2008 Investing Highlights

This was me end of June, this is me today:

Kenya
Sold: In the money (NMG, TPS, ARM, NIC) & Out of the money (BBK, EA Cables)

Reduced: KCB

Switched to: Equity, Cash

Hold: Equity, AK, miniscule KCB (2,500 shares) & Safcom & Cash

TZ
Bought: Dar es salaam Community Bank

Zambia
Bought: Pamodzi Hotel

Theme has been to move from diversification of risk to concentration of gains. Has it worked? Yes and would have been even more fruitful if I had kept to one of my golden rules of never adding more shares unless the price of the said stock is lower than my average cost so far. I got punished for buying AK at Ksh33.50 thus driving my average for it to early 20s and Equity at Ksh301 and Ksh250 thus driving average to mid 120s.

Overall for the year: average i.e. below 30% gain. Had to rush out of BRIC nations just to stay in the money and NSE has been so-so but thankfully my offloads were all in July/Aug time.

Other investment decisions:
Good ones: Missed out on SIB’s private placement. Having opened a trading account and just about to send the funds to buy some shares at Ksh120, I once more request ed a copy of its accounts. Still not received even today. In the meantime, I now hear that the initial placement failed and subsequently the shares were retailing at ksh30!
Tough ones: After sweating to set up the investment club, I decided to move on because of strategic differences. So why I my still blogging as KCIG? Investment club changed its name.
Bad ones: Hesitated when was Equity was Ksh116…

Investing resource: Thanks Aly Khan for the live prices streaming. Some of my last minute price adjustments relied on the live feed.

Key learnings: Self-discipline, early bird mentality and thereafter liquidity and investors confidence are the key ingredients that turn good company/market fundamentals into investor bounty.

Monday shorts

Remember those days on the playground when you had that annoying kid who’d always pick his up ball and walk in a huff saying he didn’t want to play anymore. D&B are trying to pull-off that move. And people say the NSE/CMA don’t have any conflicts of interest?

A former boss once told me that success in the office is entirely dependant on your being able to shove out as much rubbish as you got. In more optimistic tones, this means being able to suggest what needs to be done for others to do. Right now, I believe I’m not doing that too well hence fewer posts.

The UK mortgage is a £1trillion dollar business. BoE is offering banks £50bn mortgage funding facility to allow them to increase their mortgage offerings (many have removed any fixed term products). On the same day of the announcement, RBS the 2nd largest announced a £10bn rights issue. Methinks, the bankers at BoE should be fired en masse.

Is your area at serious risk of house-price recession? The FT has designed a nice-little guide for UK.

Congrats to KCIG, we have our first-non- IPO double-your-money large position…

More about KCIG in business daily

More about Kenya Capital Investment Group in todays business daily,

http://www.bdafrica.com/index.php?option=com_content&task=view&id=2551&Itemid=5843

NSE: A review of H1 07

NSE closed down some 10% down on its 2007 opening position driven down by profit-taking by

institutionals, fear caused by closure of Francis Thuo and panic selling by speculative retail traders. Our group though kicking off investment half-way thru this period recorded an outperformance when compared to the index.

Business registration in Kenya

This site offers steps on how to go about registering your business in kenya.

http://www.bizbrokerskenya.com/Incorporations.html

Minutes of the Launch Meeting on 07 01 07

This is an abridged version of our minutes-members should have received a fuller version
1) Present:
Tony Maina (Chair)
2) Apologies:
3) Introductions: The meeting began with members introducing themselves. It is greatly appreciated that we have a very diverse club with a variety of professions and different levels of experience in terms of participation in the stock market.
4) Overview: An overview of how we envisioned the investment club to work was given and members invited to ask questions. This also touched on progress made in kicking-off operations. 5) Review of the KCIG Constitution: We reviewed the constitution section by section with amendments suggested for:
Article II (Section 2)-On Club goals: An additional goal was suggested and agreed as follows. To be a value-based network.
Article II (Section 4)-New Members: We can accept new members-subject to the 20 members cap. However as per above, we will need to define what we are looking for in a new member.
Article III (Section 1)-Meetings: Timing-It was suggested that it is very important that members are ON-TIME for meetings as a sign of respect for their fellow members. The club officials were tasked to ensure that meetings are kept to time and adhere to agenda. It was unanimously agreed that the monthly meetings will be held on the first Sunday of every month.
Article III (Section 1)-Meetings: Venue-given the cost of venues, it was suggested that the club could take advantage of the fact that has a ltd company which allows him to get of meeting venues at a lower cost. Njindo will investigate this further.
Article III (Section 1)-Meetings: Tactical meetings: Given the speed at which the markets, it was suggested that club should be able to hold tactical meetings to discuss urgent market developments that require us to act on. The meetings will be conducted via our blog, quick get-together or through email with all members being the opportunity to participate. Will add this to the constitution but will stipulate the need for a quorum.
Article IV (Section 1)-Club dues: It was suggested and unanimously agreed that member’s will set-up a standing order to the club’s bank account to leaving their bank accounts on 30th of each month.
Article IV (Section 2)-Investing conditions: It was suggested that we put a disclaimer on our blogsite attesting to our not being stock market advisers.
Article IV (Section 2)-Investing conditions: It was suggested that all members should have access rights to the blog so they can post their thoughts and to allow the club to it use as the first point of discussion on stocks. We should make this our primary point of discussions on stocks so that we can reduce the amount of time we spend in the formal monthly meetings.
Article IV (Section 3)-Investing accounts: Suggestion that we don’t require weekly accounts. Will hence strike off from the constitution.
Article V (Section 1)-Withdrawal of Interest-It was suggested that the present treatment of benefits for death/legal incapacity is unduly harsh and should be amended to give the beneficiary the right to liquidate former member’s holding or to wait until holding matures. Will amend constitution to reflect this new position.

KCIG and HM Revenue and Customs

The link below provides all the necessary information you need to know about running an investment club in the United Kingdom in relation to:

• Taxes
• The constitution
• Non-residency
• Declaration

http://search2.openobjects.com/kbroker/inldrev/inldrev/kbsearch?sr=0&nh=20&cs=iso-8859-1&sc=ir&ha=7&mt=0&qt=investment+clubs

Investment Clubs and the FSA

Just to reassure myself, I decided to check on what the FSA-UK's regulator of financial services had to say about investment clubs. As far as I can see, the only issue that touches on us would be with respect to money laundering i.e. that the bank or anybody else that we have dealings with has to know who we are "KYC" rules. And also that we must make sure that we don't give advise to anybody other than ourselves on what they should invest in. Anyway, I touch the relevant article for you to peruse at your leisure.
http://www.proshareclubs.co.uk/cgi-bin/proshareclubs/library/pagewiz.cgi?pg=/lib_money_laundering.htm

Agenda for the Launch Date

Hi all,
Here is our agenda for Sunday’s meeting.

Introductions
· Discussion of outstanding issues on the constitution-please bring a copy along.
· Signing of the constitution by members.
· Election of officials for the coming year.
· Selection of an additional member for account signatory purposes.
· Setting of goals for the year in terms of investment.
· Receiving feedback re any interesting stock picks at the Nairobi Stock Exchange.
ANO

Anybody who doesn’t have a copy of the constitution, please see below.

See you all on Sunday!

PS: Please let us know in advance if you can’t make it for this meeting.

KENYA CAPITAL INVESTMENT GROUP LAUNCH

Dear delegate,
You are invited to the KENYA CAPITAL INVESTMENT GROUP launch meeting.

Date: Sunday, 7th January 2007

Time: 2PM

Venue:
The Mitre (function room)
24 Craven Terrace
W2 3QH
Lancaster Gate.

Nearest station: Lancaster Gate, (Central line), Paddington or Queensway.
Buses: 94, 148, 274, 390.

Turn right out of Lancaster Gate tube and walk towards Notting Hill. Craven Terrace is second right.

For more information contact:

John: 07961879446
Or
Tony:

Or visit: http://www.mjengakenya.blogspot.com/

Our Constitution

The Constitution of Kenya Capital Investment Group

Article I
Formation of Club. The individuals signing this constitution are forming an investment club as its members. The club will be known as the Kenya Capital Investment Group (KCIG).
Article II
Section 1 - The purpose of the club is to pool member resources to invest at the Nairobi Stock Exchange and other stock markets as the opportunity arise.
· The Club shall neither deal on behalf of, nor advise any persons other than the Members, in relation to investments of any kind, nor arrange for any persons other than the Members to deal in investments.
· The club shall not act as a lender or borrower to any member or other external parties
Section 2 - The club goals are as follows:
Pool finances and ideas in investing in stock markets.
To become more knowledgeable, astute investors.
To create a stock portfolio with sustainable gains, dividends that will succeed in meeting our needs
To double our initial investment every 3 years.

Section 2 - Duration.
The club will begin on January 7th 2006 and will continue to operate year-round and for an initial period of 5 years, at which point, members will vote on whether to continue indefinitely. It is a condition of joining this club that members will commit to invest continuously for the initial 5 year period.
Section 4
New Members. The club may admit additional members at any time by two-thirds consent of all members. As a condition of membership, all members agree to be bound by the terms of this constitution and by all resolutions adopted or to be adopted by a vote of the members. (A specific requirement of every member is that he/she must have access to an operational email account and internet and make a best efforts attempt to access that account at a minimum of at least once per week.)

Non-assignability of Member’s Interest. No member may assign, transfer, pledge or hypothecate his or her membership or interest in the club without prior notice and approval at the discretion of the majority of members. Any attempt to do so shall be construed as such member’s election to withdraw from the club.


Article III
The Club will be governed by the decision of a majority of Members present and voting via regular meetings.

Section 1 - Meetings.
Meetings of KCIG will be held so that members can:
· Discuss and agree forthcoming investments
· Review performance of prior investments
· Review accounts
· Bring any other issues to the attention of the club
Meetings will be held on a monthly basis except in emergency circumstances.
Emergency meetings will only be held if agreed to by two-thirds of members
Additionally, the club will also hold an annual general meeting. The AGM will
· Elect officials for the forthcoming year
· Review past performance and set targets for the forthcoming year
· Review performance of and vote on our banker and stockbroker
Meetings will only be held if two-thirds of the members are present excluding those present by proxy.
Meeting notifications will be done during the prior meeting and club’s website and a subsequent reminder two days before the next meeting.
All club members are expected to participate equally in the management of the club and attend no less than 50% of Monthly General Meetings per annum. A member who flouts this rule can have their membership withdrawn subject to a two-thirds majority vote.
The club’s officials shall meet periodically to review the administrative functioning of the club. The officials shall report back to the membership if necessary either through email, website or at the nearest MGM. Scheduling of officials’ meetings is at the discretion of the officials.
Article IV
Section 1 - Club dues.
Each member must make monthly contributions of a minimum amount of £100 to the club portfolio by or on the respective month’s MGM.
Members can make their contributions in advance (limited to 12 months)-with agreement from tow thirds majority vote.
Each month’s contributions will be kept in the Club’s bank account, until the club’s monthly meeting when investment decisions will be taken.
If a member is delinquent in his or her monthly contributions for a period of more than 3 months without a reasonable explanation, their membership may be terminated from the club by a 75% majority vote of the members. The terminated member will receive an amount subject to the terms described in Article V of this constitution.
Members are responsible for providing up to date personal or professional information that may affect the club, to enable effective and efficient running.

Section 2 - Investing Conditions. Upon receiving membership to KCIG, each member will adhere to the following rules:
1. All investing decisions will be decided upon by a two-thirds majority vote.
2. Decisions related to the investment of the previous month’s collected dues will take place during each MGM unless situations outlined in Section 4.5 request otherwise.
3. Each investment shall be protected by a capital gain/loss limit only if the club decides to do so.
4. Each member understands that, regardless of their opinion on any vote, the majority decides the use of each member’s contributions.
5. If any member is massively in disagreement with any decision passed by a vote, that member may elect to terminate membership in KCIG in accordance to the guidelines set out in Article V.
Section 3 - Investment Accounts.
· There shall be maintained in the name of each member, a record of that member’s stake in the portfolio.
· Any increase or decrease in the value of the club’s investments on any valuation date shall be credited or debited, respectively, to each member’s capital account in proportion to the value of member’s capital account on said date.
· Dividends shall be allocated to the record of each member’s stake in the amount appropriate for that member’s particular holding.
· The value of each member’s account shall be communicated weekly via email based on Friday market close.
· Uninvested contributions for any given month shall be added to the clubs value and apportioned appropriately.
Section 4 - Member’s Stake. Members have equal voting rights regardless of the size of their stake in the club’s portfolio. Each member’s stake shall be limited to 20% of the portfolio’s total value. Members’ stakes shall be valued on the previous business day to MGM.
Section 5 - Annual Accounts: On the anniversary of the club’s first meeting, a full and complete account of the condition of the club shall be made to the members.
Section 6 - Bank Account: The members or club officials shall select a bank for the purpose of opening a club bank account. Funds deposited in said account shall be withdrawn only if the withdrawal is counter-signed by 2 out of the 3 acting officials plus an additional member.
Section 7 - Broker /Custody Account: The members will select a broker and enter into such agreements with the broker as required, for the purchase or sale of shares/bonds or other market instruments. All securities owned by the members shall be registered in the club name unless another name shall be designated by the members.
Section 8 - Liability. No member or official of KGIC is liable for any club member’s financial loss that may occur as a result of the club’s investment decisions.
Section 9 - Administration fee. By a majority vote, the club may agree on an annual non-refundable payment to the club to defray the club’s administration costs. The annual payment amount will be. If a member is delinquent in his or her annual administration fee for a period of more than 31 days unless approved by the club’s officials, the member may be terminated from the club by a more than two-thirds majority vote of the members. The terminated member will receive an amount subject to the terms described in of this constitution.
Section 7 - Club Structure. By a majority vote, club members may agree to have the club treated as a “ltd company” for tax purposes or in the event of participation in IPO should such an action be necessary.

Article V
Section 1 - Withdrawal of Interest:
On leaving before the expiry of the 5 year period, the member will receive the lower their contributions or their holdings in the club, less any transactional costs. Transaction costs are costs incurred in disposing some of the club holdings if the need arises to do so. Their refund will be processed within four weeks of their departure.
The member can also choose to leave their holding intact until maturity i.e. end of the 5 year period.
They will also have the option of inviting a substitute member to take over their investments with prior consent from a majority vote.
Death or legal incapacity of a member will be considered a voluntary withdrawal. Members will nominate a beneficiary for such an eventuality. Normal rules of withdrawal will suffice unless decided otherwise by two thirds of the membership.

Article VI
Officials.
xxxxxxxxxxx: Club Chair
xxxxxxxxxxx: Secretary/ Treasurer


Official duties.
Chairman/woman:
Chair club meetings ensuring strict adherence to meeting’s agenda and timing
ensures members are updated on club account,
Act as club representative in meetings with external bodies and especially banker, stockbroker and others as required
Assist on the treasury responsibilities
Assign researching responsibilities to members
Will have signing authority on withdrawals

Secretary/ Treasurer:
Will take down minutes in meetings and distribute to members.
Will organise the regular meetings i.e. venue and timing
Will oversee club finances,
Submit investment requests
Will summit monthly and year-end portfolio valuation reports
Will deputise for the club chair
Will have signing authority on withdrawals

Compensation. No official or other member shall be compensated for services given to the club, except for reasonable and necessary club expenses authorized by a two-thirds majority vote of the members.

Elections
· Elections will take place at the AGM
· Consecutive or multiple terms are acceptable.
· Voting
i. Nominations for officers will be held the day of elections. Self- nominations are acceptable.
ii. Eligibility
o Candidates must have been active members in the club for
o In order to partake in the voting process, members shall have attended at least one-half of the regular meetings
iii. Votes will be cast on paper in order to maintain anonymity.
iv. Each candidate will give a short speech prior to the casting of votes.
v. In the event of a tie, unless candidates concede the position to opponents, each will serve for a period of six months?




Article VII

Amendment of Constitution and Dissolution. This constitution of KCIG may be amended or KCIG may be dissolved upon a two-thirds affirmative vote of the entire membership at any regular or special meeting, provided that a written notice of the proposed amendment or proposed dissolution has been given to each member at least fourteen (14) days prior to the meeting. On dissolution, all the club’s debts and expenses will be paid first, and the club’s remaining assets will be distributed to the members in cash or in kind, or partly in cash and partly in kind, apportioned in accordance with the membership interests of the members.

IN WITNESS THEREOF, the founding members have signed and executed this Constitution of KCIG the Seventh day of January ,2007 , at London, UK.

Name Signature Passport/Id Number
John Maina ………………………… ……………………
………………………… ……………………
………………………… ……………………
……………………….... ……………………
………………………… ……………………
……………………….... ……………………
………………………… ……………………
……………………….... ……………………
………………………… ……………………
……………………….... ……………………
………………………… ……………………
……………………….... ……………………
………………………… ……………………
………………………… ……………………
……………………….... ……………………
Tony Maina ……………………….... ……………………


THIS AGREEMENT is made the seventh day of January 2007 with revisions on the following dates:

Why an investment club?

The idea of forming Kenya Capital Investment Group was inspired by the recognition that as investors that the returns at the NSE were superior than those at the London Stock Exchange and investing in UK property. However the risk involved was also higher because as individuals, we could probably only invest in one stock at a time. Added at to this, the recent upsurge in the number of investors at the NSE has meant that stockbrokers can’t cope and are hence cherry picking customers based on the amounts the customer is investing. An investment club will allow us:
-Pool together our resources in a way that in the long term we should be able to invest in other projects
-Diversify our risks and thereby improve our returns
-Pool together our ideas thus helping us become better investors

About Kenya Capital Investment Group

Who are we?
We are a group of Kenyans who recognising the need to go beyond remittances to our families back home now want to invest in the Kenya's stock exchange. In doing this, we are challenged by companies such as Transcentury Ltd formed by a group of 29 guys who back in 1996 got together with each of them donating around Ksh1m with their goal to create wealth. Today, their net worth is over Ksh1bn; they won EA Cables a listed company at the Nairobi Stock Exchange and several other companies and are market movers.

Our Vision

Sow well, reap well.

Our Mission

That by investing as a group in the Nairobi Stock Exchange, our individual resources, strengths and preferences in investing in shares, will help us achieve a well-balanced and diversified portfolio of stocks bringing with it good returns and mitigating against the risks of specific stocks.