Innovictor
New Member
Stock investments could be one of the smartest ways to diversify your investments if you have already bought into real estate and other investments. Stock investments allow you to have a hand in every kind of investment pie because you can buy shares in any company, in any sector, if the business fundamentals are right for your investment strategy.
Yesterday, Access Bank Plc announced that it has secured the approval of the Securities and Exchange Commission (SEC) to proceed with a proposed raising of N52.6B in share sales towards infrastructural development, expansionist plans and increased lending power. Access Bank is on track to sell shares to existing shareholders by way of Rights Issue of 7,627,639,636 shares of 50 kobo each at N6.90.
The issue of the new shares, which was approved by the shareholders of the bank last October, will close on March 4. It might interest you to know that new ordinary shares will be offered at a ratio of one new share for every three shares held by existing shareholders of Access Bank.
Access Bank Isn't Attractive at the Moment
To start with, shares of Access Bank are currently trading in a range of N5.25 – N5.58 per share; hence, the stock trades at a discount to the N6.90 issue price of the new shares. In essence, you'll be better off buying shares of Access Bank at the secondary market at the highest intraday-high price of N5.58 than buying the newly issued shares at N6.90.
Secondly, the shares of Access Bank have spent quite a great deal of time in negative territory in the last one year. The chart below shows how the shares of Access Bank Plc have traded in comparison to the NSE All share index in the last one year.
You will observe that shares of Access Bank recorded a decline of 44.95% in the last one year and a N100,000 investment in the stock as at January 27, 2014 will be technically worth N55,050 now. The worst part is that the shares of Access Bank have largely underperformed the broader market as the NSE All Share Index only holds a 28.50 decline within the same period of one year.
The Contrarian View
I have only examined how the technical analysis stacks in favor of a bearish position in Access Bank and a look at the stock fundamentals might paint a different picture entirely. For instance, one might argue that shares of Access Bank are currently trading at a mean of the 52-week trading low of N4.50 and a 52-week trading high of N10.18. Hence, it might be easy to posit that you are buying shares of Access Bank at a discount.
Final Words…
The technicals are already stacked against Access Bank and there's no point in poring over the business fundamentals. The only way I recommend that you buy shares of Access Bank now is if you have a long-term investment focus and you'll be content to forget about your investment in the shares of Access Bank for the next 10 years. If you can't do that, you have no business buying the shares of Access Bank now.