Aguytrying wrote: But even you its a well known fact here in wazua that you have been shafted dearly by KK.
Thats a fact, u win here and lose somewhere else!
Yes and No. I could make this a snappy one-liner but I am more interested in the process/methodology.
Not losing money (lost opportunity cost is very high vs Equity, Safaricom, Britam, etc) but not very happy with the firm's performance to-date. KK needs to have made at least an EPS of 1/- for 2014.
Post hedging losses and post--Segman, I took a good re-look then attended all the AGMs, Investor Briefings and asked questions. I was persuaded by positive (biased) Kestrel reports. Then at 8-9, I went all-in banking on the future.
Could I be wrong? Yes. Why? 1) Price controls 2) Sales by biwott & friends (Chery) 3) Poor market conditions
I sold all my KQ at 13-14 & bought into KK at a 1.5 ratio.
I am not bothered with price movements (I like discounted shares just like Warren Buffett) as much as the trend in profit (& cashflow) movements. That's where I see my payoff as profits & cashflows steadily increase. The major shareholder still owns a huge stake thus his representatives are watching the numbers. Ohana has to prove himself a worthy successor to Segman. I don't know if Ohana has shares in KK but I will ask at the next AGM.
KK fell into a huge rut/hole but is getting out. Small 2013 profit. Larger 2014 profit. And hopefully, a much larger 2015 profit. Endgame is a buyout at a significant premium to the current price.
KQ isn't recovering. Constant pilot\staff battles. Insignificant ownership by staff/management/board. Huge losses since 2012 without gains in market share. NAV is dropping. Cash inflows from sale of assets eg land in Embakasi are used up to service (not reduce) debt.
P.S. I screwed up on not picking Safaricom vs KK based on perceived (but non-existent) competition from Airtel.
All in all, I am comfy with KK based on my projected EPS (low-ish PER), PB (based on my revaluation guesstimates vs Historic Book Value), reduced debt (and cost of servicing) and future growth in sales (increased volumes excluding OTS, trading and Jet-A1).
Could I be wrong? YES. How wrong? I estimate my downside over the next 3 years is limited to lack of profits not losses.
To paraphrase Warren Buffett, if I had 15bn, I would buy the entire firm. Lock, stock & barrel.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett