Here is the latest value of the PesaPortfolio based on share prices at the end of trading on Friday – 14^th September 2012. Read our summary of that day's share trading here.

Read more on the PesaPortfolio here.

[caption id="attachment_20268" align="aligncenter" width="615"] The PesaPortfolio based on share prices at the close of trading on Friday 14th September 2012[/caption]

Since we last updated the PesaPortfolio at the end of trading on 30^th August 2012, it has lost KES 1,297.50 to stand at a total value of KES 91,115.00 from KES 92,412.50 at the last update.

If we were to sell the entire portfolio, we would take home KES 89,292.70 compared to KES 90,564.25 on August 30^th (transaction costs of 2 percent subtracted).

Losses to the portfolio were made through the following counters:

• Mumias Sugar  – Since our last update, the shares dropped 25 cents to lose our portfolio a total of 337.50 shillings by Friday’s close of KES 6.10 per share. The shares have been on a steady decline this month and appear to be edging closer to the 6 shilling mark from as high as 7 shillings per share early last month. Despite the steady drop, Mumias shares are trading above the KES 5.50 price we bought them at so we will hold on to them as long as they are above this price in anticipation of an upturn in their performance.

• Housing Finance – The shares have dropped further below the KES 15.60 price we bought them at down to Friday’s close of KES 14.00 losing the portfolio a further 605 shillings since our last update. In light of this we will sell our Housing Finance shares today. Read on for the sale transaction.

• Crown Paints – Since our last update at the turn of the month the shares have remained stable, trading between KES 35 and KES 36 per share to close Friday at KES 35.50 per share which was 50 cents lower than their price at our last update. This lost our portfolio a total of 500 shillings. Of all the shares in the PesaPortfolio, Crown Paints have gained the most from the KES 26 share price we bought them to trade almost 10 shillings above this currently. We will hold on to them for now. Crown Berger officially changed their name to Crown Paints.

• Rea Vipingo – After our last update, the shares declined to last month’s lowest of KES 16.05 before edging up to peak at KES 16.50 until mid last week where they fell to a two month low of KES 16.00. They however appear to be on the rise, having gained 2 percent to Fridays close of KES 16.35 which was 10 cents shy of their price at our last update. This led to an 80 shilling loss to our portfolio. We will still hold on to the shares for now.

The following shares added to the value of our portfolio:

• NIC Bank – Since our last update, the shares rallied likely on the back of the NIC Rights Issue which closed on Friday. The shares rose to peak at KES 35.25 just over one week ago before dropping to trade between 33 and 34 shillings with Friday’s close at KES 33.50 from KES 33.00 at our last update. This gained the portfolio 150 shillings. Today we will take up our full rights following the closing of the NIC Rights Issue. This means we will buy 1 new NIC share at KES 21 for every 4 that we currently own. Read on for this transaction. In addition, NIC is seeking regulatory approval for a bonus issue where we will receive 1 new share for every 10 that we hold if it is approved.

• British–American Investments – During the period from our last update, British American Investments and its subsidiaries officially adopted the unified Britam brand that saw the share close at the year’s highest of KES 6.05 last week before dropping to Friday’s close of KES 5.90. This was 5 cents higher than their price at our last update which added 75 shillings to our portfolio. The shares are trading slightly above the KES 5.65 price we acquired them for and we will consider selling them if they go below this range.

Changes to the PesaPortfolio

Sale transaction

We will sell all of our Housing Finance shares which have been eroding the value of our portfolio by trading below our KES 15.60 buying price for more than 3 months with no sign that they will exceed this price soon. The transaction is summarized below:

1,100 shares *KES 14/share = KES 15,400.00

Actual proceeds from the sale: 15,400*0.98 (to remove 2% transaction costs) = KES 15,092.00

Total cash at hand: 15,092.00 + 212.25 (previous cash at hand) = KES 15,304.25

Purchase transactions

NIC Rights Issue shares - As NIC shareholders, we are entitled to 1 new discount share for every 4 we already own. Here are the number of new NIC shares we will receive based on our current holding:

300 ÷ 4 = 75 new shares            

Purchasing the new shares: 75*21 (the price of each new NIC shares) = KES 1,575

Actual  cost: 1,575*1.02 (adding the standard 2% broker commission) = KES 1,606.50

Scangroup – We will buy 230 Scangroup shares using the rest of our proceeds. We have chosen this counter for three reasons. Firstly, Scangroup has a 75 percent advertising market share in East Africa and has reportedly grown this market share since 2009 while other large firms have been losing theirs. This could lead to higher earnings booked by the firm this year also considering extraordinary revenue from Olympics advertising this year. Secondly, Scangroup posted an 11 percent growth in half year pre-tax earnings to 578.4 million shillings from the same last year pointing to an earnings growth trend that could prop up demand for the share in the future. Thirdly, foreign investor demand in blue chip company stocks such as Scangroup could materialize through demand driven rallying in the short-term future before election jitters begin to affect the stock market as they are expected to. Our purchase transaction is summarized below:

Purchasing the new shares: 230*58 = KES 13,340

Actual cost: 13,340*1.02 (adding the 2% standard broker commissions) = KES 13,606.80

Total Share Purchase Costs for today:  13,606.80 + 1,606.50 = KES 15,213.30

Below is the new PesaPortfolio incorporating these changes:

[caption id="attachment_20269" align="aligncenter" width="662"] New value of the PesaPortfolio with changes effected[/caption]

*Our 75 new NIC Bank shares will be listed on the stock market and begin trading on October 23^rd. We therefore will not include them in the PesaPortfolio until then. Read here for a timetable of the rights issue.

{The PesaPortfolio is a simulation of the Nairobi Securities Exchange and is intended for investor education and entertainment only. It does not constitute investor advice and we do not trade on behalf of our readers}