstrated that a firm using debt would produce a higher ROE than its all equity financed peer. This concept is well known in corporate finance as we say the value of a company is maximized at the right mix of debt and equity.

Debt is cheaper than equity, debt comes with a tax advantage that equity does not enjoy, strong organisations should mix debt with equity to maximize the wealth of the shareholders only when they are sure the rate of return will exceed the cost of debt. However, increasing use of debt beyond the optimum point begins to raise the cost (or threat) of bankruptcy particularly if the company suddenly experience an unexpected significant losses.

You asked me some questions on the Oando thread, and interestingly you have provided the answers here. Oando uses significant debt in its capital structure, yet it is characterized by a very low ROE of 7.3%, well below the industry average and inflation, the ROIC you mentioned above stands at 3.5% for Oando.

This is a terrible situation that's called double whammy. You are heavily indebted and you have a ridiculous low ROE. Such companies are not structured to give returns to outside shareholders.

But who are the debt holders?

You understand why I said Oando is only good for speculation. Oando owe its life at this time to the "generous" OandO and the bankers that are watching keenly how the right offer will play out.

Solid enough points but I think the term industry average should be used carefully with Oando as I'm not sure many of the companies in its so called 'industry' operates across all the sectors of that industry as Oando does or have embarked on aggressive growth as Oando. If I'm mistaken about this please enlighten.
I'm also not certain that Oando's ROE has been consistently below the industry avg if averaged over 5 years as advised. I recall Interbrew's balance sheet looking similarly leveraged unti recently (obviously not on a similar scale to Oandos).

You might be right in calling Oando as only good for speculation due to its current debts and the success or failure of its rights offer but I dont see the banks calling in their loans with Oando's current revenue generation even with the failure of a rights offer. It will only lead to an even longer period of profit retention which will further cause shareholder disaffection and interim share price erosion. IMO, as long as the growth strategy is right it will win out in the end.
The future of Oando as far as I can see ultimately depends on the success or failure of their Upstream gambit and this is where that adage about risk and reward becomes relevant. Who knows? the Toronto OER might one day reverse-reverse takeover the parent someday if the oyibos who arent as sentimental as we seem to be end up providing the capital Tinubu and his henchmen need to make this work.

[knightofdelta]

[quote=duduspace;153743]

Originally Posted by afolabi27

Solid enough points but I think the term industry average should be used carefully with Oando as I'm not sure many of the companies in its so called 'industry' operates across all the sectors of that industry as Oando does or have embarked on aggressive growth as Oando. If I'm mistaken about this please enlighten.
I'm also not certain that Oando's ROE has been consistently below the industry avg if averaged over 5 years as advised. I recall Interbrew's balance sheet looking similarly leveraged unti recently (obviously not on a similar scale to Oandos).

You might be right in calling Oando as only good for speculation due to its current debts and the success or failure of its rights offer but I dont see the banks calling in their loans with Oando's current revenue generation even with the failure of a rights offer. It will only lead to an even longer period of profit retention which will further cause shareholder disaffection and interim share price erosion. IMO, as long as the growth strategy is right it will win out in the end.
The future of Oando as far as I can see ultimately depends on the success or failure of their Upstream gambit and this is where that adage about risk and reward becomes relevant. Who knows? the Toronto OER might one day reverse-reverse takeover the parent someday if the oyibos who arent as sentimental as we seem to be end up providing the capital Tinubu and his henchmen need to make this work.

You say what? We are sentimental and can't see long term? And oyibos are not sentimental and will bail out Oando? Then I guess Franklin Templeton, run by the ever bullish-on-Nigeria Mark Mobius, and HSBC who both dropped Oando like hot potatoes in the last few weeks are run by sentimental Nigerians.

I wish you good luck on your Oando sojourn. I have no regret selling it and taking my money to NEM and Access bank.

And one more thing, the practice of looking actively for information to support your belief such that you went looking for the pitfalls of ROE, which has made you comfortable with holding Oando is called "Confirmation Bias".

Another symptom of confirmation bias is calling those who have done their analysis and exited Oando is by believing we are sentimental. I am certainly sentimental about the best use of my money and certainly not Oando. I have had no regret selling Oando and buying NEM that has made me almost 50% return since I made the decision.

Trust me, if I se changes in Oando I will make the loudest noise on SMN.

[afolabi27]

[quote=duduspace;153743]

Originally Posted by afolabi27

Solid enough points but I think the term industry average should be used carefully with Oando as I'm not sure many of the companies in its so called 'industry' operates across all the sectors of that industry as Oando does or have embarked on aggressive growth as Oando. If I'm mistaken about this please enlighten.
I'm also not certain that Oando's ROE has been consistently below the industry avg if averaged over 5 years as advised. I recall Interbrew's balance sheet looking similarly leveraged unti recently (obviously not on a similar scale to Oandos).

You might be right in calling Oando as only good for speculation due to its current debts and the success or failure of its rights offer but I dont see the banks calling in their loans with Oando's current revenue generation even with the failure of a rights offer. It will only lead to an even longer period of profit retention which will further cause shareholder disaffection and interim share price erosion. IMO, as long as the growth strategy is right it will win out in the end.
The future of Oando as far as I can see ultimately depends on the success or failure of their Upstream gambit and this is where that adage about risk and reward becomes relevant. Who knows? the Toronto OER might one day reverse-reverse takeover the parent someday if the oyibos who arent as sentimental as we seem to be end up providing the capital Tinubu and his henchmen need to make this work.

[quote=knightofdelta;153764]

Originally Posted by duduspace

You say what? We are sentimental and can't see long term? And oyibos are not sentimental and will bail out Oando? Then I guess Franklin Templeton, run by the ever bullish-on-Nigeria Mark Mobius, and HSBC who both dropped Oando like hot potatoes in the last few weeks are run by sentimental Nigerians.

I wish you good luck on your Oando sojourn. I have no regret selling it and taking my money to NEM and Access bank.

And one more thing, the practice of looking actively for information to support your belief such that you went looking for the pitfalls of ROE, which has made you comfortable with holding Oando is called "Confirmation Bias".

Another symptom of confirmation bias is calling those who have done their analysis and exited Oando is by believing we are sentimental. I am certainly sentimental about the best use of my money and certainly not Oando. I have had no regret selling Oando and buying NEM that has made me almost 50% return since I made the decision.

Trust me, if I se changes in Oando I will make the loudest noise on SMN.

Sir KOD, I will sue you for character assassination The quote above was written by Sir Duduspace, but you made it appear as if it came from me in your post above.

Talking about NEM, I think I built a castle there before you did. I almost fought my broker when he insinuated he will not count my investment in NEM towards my "margin" account.

Of course this was last year when we were discussing the impact of the flood on insurance companies. Sir Nosa, you remember??

[duduspace]

Originally Posted by knightofdelta

KOD san, because of the massive respect I have for you I won't request a written and signed apology. I must however say that your write up above is misplaced.

Firstly in my first post about the use of ROE as a tool for fundamental analysis, I made no mention of Oando. You can trace back to the Genesis of this discussion with Oga Afolabi before you started this Chuck Norris style shooting from the hip post as if I dey follow you drag woman for nightclub.

Secondly, when I talked about oyibos bailing out Oando, I wasn't referring to Oando PLC rather to OER listed on the TSX which is the vehicle in which all the upstream assets of Oando are being vested and which is 'for now' doing reasonably well on that stock exchange.

As someone once said on this forum, if Oando was a woman, no man would want to marry her with the amount of acid poured on her on this forum (and most likely other places too) hence I'm not too surprised the likes of Mobius and HSBC are running away. You would notice that I even made fun of a reverse-reverse takeover. I alluded to the fact that Oando's finances do not look in the best of shape and gave what I believed were those reasons (Rapid growth through upstream asset acquisition).

Perhaps Oga Afolabi is even right that Oando PLC is being set up for bankruptcy (I like to think wide and consider things from every angle and point of view possible as narrow mindedness is often the achilles heel of those who aim to be great), I can clearly see that OER TSX is being ring-fenced from Oando PLC as I do not see any creditor having a hold on any of the upstream assets Oando is acquiring asides from the value of the shares Oando PLC have in that company. If I played in the Canadian stock exchange, that is where I would be putting my money right now and perhaps that is where Messrs Mobius and co have decided to put their money.

Events on this forum have convinced me there is a sentimental aversion to Oando (most likely with good reason I must say), this discussion with Oga Afolabi and your post only further convinces me that it is so, the venom with which anyone who requests further examination of the issues associated with Oando are attacked is not in the best interests of SMN (which is a very great forum). I am yet to see a well put together, researched and reasoned piece why people shouldn't take up their rights in Oando, the closest I've seen to make me rethink my decision are the dangers inherent in the upstream sector pointed out by Oga Wanaj and Oracle I think (a point I consider more than balanced by the profitability inherent in a successful upstream venture). Most of what I see are attacks on those who recommend that people should do so as evidenced by all the accusations that came against Proshare when their write-up came out.

This is my pennies worth and all I have to say about Oando.

[bivins1]

Originally Posted by duduspace

KOD san, because of the massive respect I have for you I won't request a written and signed apology. I must however say that your write up above is misplaced.

Firstly in my first post about the use of ROE as a tool for fundamental analysis, I made no mention of Oando. You can trace back to the Genesis of this discussion with Oga Afolabi before you started this Chuck Norris style shooting from the hip post as if I dey follow you drag woman for nightclub.

Secondly, when I talked about oyibos bailing out Oando, I wasn't referring to Oando PLC rather to OER listed on the TSX which is the vehicle in which all the upstream assets of Oando are being vested and which is 'for now' doing reasonably well on that stock exchange.

As someone once said on this forum, if Oando was a woman, no man would want to marry her with the amount of acid poured on her on this forum (and most likely other places too) hence I'm not too surprised the likes of Mobius and HSBC are running away. You would notice that I even made fun of a reverse-reverse takeover. I alluded to the fact that Oando's finances do not look in the best of shape and gave what I believed were those reasons (Rapid growth through upstream asset acquisition).

Perhaps Oga Afolabi is even right that Oando PLC is being set up for bankruptcy (I like to think wide and consider things from every angle and point of view possible as narrow mindedness is often the achilles heel of those who aim to be great), I can clearly see that OER TSX is being ring-fenced from Oando PLC as I do not see any creditor having a hold on any of the upstream assets Oando is acquiring asides from the value of the shares Oando PLC have in that company. If I played in the Canadian stock exchange, that is where I would be putting my money right now and perhaps that is where Messrs Mobius and co have decided to put their money.

Events on this forum have convinced me there is a sentimental aversion to Oando (most likely with good reason I must say), this discussion with Oga Afolabi and your post only further convinces me that it is so, the venom with which anyone who requests further examination of the issues associated with Oando are attacked is not in the best interests of SMN (which is a very great forum). I am yet to see a well put together, researched and reasoned piece why people shouldn't take up their rights in Oando, the closest I've seen to make me rethink my decision are the dangers inherent in the upstream sector pointed out by Oga Wanaj and Oracle I think (a point I consider more than balanced by the profitability inherent in a successful upstream venture). Most of what I see are attacks on those who recommend that people should do so as evidenced by all the accusations that came against Proshare when their write-up came out.

This is my pennies worth and all I have to say about Oando.

Bros Dudu
Did you say OER is doing very well in TSX. Have you seen the volume of transaction? Did you say its doing well?. OER is being found out now in TSX. Initially they didnt understandTHE EXILE takeover but once they got the details of OER / conoco phillips, They are actively discussing the risk involved.check this and take time to read all the posts Oando Energy Resources Inc., OER - Bullboard
I do not know why you think People have sentimental aversion to Oando . Oando has traded at over 200 naira before, Their management have deceived investors time and time again and the overwhelming evidence is there but you think they are being singled out, why dont we have such aversions against companies like Nestle, GTB, Fistbank, Mobil , UACN,NB to mention but a few. a couple of years ago NB underwent some reorganization and told investors that it would be tough but they clearly outlined their plans and that is why they are where they are today
Anyway i no fit shout. Bros dudu if you get money, wire them to me and i will buy OER shares for you from the comfort of my house. Just tell me your price limit . I wonder why Bra Ewumi will be sentimentally against a company where he owns more than 400,000 shares .

[duduspace]

Originally Posted by bivins1

Bros Dudu
Did you say OER is doing very well in TSX. Have you seen the volume of transaction? Did you say its doing well?. OER is being found out now in TSX. Initially they didnt understandTHE EXILE takeover but once they got the details of OER / conoco phillips, They are actively discussing the risk involved.check this and take time to read all the posts Oando Energy Resources Inc., OER - Bullboard
I do not know why you think People have sentimental aversion to Oando . Oando has traded at over 200 naira before, Their management have deceived investors time and time again and the overwhelming evidence is there but you think they are being singled out, why dont we have such aversions against companies like Nestle, GTB, Fistbank, Mobil , UACN,NB to mention but a few. a couple of years ago NB underwent some reorganization and told investors that it would be tough but they clearly outlined their plans and that is why they are where they are today
Anyway i no fit shout. Bros dudu if you get money, wire them to me and i will buy OER shares for you from the comfort of my house. Just tell me your price limit . I wonder why Bra Ewumi will be sentimentally against a company where he owns more than 400,000 shares .

I wanted to respond to this but I'd already stated, I will not talk about Oando again. Your post only strenghtens my perception of the prevailing view on it here.
I will be glad to hold further discussions with you about investing on the Canadian stock exchange as an individual not resident in Canada if you don't mind.

What exactly do I need? a Canadian bank account? can you recommend a stock broker?

[emmanuel ewumi]

Originally Posted by bivins1

Bros Dudu
Did you say OER is doing very well in TSX. Have you seen the volume of transaction? Did you say its doing well?. OER is being found out now in TSX. Initially they didnt understandTHE EXILE takeover but once they got the details of OER / conoco phillips, They are actively discussing the risk involved.check this and take time to read all the posts Oando Energy Resources Inc., OER - Bullboard
I do not know why you think People have sentimental aversion to Oando . Oando has traded at over 200 naira before, Their management have deceived investors time and time again and the overwhelming evidence is there but you think they are being singled out, why dont we have such aversions against companies like Nestle, GTB, Fistbank, Mobil , UACN,NB to mention but a few. a couple of years ago NB underwent some reorganization and told investors that it would be tough but they clearly outlined their plans and that is why they are where they are today
Anyway i no fit shout. Bros dudu if you get money, wire them to me and i will buy OER shares for you from the comfort of my house. Just tell me your price limit . I wonder why Bra Ewumi will be sentimentally against a company where he owns more than 400,000 shares .

I don't own 400,000 units, I have about half the figure quoted. My right is over 400k units, but i will not take my right.

[dr.abrahamb]

Originally Posted by duduspace

KOD san, because of the massive respect I have for you I won't request a written and signed apology. I must however say that your write up above is misplaced.

Firstly in my first post about the use of ROE as a tool for fundamental analysis, I made no mention of Oando. You can trace back to the Genesis of this discussion with Oga Afolabi before you started this Chuck Norris style shooting from the hip post as if I dey follow you drag woman for nightclub.

Secondly, when I talked about oyibos bailing out Oando, I wasn't referring to Oando PLC rather to OER listed on the TSX which is the vehicle in which all the upstream assets of Oando are being vested and which is 'for now' doing reasonably well on that stock exchange.

As someone once said on this forum, if Oando was a woman, no man would want to marry her with the amount of acid poured on her on this forum (and most likely other places too) hence I'm not too surprised the likes of Mobius and HSBC are running away. You would notice that I even made fun of a reverse-reverse takeover. I alluded to the fact that Oando's finances do not look in the best of shape and gave what I believed were those reasons (Rapid growth through upstream asset acquisition).

Perhaps Oga Afolabi is even right that Oando PLC is being set up for bankruptcy (I like to think wide and consider things from every angle and point of view possible as narrow mindedness is often the achilles heel of those who aim to be great), I can clearly see that OER TSX is being ring-fenced from Oando PLC as I do not see any creditor having a hold on any of the upstream assets Oando is acquiring asides from the value of the shares Oando PLC have in that company. If I played in the Canadian stock exchange, that is where I would be putting my money right now and perhaps that is where Messrs Mobius and co have decided to put their money.

Events on this forum have convinced me there is a sentimental aversion to Oando (most likely with good reason I must say), this discussion with Oga Afolabi and your post only further convinces me that it is so, the venom with which anyone who requests further examination of the issues associated with Oando are attacked is not in the best interests of SMN (which is a very great forum). I am yet to see a well put together, researched and reasoned piece why people shouldn't take up their rights in Oando, the closest I've seen to make me rethink my decision are the dangers inherent in the upstream sector pointed out by Oga Wanaj and Oracle I think (a point I consider more than balanced by the profitability inherent in a successful upstream venture). Most of what I see are attacks on those who recommend that people should do so as evidenced by all the accusations that came against Proshare when their write-up came out.

This is my pennies worth and all I have to say about Oando.

Hope you'd not be offended if I said you have a sentimental attraction towards Oando? Now, why would I say so? You are yet to put forward your own analysis on Oando. You also have not made your own observations known about the analysis Proshare put forward.

Your observation about the relationship between Debt and ROE, ROE and inflation (and ROE and Cost of debt which you left out) also sheds light on why some Ogas think Oando has grave issues at hand.

Some Ogas and my humble self have looked at that analysis by Proshare and said it fell far below what we expected of Proshare. I for one, asked questions that Proshare CEO agreed was in order and promised to get the missing aspects(DCF Analysis) I pointed out, across to me(and by extension the forum). I also pointed out, and some Ogas agreed that the comparison of Oando to other marketers was biased; it being an Integrated energy player. These are not venoms now? This is placing fact for fact before all on the table now?

Okay, lets a-s-s-u-m-e there is no company locally and internationally with which you could objectively compare Oando, Oga Afolabi's ratios would then be enough for any prospective investor to make a decision; or you don't agree those ratios are relevant to people's investment decision? Now if those who say you should buy are right, why not go ahead?

There is nothing like 'chop alone die alone' to a man who knows what he is doing sir.

I will send you a PM as soon as am back(I just got an emergency call).

[lolobo]

Originally Posted by duduspace

KOD san, because of the massive respect I have for you I won't request a written and signed apology. I must however say that your write up above is misplaced.

Firstly in my first post about the use of ROE as a tool for fundamental analysis, I made no mention of Oando. You can trace back to the Genesis of this discussion with Oga Afolabi before you started this Chuck Norris style shooting from the hip post as if I dey follow you drag woman for nightclub.

Secondly, when I talked about oyibos bailing out Oando, I wasn't referring to Oando PLC rather to OER listed on the TSX which is the vehicle in which all the upstream assets of Oando are being vested and which is 'for now' doing reasonably well on that stock exchange.

As someone once said on this forum, if Oando was a woman, no man would want to marry her with the amount of acid poured on her on this forum (and most likely other places too) hence I'm not too surprised the likes of Mobius and HSBC are running away. You would notice that I even made fun of a reverse-reverse takeover. I alluded to the fact that Oando's finances do not look in the best of shape and gave what I believed were those reasons (Rapid growth through upstream asset acquisition).

Perhaps Oga Afolabi is even right that Oando PLC is being set up for bankruptcy (I like to think wide and consider things from every angle and point of view possible as narrow mindedness is often the achilles heel of those who aim to be great), I can clearly see that OER TSX is being ring-fenced from Oando PLC as I do not see any creditor having a hold on any of the upstream assets Oando is acquiring asides from the value of the shares Oando PLC have in that company. If I played in the Canadian stock exchange, that is where I would be putting my money right now and perhaps that is where Messrs Mobius and co have decided to put their money.

Events on this forum have convinced me there is a sentimental aversion to Oando (most likely with good reason I must say), this discussion with Oga Afolabi and your post only further convinces me that it is so, the venom with which anyone who requests further examination of the issues associated with Oando are attacked is not in the best interests of SMN (which is a very great forum). I am yet to see a well put together, researched and reasoned piece why people shouldn't take up their rights in Oando, the closest I've seen to make me rethink my decision are the dangers inherent in the upstream sector pointed out by Oga Wanaj and Oracle I think (a point I consider more than balanced by the profitability inherent in a successful upstream venture). Most of what I see are attacks on those who recommend that people should do so as evidenced by all the accusations that came against Proshare when their write-up came out.

This is my pennies worth and all I have to say about Oando.

See what Oando is causing on SMF o, and Wale and his people are resting peacefully in the comforts of their zones. I have said it times without number that this Oando issue has been overflogged, overanalysized. Guys, Ogas dem and CEOs' I beg make we rest this Oando case o.

#ihaveaddedmyownpenniesworth#

[dr dowell]

Originally Posted by lolobo

See what Oando is causing on SMF o, and Wale and his people are resting peacefully in the comforts of their zones. I have said it times without number that this Oando issue has been overflogged, overanalysized. Guys, Ogas dem and CEOs' I beg make we rest this Oando case o.

#ihaveaddedmyownpenniesworth#

Aluta continua victory acetia. The battle most continue until we drive home our point. We will not stop mid stream.

[emmanuel ewumi]

Originally Posted by lolobo

See what Oando is causing on SMF o, and Wale and his people are resting peacefully in the comforts of their zones. I have said it times without number that this Oando issue has been overflogged, overanalysized. Guys, Ogas dem and CEOs' I beg make we rest this Oando case o.

#ihaveaddedmyownpenniesworth#

The company is over-diversified, over-leveraged, over hyped, in fact the organisational structure is too complex. It won't be a bad idea if the company is over analyzed.

[nosa2]

[quote=knightofdelta;153764]

Originally Posted by duduspace

You say what? We are sentimental and can't see long term? And oyibos are not sentimental and will bail out Oando? Then I guess Franklin Templeton, run by the ever bullish-on-Nigeria Mark Mobius, and HSBC who both dropped Oando like hot potatoes in the last few weeks are run by sentimental Nigerians.

I wish you good luck on your Oando sojourn. I have no regret selling it and taking my money to NEM and Access bank.

And one more thing, the practice of looking actively for information to support your belief such that you went looking for the pitfalls of ROE, which has made you comfortable with holding Oando is called "Confirmation Bias".

Another symptom of confirmation bias is calling those who have done their analysis and exited Oando is by believing we are sentimental. I am certainly sentimental about the best use of my money and certainly not Oando. I have had no regret selling Oando and buying NEM that has made me almost 50% return since I made the decision.

Trust me, if I se changes in Oando I will make the loudest noise on SMN.

why you dey drag matter? stock market is for making money Not Proving point, if person wan die With oando leave am after all na all man for im Set for for us all.

meanwhile try read Investment psychology explained by Martin Prinz, the book is hot.

[nosa2]

Originally Posted by nosa2

Here are the books I finally settled on

1. Investment Psychology explained by Martin J. Pring.

2.*Diary of a Hedge Fund Manager: From the Top, to the Bottom, and Back Again by*Keith McCullough

3. The Little Book That Still Beats the Market (Little Books. Big Profits) *by*Joel Greenblatt

4.*Value Investing: From Graham to Buffett and Beyond (Wiley Finance) by*Bruce C. N. Greenwald, Judd Kahn

The second book "diary of a hedge fund manager" would probably make a decent novel but I don't read novels and as such found it useless and stopped reading half way thru (maybe it'll change dramatically at the end but I doubt) and would pick it up later.

That brings me to the book I'm currently reading, Investment Psychology explained by Martin J. Pring, this book is pure gold to anyone with a CSCS account and even thou I'm only a quarter way thru I can see it turning out to be as good as "intelligent investor by Benjamin Graham". Basically, I strongly recommend this book for everyone in the market and I wish I'd read it earlier cause I'd have been a lot richer now.

[knightofdelta]

Originally Posted by nosa2

The second book "diary of a hedge fund manager" would probably make a decent novel but I don't read novels and as such found it useless and stopped reading half way thru (maybe it'll change dramatically at the end but I doubt) and would pick it up later.

That brings me to the book I'm currently reading, Investment Psychology explained by Martin J. Pring, this book is pure gold to anyone with a CSCS account and even thou I'm only a quarter way thru I can see it turning out to be as good as "intelligent investor by Benjamin Graham". Basically, I strongly recommend this book for everyone in the market and I wish I'd read it earlier cause I'd have been a lot richer now.

You are about to become a threat to me. If I am making money on the NSE, it is 60% based on behavioral finance and and 40% fundamental. Did you see the way market reacted after BGL published a strong buy on Interbrew?

Anyway, the bears are on the way... just a hint. Not fundamental, not technical but behavioral pattern.

[Salida]

Originally Posted by knightofdelta

You are about to become a threat to me. If I am making money on the NSE, it is 60% based on behavioral finance and and 40% fundamental. Did you see the way market reacted after BGL published a strong buy on Interbrew?

Anyway, the bears are on the way... just a hint. Not fundamental, not technical but behavioral pattern.

Sir KOD, BGL actually placed a HOLD on the stock, not a BUY. However, it was a lucid analysis and the market is already reacting.

[nosa2]

Originally Posted by knightofdelta

You are about to become a threat to me. If I am making money on the NSE, it is 60% based on behavioral finance and and 40% fundamental. Did you see the way market reacted after BGL published a strong buy on Interbrew?

Anyway, the bears are on the way... just a hint. Not fundamental, not technical but behavioral pattern.

My brother the thing is real oh, there were some parts that as I was reading the guy was just describing my thought process, the good thing is that the book makes suggestions as to how to control and take advantage of ones emotions.

[gbengus]

Originally Posted by Salida

Sir KOD, BGL actually placed a HOLD on the stock, not a BUY. However, it was a lucid analysis and the market is already reacting.

Oga Salida,a hold at N14,this one is way overvalued.In my humble opinion though.