I am a fan of Warren Buffett. He buys all sorts of businesses.
- Some businesses can stand on their own. They may not grow their profits by much every year but are CASH POSITIVE. He uses this cash to buy other firms.
See's Candy is an example.
- Some businesses require massive (new) investment eg BNSF (railway) to create a source of long-term POSITIVE CASHFLOW.
- Some businesses are cashflow neutral while growing in size & profitability like GEICO (Insurance). They use the profits/cash to grow larger until profitable growth is 'maxed out'. Then start paying dividends.

HB needs to follow WB's philosophy not Merali or Matu's thieving ways.
Run the businesses for long-term CASH GENERATION not loss-making size like the crooks at KQ did.

@Ebenyo - Berkshire, Centum and FTG are 'conglomerates' ... In other words, they are CORPORATE representations of most individual investors.

You @ebenyo are a conglomerate. You probably have shares, land [not a farm], a farm and cash/bonds. You do not just pick one but look around for value and diversification.

Conglomerates grow out of an individual's initial investment. I think for Bangera, who currently owns 80% of FTG but owned 100% at one time, it was first the Roto Tanks [according to the bio] then beauty and finally foods. Some have performed better than others. Some will perform better than others. The challenge for HB is to identify and invest in the BEST businesses.

Centum's history is different but as ICDCIC it invested in many businesses and not all did well. Kirubi took it over and changed the name to Centum. Mworia chose "Real Estate Development" as the core business but Centum has substantial stakes in many Kenyan businesses including finance (Sidian, Platinum), Beverages (Coca-Cola), etc.

Warren Buffett bought Berkshire Hathaway [a cloth mill business] but started investing in any business that made sense to him (& Munger) especially Insurance. When he felt insurance had 'matured' (or getting very competitive) he started buying industrial concerns like Marmon, BNSF (transport) and Precision Castings. He also owns many other businesses that are very different from each other. From manufacturing high-tech airline parts to underwear.

Can Bangera continue PROFITABLY growing FTG's businesses?
Can he do so without coming to shareholders for a Rights Issue?
Can he do so without over-burdening FTG with debt?
Does he have the foresight (and luck) to pick the right divisions to promote with additional cash for expansion?
Would he be amenable to building up and then selling off a division e.g. beauty to another firm at the right price?
Would he be amenable to merging a fully-owned division eg Roto Tanks with a competitor to gain scale but own only 40% & losing control of a bigger entity?

It's a bet on the entrepreneur... As an EXTERNAL investor one has to be careful. After all it is our money.
I have been burnt back in the day on Olympia.

Well said by @vvs. Small companies like FTGH are for savvy investors, especially guys with resources to do a due diligence and launch a take over bid.

A portifolio investor is too exposed because of weak governance structures. Decisions of management do not necessarily align with interests of portifolio investors. Case in point is Meralli, Somens, CMC, rogue DJ, Home Afrika, Olympia.

Secondly, the cost of expansion capital is higher for small companies than the bigger companies eg Centum and HFC get cheaper corporate bonds and deposits from their banking arms while Home Afrika struggles with expensive bank loans.

Cost of capital and weak governance has stunted firms like Hutchings Biemer, Express Kenya, Car and General, Marshalls EA, Olympia.
A portifolio investor is better off with Centum which has better governance structures, access to cheaper capital and now trading at 0.69 of NAV.

Great lessons there. Thanks for sharing.

What's the Sameer Business Park story? I missed that.

And the Firestone IM, what did you find?

It's yawning for buyers @ 4.65

I swear I am losing it! Have they released 1H 2016 results?

selling spree!! my order at 4.30 just completed!

Merali reloaded

NBV= 2.54 EPS =1.1 PE = 3.909 DPS = 0

based on the above, i would say that it is still trading at a premium. Can only consider it at sub 3 bob

Manabii halisi wa wazua