It looks like the change in weather has also brought with it a tsunami of IPOs in Bahrain specifically and across the Gulf in general. That in addition to various attempts by the government to increase the economy of Bahrain through espousing investment forums and of course the huge efforts by the Economic Development Board in addressing various dire issues like the labour market, education and the economy.
We’re done with the Dubai-based Dana Gas IPO which by all accounts was very heavily over subscribed, now we have 3 more in Bahrain all happening over the next few weeks:
1. Banader Hotels company’s IPO starts tomorrow offering 60 million shares at BD 0.100 each with minimum 1,000 share blocks. That goes on until Oct 17th.
2. Nass IPO is starting on Oct 9th and closing Oct 30 for 25% of Nass Corp ordinary shares.
3. Jawad International Fashion a subsidiary of Jawad Business Group and operates international fashion brands like BHS, Mango, Adams, Shoe City, and Hush Puppies throughout the GCC is launching the first ever retail business IPO mid November offering 30% of the parent company (KFI) to the public. No price has been set yet.
This is Good News
Tell me that I’m doing The Right Thing
Any guides on these issues? I’ve never been into shares and don’t know how to even evaluate these opportunities so any input would be appreciated.
related link: Bahrain Stock Exchange
Comments
IPO Season
Sorry, but weren’t you just banging on those guys who were out buying the Dana stocks in a previous posts and saying things like ‘What’s the big deal’?
Re: IPO Season
Yes indeed I was. I have since looked more deeply into this “craze” if you like, and have asked people who have bought Dana shares as well as others who trade in various markets in the Gulf, which led me to believe that there is indeed no smoke without a fire! Hence, juices started flowing to get rich!
However, I also believe that people should invest in stocks, which for the most part are volatile, only when they have FU money, as one of my friends put it. (F**k You money, money that you won’t be too bothered losing and hence can comfortably risk) I’m not at that position, not by a long shot! However, I can afford to put a small amounts here and there IF I can convert those shares to liquidity very quickly, sort of in-and-out job. Eyad opened my eyes further by his comment above especially as far as the small print is concerned, and the laws and regulations of the stock exchange the equity is going to be listed in.
I am the first to admit as well that I do not understand this market. I don’t understand the dynamics that drive it. And I don’t have the financial strength to just wing it and take a pot-shot at a few stocks in the hope that one will grow exponentially. I have tracked stocks of companies I do deal with in order to try to understand what’s going on. For instance one of the main companies I deal with (Avid Technology) about 4 years ago its shares were trading at $7, last year they reached more than $60, and now they have stabelised at $45 after the Pinnacle acquisition.
I have also seen stocks like SGI in the late nineties at more than $40, to only crash down to less than $1! It is an excellent company with fantastic product, but the market doesn’t believe in it.
What I’m trying to say is this: I’ve known people who made a killing in stocks, and I’ve known also a few who have been hurt. I’m no better nor worse than these people and there is a chance if taken scientifically that I can make some money from it, and vary my sources of income.
The question is, where is the silver bullet if there is one, and how do I start?
Suggestions welcome!
Re: IPO Season
Excellent advice thank you Eyad…. I’ll keep what you say in consideration and start reading up.
From your (or anyone else’s experience) which is the best online stock portal to go with? Ameritrade you mentioned. Any others? Is there a comparison? Personal experiences? Any ‘hangout’ investment blogs/forums I should browse?
IPO Season
I am a bit sceptic about all the hype surrounding Dana Gas. I tried googling for some more information about the company but there very little available. Even the prospectus of the IPO gives very little details, even about the very basic operations of the company.
I have a few very fundamental questions.
1) Why has this company (which hasn’t even commenced operations yet) resorted to public equity, rather than raising debt or a private equity placement? (Okay, private equity would mean that current shareholders would have to deal with other influential bigshots sitting on the board).
2) Following on from that is what will be the leverage of the company, and in what form?
3) What the hell will the company do? Yes, it’s gas, but anything more specific? This would help to make some kind ball park estimates about the valuation.
4) What are its assets? What is the nature of any contracts it may have already secured (exploration, uptake, supply, etc etc) ?
But in our part of the world it seems that the fundamentals don’t really matter as much as who the backers of the project are. And in this case the backers are quite solid: royal families, financial institutions, energy companies. It seems that everyone else is willing to piggyback on their decision, as they know about the details of the company, and they are influential enough to remove any obstacles that may arise.
-chan’ad
IPO Season
Two pieces of advice based on what you wrote:
1- Research
2- Don’t go with the flow
Research includes learning everything you can about stocks. You are very resourceful and I’m sure a couple of online crash courses will get you feeling very comfortable about the whole business.. I recommend investopedia.com
Try some online simulators.. buy and sell and see how it works out for you.. the usual strategies are to either research the company to determine future success, or research the stock patterns (graphs and ratios) and determine where it’s headed. A new method was introduced by Google which has to do with mind share. Their company does not merit their stock price, but becuase people LOVE Google, their price is up..
Dana Gas? I don’t know. I didn’t buy them because I don’t get into something I don’t have information about. The whole thing was based on word of mouth, and basically relied on Qatar gas going up to billions because basically that one was a donation by the government to Qatari citizens.. The first piece of bad news already hit on Dana Gas : You can only cash out if you have a bank account in UAE. (I bet half of these people are not elgible to open bank accounts in the UAE!).. Also, they can come out and say you can’t sell for 10 years. How would you like that..
Looking at all the Saudis selling their wives to get some shares.. I can just say I feel sorry for what the government has done to these people.. have we steeped so low? There is no such thing as a get rich quick scheme people
Ok sorry drifting away, back to our topic.. I have more faith in the American stock market because they have more “rules” and you can easily open an account and do online trading (warning: addiction may ensure). You can by or sell any second, do your own research, and not let your money be controlled by other factors. (Other factors include Wasta, Insider information, Dealers doing favors to their buddies by selling their stocks dirst, etc. etc… Don’t put your money in a corrupted market.)
That said, a lot of people are making good money in the Bahraini market.. but that just takes us back to rule #2- Don’t go with the flow. Stocks in the Gulf region have become a trend. People don’t even understand how to spell the word “stock” let alone what it signifies..
So knowing you, I’d say you should either do the investment crash courses, grab a good book, and open an account with Ameritrade or similar.. control your own destiny or something, it’s not based on luck if you do your homework. This is the American way.
OR get your wastas rolling, got any dealer friends? Now’s the time to give them a call and take care of you.. whatever they put their personal money in, you follow.. this is the Arab way!
e.
IPO Season
Hi Mamood,
I have a friend who spends WAY too long studying stocks and shares and the rise and fall of prices – but then he does appear to do rather well out of it. But even he will admit that it has caused him many sleepless nights when he has perhaps allocated more than he should (not your so wonderfully named “FU Money” here) and has just escaped financial ruin because he spread his risk sufficiently.
So – even with lots of study – what goes up, can come crashing down.
I recall when I was doing my Business Studies at college – our Commerce tutor, during a lesson on stocks and shares, suggested that “if any of you have any [b]spare[/b] cash” go out and buy as many shares as you can in “XYZ” (I’m damned if I can remember the actual name of the company….) – he arrived the following week in a new car – the result of his own advice!
My personal handle on trying to make a profit in stocks and shares is that it is a LOT like gambling – you are up against professionals – and they will beat you every time.
Never feel tempted to invest money that you wouldn’t feel grieved over if you just chucked it off the end of the pier at Zallaq and watched it float out towards Saudi for the sheer hell of it…….
Having said all that – if you get very rich by ignoring me – that will make you, and my old tutor, two people who’s lead I should have followed 🙂
Mike – Luxembourg
IPO Season
Hi Mahmood,
For local (that is MENA region) investment and business news http://www.zawya.com and http://www.ameinfo.com and http://www.menafn.com are good sites to educate yourself.
I am all for investments in Stocks, of the 3 IPO’s u mention NASS GROUP IPO is the safest bet, but I would caution you cannot expect wild volatality on the Bahrain Stock Exchange as compared to what has been seen on the Saudi, UAE and Kuwaiti bourses.
If you are not comfortable with analysing Share issues or tracking company profitablility and news then I would suggest you opt for the Managed Fund route and invest through reputed Investment Banks such as SICO Bahrain, TAIB Bank and GLOBAL Kuwait. Funds managed by these institutions have provided mind boggling returns over the last 12-18 months. For eg the Khaleej Equity Fund of SICO has returned appreciation of 55.40% Jan-Aug 2005, 74.60% in the last 12 months and believe it or not appreciation of 97.40% since the funds inception in March 2004.
What it implies is you’d have nearly doubled your money had you invested in the Khaleej Equity Fund in March 2004. Advantage of investing in Equity Funds is it takes away the need for you to monitor price movements and be able to get out at the right time.
Taking the Fund route does not mean their is no down side, but you are able to diversify your risks.
DANA IPO ain’t all that bad as some of our friends here have made it out to be they have supply, storage and distribution channels mapped out. GAS is the next big thing afer OIL. GAS futures which were around $2.40 per barrell equivalent have gone up to around $9 to $10 per barell equivalent. Most GAS projects such as Qatar Gas etc have been planned at selling price of $2.50 to $3.00 per Gas barell and you now have it selling at $8.00 to $10.00 per Gas barell so the hype around DANA is in a sense justified. Guys who actually get the shares allocated will end up getting good returns and will perhaps then decide to buy 3-4 wives in lieu of the odd one they sold to buy DANA shares.
And finally what about the real estate projects are you investing in those, for eg. Gulf FInance House paid out a huge 42% return p.a. to investors who had joined in promoting Bahrain Finance Harbour phase 1.
Finally a word of caution I am not selling any of the above mentioned suggestions, they are merely suggestions based on results I have seen and the fat bonuses I have encashed.
Give me a shout any time you want info on such investment options a lot of this stuff passes my desk daily.
cheers.
IPO Season
Hi,
Try Interactivebrokers.com , you can trade stocks,options,FX,etc from one account in different currencies and diff countries. Regarding BSE I’ve been trading since Oct 2004 and had no problems with brokers, I just call and they execute for me on the phone. NO WASTA.
Good trading stocks with reasnable volume are GFH,TAMEER,AUB,and BATELCO.
Made good money trading them.
Cheers,
Adel
Re: IPO Season
Thanks for the advice Adel. Much apprecaited.
Coming to the office this morning I noticed quite a number of (obviously) Saudis waiting outside the BBK HQ building waiting to go in, and there was even a police van waiting in front of Al-Zamil building in anticipation of any trouble! They must have been there for the Nas IPO. What do you think of that?
I heard from one friend that it’s over-valued, and another who’s all for it!
IPO Season
Actually Saudis started gatherig since the Banader IPO.
Banader will build a 4 star Rotana Hotel on the old BMMI land and the big shareholders didnt want to IPO it, but the Gov made them. Saudis started having interest in Bahrain IPOs since the Tameer IPO in which they made at least 100% . Dana Gas opened their eyes on Banader and Nass cos the adverts in newspapers started when they where here for Dana so they started asking questions about them.
Regarding Nass still don’t know, have to do some research on it first which includes having a look at their statements, but I think Nass is strong cos Abdulla Nass has good connections with people in power, so we dont know what will happen when he dies or retires.
Cheers
Adel
Re: IPO Season
There were even more people around this morning…
I don’t understand the Nass IPO, the prospectus (108 page pdf file) is quite extensive and contains quite a lot of information that even if I read it now, I would not understand a lot of the things they’re trying to impart. BUT, if the “nominal price” per share is BD 0.100, why are they offereing it at 0.612? Is it worth that much that they think very shortly it will exceed that price? To my way of thinking if the nominal price is 0.100, then they should offer it at that price and let the market decide how high or low it will go, or if they can increase the issue so that they can be assured of reaching their targets.
IPO Season
Read pages 5 , 21.9 of Appendix A
Net Income for 2004 is BD 9,981,000 which is the best in three years, earning per share is about 50 fils, and they want us to pay 612 fils , No thanks.
Re: IPO Season
I thought it was a bit inflated… but then with the amount of construction going on in Bahrain (which they’re not winning, the winner there is Al-Hammad of the UAE ironically!) they might continue to increase their revenues going into the future. But it will take some time for them to justify the asking price.
IPO Season
Maybe its not about the fundamentals of the company…. maybe its about speculation in the short-term?!
I was asking myself exactly the same question…why is the share price BD 0.100 but selling for BD 0.612 …
Re: IPO Season
memories of Souq Al-Manakh anyone?
IPO Season
I have gone through your comments above, and I must say that most of them were very informative. To me, I think Al-Banader would be a good investment, especially in a country that is expecting a huge boom in the tourism industry.
Currently most of the hotels are fully packed even though it’s not yet a peak season! F1 grand Prix really opened the eyes of many tourists world wide to Bahrain, that means more traffic, and hence, more accommodation required.
That’s merely my opinion, welcome any comments.
Usif