Warren Buffett’s strategy as regards investments has earned him the popular nickname the “world’s greatest investor.”
The global investment community holds the 90-year-old man with so much high esteem when his successful investment strides is considered and the fact that he is now worth about $88.4 billion, and seats on the boards of so many blue-chip companies.
Buffet has long believed in the value-based investing model, as he only invests in companies that exhibit solid fundamentals such as strong earning power, the potential for continued growth, and most importantly, selecting those with low or no debt.
Consequently, Nairametrics has sought the opinions of selected financial market experts on what Nigerian stocks the world’s most powerful investor may likely consider, based on his unique principles.
Angela Aya, Head, Institutional Sales at Alonati in an exclusive interview with Nairametrics spoke on key insights Buffett usually looks out for when selecting stocks.
“Warren Buffet’s investment philosophy centers around traditional yet intricate qualities like company debt profile, profitability, historical performance, exposure to commodities, product offerings, and historical dividend payouts.
“He is considered a value investor focusing on high dividend-paying blue-chip companies that show robust earnings characterized by strong balance sheets holding investments over the long term,” Aya said.
She elaborated on the impressive performance of the Nigerian Stock market in relation to the value they bring in the long haul by stating;
“Despite the Nigerian All Share Index outperforming the rest of the world in 2020, Nigerian stocks are relatively cheap from a purchasing power parity standpoint.
“Therefore, in a long-term strategic value investment play, bellwether stocks that offer stability, show profitability, and are resistant to systemic shocks will be the picks. They may not be trendy or might seem out-right boring, but they are reliable and proven to outperform given time. “
Adetayo Teluwo, a Portfolio Manager at one of Nigeria’s most valuable firms spoke on key metrics accustomed to Warren Buffet’s investment style;
Teluwo said, “I will focus on the long term, adopt a buy-and-hold mentality and prioritize blue-chip dividend-paying stocks that have proven their worth over decades.
Since I do not have bottomless pockets, I will make out time to shortlist based on ROE, D/E, and a blend of perceived ‘intrinsic value’
ROE = Net Income ÷ Shareholder’s Equity
Debt-to-Equity Ratio = Total Liabilities ÷ Shareholders’ Equity
Following Buffett’s investment principle, Adetayo went further by revealing the type of Nigerian stocks he would select. He said;
“According to Warren, if you aren’t thinking about owning a stock for ten years, don’t even think about owning it for ten minutes.
“If I had the conviction of Warren, these will be my top stock picks:
“Julius Berger, UBA, Zenith Bank, GTBank, Custodian, NAHCO, CHI Plc, NEM, Jaiz Bank, WAPIC, Unilever, GSK, MANSARD, Dangote Sugar, Afrinsure”
Silas Ozoya, President/CEO, SUBA Capital adds up to our remarkable respondents as he discloses that Nigeria’s stock market’s most liquid sector would be on Buffett’s top list, not forgetting his love for consumer staple stocks;
“Banking stocks for a start would be his first pick because he has a history of investing in financial institutions.
“So, he would go with stocks like Zenith Bank, GTBank, and FCMB because of profitability in the case of Zenith. Cutting edge technology in the case of GTBank, and versatile banking products in the case of FCMB.
“Warren Buffet is also big with daily consumables and beverages. So, he would go with the stocks of Nigerian Breweries Plc, Dangote Sugar, and Guinness Nigeria Plc.
“I’ve been following Warren Buffet’s investment strategy for a while and three things I’ve noticed are that he says the money would always exchange hands, financial institutions would always make money, and people would always consume daily consumables.”
- It’s key to highlight the rarity of Warren Buffet’s tenets in selecting stocks on the account that he has remained relatively consistent over many decades.
- Still, it remains critical for readers to understand that applying Buffet’s strategy takes a whole lot of discipline and patience.
- However, the few who have followed the founder of the world’s biggest conglomerate, (Berkshire Hathaway) on applying his analytical investment tools have had no regrets in the long term.
Bears take Nigerian stocks hostage, investors lose N82.4 billion
Investor sentiment as measured by the market breadth closed negative with 12 advancers and 47 decliners.
Nigeria’s all-share index fell further at the close of trading today, down by -0.40% to 39,364.67 points. Investors losses today stood at N82.35 billion.
- Year-to-date return and market capitalization settled at -2.26% and N20.5 trillion, respectively.
- Investor sentiment as measured by the market breadth closed negative with 12 advancers and 47 decliners.
- Across coverage sectors, the performance was bearish. The NSE insurance, banking, consumer goods, and oil & gas sectors dipped 4.04%, 1.54%, 1.47%, 64 basis points, and 0.65%, respectively.
- The flip side saw only the industrials improved marginally by 0.19%.
- UPL up 9.91% to close at N1.22
- MORISON up 9.09% to close at N0.6
- CAP up 5.26% to close at N20
- WAPCO up 3.59% to close at N20.2
- LIVESTOCK up 3.17% to close at N2.28
- FIDSON down 10.00% to close at N4.41
- NNFM down 9.97% to close at N6.32
- ENAMELWA down 9.95% to close at N19.9
- NEM down 9.95% to close at N1.72
- NCR down 9.91% to close at N3.09
Nigerian stocks ended the fourth trading session on a weaker note amid soaring oil prices prevailing at the U.S trading session.
- Today’s bearish trading session was inclined by sell pressure on consumer ticker, DANGSUGAR which lost -6.25%. JBERGER, ARDOVA, and UBA also declined by -7.88%, 9.85%, and -3.64%, respectively.
- Nairametrics expects intending buyers to seek the advice of certified stockbrokers.
Nigerian stocks plunge, as WEMA, CHAMPION, MANSARD slump
The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session.
Nigerian stocks wrapped up the week on a bearish note after the benchmark index registered its third negative close in the last five sessions.
- Sentiments notably picked up where they left off yesterday, as selloffs persisted in bellwether ticker – ZENITHBANK (-1.55%) as well as in Telco giant – MTN Nigeria (-3.28%).
- The 74 basis points pullback recorded today kept the All Share Index return firmly rooted in the red and also lowering the Year date returns to -1.88%.
- Save for the Oil and Gas (+0.25%) index lifted by sustained interest in OANDO (+2.99%), all other sectors closed in the negative territory.
- The Insurance (-2.32%), Banking (-0.48%), Consumer Goods (-0.40%), and Industrial Goods (-0.19) indices declined following price dips in MANSARD (-5.36%), ZENITHBANK (-1.55%), INTBREW (-3.65%), and WAPCO (-2.94%) respectively.
- The market breadth closed negative as LASACO led 17 Gainers as against 23 Losers topped by CHAMPION at the end of today’s session
- LASACO down 9.82% to close at N1.23
- MBENEFIT down 8.11% to close at N0.37
- COURTVILLE down 5.00% to close at N0.21
- OANDO down 2.99% to close at N3.45
- NAHCO down 2.70% to close at N2.28
- WEMABANK down 10.00% to close at N0.63
- CHAMPION down 10.00% to close at N2.52
- SUNUASSUR down 9.59% to close at N0.66
- AFRIPRUD down 5.74% to close at N5.75
- MANSARD down 5.36% to close at N1.06
Nigerian stocks ended the last trading session of the week on a bearish note amid profit-taking across the market spectrum.
- Downtrend was driven by price depreciation medium capitalized stocks amongst which are; WEMA, CHAMPION, MANSARD.
- That being said, Nairametrics envisages cautious buying on the account that certain market indicators reveal investors are taking some of their gains across the market spectrum.
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