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Are Companies Listed On the Barbados Stock Exchange Seriously Undervalued and Vulnerable To Cheap takeovers?

Submitted by Dr. Justin Robinson
Dr. Justin Robinson

Dr. Justin Robinson

On Tuesday September 22 2015, approximately 20% of the shares in Banks Holdings Limited (BHL) were acquired by SLU Beverages Limited (‘SLU’), a St. Lucian company. When combined with BHL shares […]already held by SLU,

the above-mentioned transaction resulted in SLU owning approximately 40% of the shares in BHL. SLU is majority owned by Companhia de Bebidas Das Américas – AmBev (‘AmBev’), which is controlled by Anheuser-Busch InBev. AmBev is the largest brewery in Latin America and the fifth largest in the world. Ambev operates in 14 countries in the Americas and its portfolio includes beers like Antarctica, Brahma, Bohemia, Skol, Stella Artois and soft drinks like Guaraná. As the largest PepsiCo bottler outside United States, it sells and distributes PepsiCo products in Brazil and other Latin American countries.

On September 22 2015, Ambev purchased 13,170,728 BHL shares traded at $4 per share, paying approximately BDS$52,682,912.00. On that date, BHL’s share price on the stock exchange was BDS$2.49 per share. AmBev therefore paid a substantial premium of about 60% over and above the most recent stock market price on the Barbados Stock Market. However, BHL’s Balance Sheet for the nine months ended May 31 2015, valued the shares at BDS $4.81 each. The Balance Sheet reports shareholders’ equity of BDS $311,812,000, and with approximately 64,853,760 shares outstanding, the book value per share was approximately BDS $4.81. Therefore, on September 22 2015, BHL’s balance sheet valued the shares at BDS $4.81 each, the Barbados stock market valued the shares at BDS$2.49 each, while AmBev was willing to pay BDS $4.00 per share. Is AmBev really paying a premium or getting a steal of a deal? They are paying sixty percent more than the stock market valuation, but paying a 20% discount on the book value of the company.

The balance sheet value of the shares or what is termed the book value per share, is typically viewed as a backward looking measure based on the book value of the companies’ assets and liabilities. It does not account for the market value of assets and liabilities or future earnings potential. The stock market valuation is supposed to do that, and reflect the book value plus future growth potential. When you sell a company you not only sell the company as is but you also sell the future growth potential, and investors normally expect to be compensated for such, and buyers typically pay a premium.

On the surface the stock market price of BDS$2.49 compared to a book value of BDS $4.81 suggests that investors on the Barbados Stock Exchange view the future growth potential of BHL as being negative. Companies’ shares being sold at prices below their book values is extremely rare on most stock markets and is typically associated with companies in financial distress and facing bleak futures. I doubt investors see a bleak future for BHL and negative growth potential. I think the low market value is due to the infrequent level of trading on the Barbados Stock Exchange. Stock prices only change when trades of a certain volume are made. The infrequent trading means that stock prices are not being regularly updated to reflect the current book value and future growth potential of companies. Stock market prices only come close to reflecting the true value of companies if there is sufficient trading by informed investors. I am sure we have lots of informed investors in Barbados and the Caribbean, what we appear to lack is sufficient trading, or a group of what economists call “marginal investors”. Marginal investors are investors who are willing to buy and sell shares regularly at prices based on their estimates of the future direction of a stock price. Marginal investors are typically institutional investors such as mutual funds, insurance companies and other professional investors.

Why with so many informed and sophisticated institutional investors is there such infrequent trading on the Barbados Stock Exchange? Is this lack of marginal investors leaving companies on the Barbados Stock Exchange seriously undervalued? If this is so, investors are unable to reap the full benefits of their investment and companies are vulnerable to cheap takeovers. Why should I buy shares when market prices only approach realistic levels when there is a takeover bid? Why should local companies be sold at relatively low prices because of consistent undervaluation on the local stock exchange? Oh for some marginal investors! There are many more companies on the Barbados Stock Exchange trading at below book value.

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198 Comments on “Are Companies Listed On the Barbados Stock Exchange Seriously Undervalued and Vulnerable To Cheap takeovers?”

  1. Atrue Freeman October 8, 2015 at 5:59 AM #

    Still involved with both BHL and Massy
    http://www.thebhlgroup.com/page.cfm?p=leadership
    http://www.massygroup.com/About_Us/Board_Members/GAnthonyKing.aspx

    Like

  2. NorthernProwler October 8, 2015 at 6:12 AM #

    @Gabriel. Ever heard of closing the stable door after the horse has gone?
    Any Bajan or Bajan corporation can BID to buy shares via the BSE.

    Like

  3. Atrue Freeman October 8, 2015 at 6:16 AM #

    Lessons for BHL directors and shareholders – 3rd proposal may not be enough

    Brewing Giants Joust Over Tie-Up
    SABMiller says AB InBev’s $104 billion proposal ‘very substantially undervalues’ the company

    http://www.wsj.com/articles/ab-inbev-makes-revised-proposal-to-buy-sabmiller-1444199046

    Like

  4. MoneyBrain October 8, 2015 at 8:01 AM #

    All these big Businesses including “Professional” Services firms talk a great game until it makes sense, from their limited pov, to break all the Strategic directions and “long” term thinking. My son was promoted in record time and trained with one such firm that wanted to grow here in TO—–until the 2008 situation hit and all Strategic “thinking” vanished and over a hundred youngsters were let go regardless of capability/ promising future. Dump salaries so the Partners bonuses/ pay is not effected!

    The solution in Bim is to develop DRIPs ie Dividend Reinvestment to accumulate shares at very low costs. We could innovate other methods to increase share ownership widely at very low cost.If another Group of major investor Corps are interested but are looking for $20-40 mn surely financing could be arranged by some means. Interestingly I did an analysis of several BSE stocks, back in 1978 on behalf of my father and Banks was the only one worthy of investment.

    While I tend to believe in free enterprise the reality in a small market is that there is only one Brewery and if these Inbev people are likely to mess with the Brand quality etc then it requires some form of protection. Inbev has conducted themselves somewhat crazily with AB in a very competitive massive market like the USA, so we must assume they will run roughshod over lil Bim! But surely a couple $$$$$$$ to Pols will pave the way to mayhem? The question is what will be the price?

    Like

  5. Bush Tea October 8, 2015 at 8:08 AM #

    David
    “What prevented Barbadian companies from bidding?”
    ++++++++++++++++++++++++++++++++++++
    When the ‘inside’ players on the Board (with full access to all information), are not playing on a level playing field…. it would be a VERY rich, or very foolish investor that will try to outmanoeuvre them…

    There is method to the madness.
    1- Acquire enough equity to get on to the Board with full access to information.
    2 – Influence policy and appointments etc to grease the way for your long term strategy
    …the rest is just PR

    Meanwhile, most of these other ‘Barbadian Companies’ of which you speak are busy playing their own shenanigans…

    Like

  6. Bush Tea October 8, 2015 at 8:12 AM #

    Shiite man!!! Money Brain….
    Why could you not have taken over your father’s business here and stayed around?
    …you actually got sense….

    Like

  7. MoneyBrain October 8, 2015 at 8:18 AM #

    Bushie, full access to information.??????????????????

    Bushie the info does be real outdated and in some cases which set of books are you going to be privy to ?

    Bushie, I correctly did not want to become a Victim of political corruption and stupidity! All the Bajan Statesmen done dead already!( Dippa ainy Skippa, Cammie gone, Grantley and Tom playing Poker somewhere———)

    Like

  8. Bush Tea October 8, 2015 at 8:58 AM #

    @ Money B
    That situation (outdated information /cooked books) applies to outsiders and to Board lackies, but the INSIDE players are the ones who engineer the cooking and who have the access…. and who decide WHICH set of books to hand over to whom…

    LOL
    did you compare CAHILL statements of accounts for the bank …with that for the taxman?
    …same shiite bout here….
    So when it comes time for wage negotiations, declaration of dividends, payment of taxes ..one set of accounts come out showing the perilous condition of the ‘poor’ company…

    When they are seeking financing or looking to impress investors, a whole different picture emerges…
    Looking on from OUTSIDE the typical brass bowl decides to put his savings in the bank…cause um don’t make no sense just handing it to these crooks.

    “…..Victim of political corruption and stupidity! ”
    ++++++++++++++++++++++++++++++++++++++++
    You are talking shiite Money B…

    What victim what???!!
    NOBODY bout here could victimise you…. NONE.
    Skippa this is Barbados, and you possess the three most critical attributes for success..
    Yuh got sense
    Yuh got money
    ….and yuh white

    Added to that yuh seem to be honest and straightforward….
    LOL
    ….only difference between you and Bushie’s top-man “Lowdown Hoad” is that he ain’t got no real money🙂

    Like

  9. David October 8, 2015 at 9:07 AM #

    @Bush Tea

    Yours is the response we wanted to extract. Changing the mindset to invest in shares is more than the offer and price.

    Like

  10. Hants October 8, 2015 at 12:12 PM #

    “With Republic now controlling about 25 per cent of corporate business in Barbados and 27 per cent in retail banking, De Souza said the aim was to continuing growing this share in 2016.

    http://www.nationnews.com/nationnews/news/72984/banker-brighter-days-ahead#sthash.2OHJaEHY.dpuf

    Like

  11. Gabriel October 8, 2015 at 12:52 PM #

    So King was a Massy man.Strategically placed like the proverbial fox in the BS&T henhouse,did the henchman thing and moved ownership and control to Trinidad with the connivance of the former jehovah witness owned tropical battery man Rallan Fields.Since King is notorious for wrecking local ownership of bajan companies,he wheels and deals in the customary fashion,borrows with the intention to repay with ownership on a platter at a future date,determines that now is a good time,seeing that the poor rakey government is strapped for foreign exchange,gets the buy in of the MoF,and makes his move.Pretends to buy time with a late notice to shareholders,have AmBev say a few words on DLPTV and the deal is consummated.The idea of fiduciary trust and business confidence do not exist in these boardrooms where tired old worn out bajan whites have the final say.

    Like

  12. Bush Tea October 8, 2015 at 12:54 PM #

    @ gabriel
    EXACTLY !!

    Like

  13. MoneyBrain October 8, 2015 at 1:15 PM #

    The Golden Rule?

    He who owns the Gold makes the Rules!

    How much “Gold” do U own?

    How much current Consumption, over many years, have U forgone to become better off financially? I drink only a lil alcohol, always ensure I am eating well but at advantageous cost, negotiate major purchases to the bone, dont buy what everyone else is willing to pay big costs for ie Honda/ Toyota NOT Merc/ BMW!, always educate myself thoroughly————– ad nauseum! NEVER pay high prices! Always position yourself to WIN!

    Like

  14. Atrue Freeman October 9, 2015 at 12:49 AM #

    http://epaper.barbadostoday.bb/ (pages 3 and 9)

    Like

  15. NorthernProwler October 9, 2015 at 2:21 AM #

    The standard diatribe which occurs upon most takeover offers. AmBev could prove to be a star or a rogue. Right now this is about process. The SLU ownership of 40% automatically kicks in the takeover regulations. The BHL board has a responsibility to advise shareholders.
    Yet, for transparency, doesn’t Chairman Tinks need to step aside? I mean he is also a director of Massy, and it is no secret Massy sold the large block to SLU. If Massy saw fit to sell their block at $4, how can he now as Chairman of BHL recommend to other BHL shareholders, they NOT tender their shares?
    Plus Massy companies are heavily involved in the distribution end of BHL. Doesn’t one have a multi-year deal with Pine Hill?
    Some other shareholders are on the Board. Time for one or more of them to offer their opinion.

    Like

  16. Atrue Freeman October 9, 2015 at 6:42 AM #

    Lessons for BHL directors and shareholders

    http://www.wsj.com/articles/ab-inbev-responds-to-sabmiller-rejection-of-takeover-offer-1444298479

    Like

  17. Hants October 9, 2015 at 11:43 AM #

    “Labatt buys Mill Street Brewery
    the Labatt’s acquisition of the privately held Mill Street will help expand the brand into new markets, including Quebec.”

    “Labatt — once an independent giant in Canada’s beer industry — was bought in 1995 by a Belgian group that has continued to grow by buying and merging with other companies around the world. The group, now called Anheuser-Busch InBev, is currently attempting to buy the world’s second-biggest beermaker SABMiller.”

    http://www.thestar.com/business/2015/10/09/labatt-buys-mill-street-brewery.html

    Like

  18. Due Diligence October 9, 2015 at 1:01 PM #

    @Hants

    Thanks for the link. I had not read it.

    The comments sound like those here on BU.

    But that is the law of the jungle in an open capitalist economy.

    Capitalism is not perfect, but what system is better?

    Let the shareholders decide.

    If Barbados wants to encourage FDI, it has to be seen a place where the investor is free to sell to the highest bidder.

    BTW – I just did a search of the (Ontario) Beer Store website for Banks and got this result: “Your search returned 0 results. It’s okay, don’t panic. Crack open a cold one and try
    again”

    See http://www.thebeerstore.ca

    Maybe AmBev will be able to get in the Ontario Beer Stores

    Like

  19. NorthernProwler October 9, 2015 at 8:17 PM #

    Off topic, but. If you check the Lcbo site you will find Banks, albeit discontinued. You are now tackling distribution in oligopoly prone Ontario (actually all provinces except Alberta) which is an issue unto itself. You won’t find cockspur either.

    Like

  20. Atrue Freeman October 10, 2015 at 3:03 AM #

    Does the Financial Services Commission have the authority to examine a transaction that prompts a takeover bid, given the influence of that transaction on the takeover process? For example, is it illegal to make private side deals so that the published price for such a transaction may not be the full price agreed and would such an arrangement attract the attention of the Commission? And if the Commission has that authority, does it act on its own initiative or only at the request of an interested party?

    Like

  21. David October 10, 2015 at 5:33 AM #

    @Atrue Freeman

    Can you identify a regulator anywhere who is not empowered to act in the face of wrong doing / irregularity?

    Like

  22. Atrue Freeman October 10, 2015 at 10:40 AM #

    Then perhaps journalists will examine that aspect of this transaction with the FSC if the valuation shows that the $4 is unreasonably below the appraised value.

    Like

  23. Hants October 10, 2015 at 11:26 AM #

    Toronto, Canada.

    Just bought a bottle of

    BARBADOS HOT PEPPER SAUCE, imported by Shah Trading, product of TRINIDAD & TOBAGO. Note that I already have a bottle of Aunt Mays in the fridge.Used to buy Windmill but can’t find it.

    Just one example of the Trinization of Barbados.

    I also bought Shirley biscuits, MADE IN BARBADOS by Wibisco – Bermudez ( a Trinidadian owned company )

    Like

  24. David October 10, 2015 at 11:29 AM #

    @Hants

    It is what Dr.Don Marshall refers to as the denationalizing of Barbados.

    Like

  25. MoneyBrain October 10, 2015 at 11:52 AM #

    It is NOT easy when you are a very small population next door to a much larger pop floating on Oil! Luckily the Trinis and others make mistakes by buying overpriced and non-performing assets. Think Almond! Think about all the expensive homes that were selling at $2mn which the Banks giving way at $600k! Had people kept their $$$ safe and conservative at the top of the cycle they would now be in a position to gobble up foreigners errors. Same thing happened when Japan overpaid for US assets in the 1980s and early 1990s. The half price Sale always comes eventually. I buy my houses AFTER the Crash!

    Many Canadian Corps are owned by US interests. Some work well for the US and Canada and some FAIL! The mighty Merril Lynch retail, withdrew twice from Canada in the last 40 yrs.

    When the Chinese wanted to buy Potash Corp we correctly said NO! Why? It is the biggest Corp in a business we are leaders in and the future is very bright for agriculture/ food crops with an ever rising Global population. However, we would allow China to buy into Oil/ Gas as we have many Corps in this sector and could benefit from working with China on exports, some of which would benefit many other Corps.

    Like

  26. Bush Tea October 10, 2015 at 11:54 AM #

    @ Hants
    “I also bought Shirley biscuits, MADE IN BARBADOS by Wibisco – Bermudez ( a Trinidadian owned company ”
    +++++++++++++++++++
    You don’t get it yet Hants…?
    Was those biscuits not next to Sweet drinks labeled “MADE IN TUNAPUNA by SOLO( a Trinidadian owned company )”

    Barbados / Tunapuna / San Fernando …. no difference….🙂
    ..all Trickidad.

    Like

  27. Bush Tea October 10, 2015 at 12:11 PM #

    @ Money Brain
    …not a good example.
    Barbados is NOT Canada.

    After the Trinis got hold of Almond they did NOT lose anything in the fire sale…. by that time they had milked it dry and more than recovered their investments…
    …Management fees
    …Tax avoidance
    …profits declared
    …and just using their management prerogative to move funds to head office.

    Barbados is the BIG loser …now having a rotting liability where once we had a potential ‘Sandy Lane’ type asset.

    Same shiite with BL&P.
    By the time EMERA decides to ‘move on’ that will be a collection of old rusty machines from the 1980’s and a liability that we will have to pay someone to demolish,; borrow money to rebuild; AND then find other (scheming) foreigners to run (cause we have not been DEVELOPING local expertise) … meanwhile, have a good look at the levels of PROFITS being raked in yearly from BL&P even while investment in new equipment is NIL, growth is negative; and the competition from renewables is high.

    Banks Holdings is next in line…
    Buy it for ‘whatever’…
    Close down any competition to foreign products
    Close down any local ‘break-even’ schemes done in the national interests ..milk /juices..
    Reduce investments / repairs / staff development etc ..and increase profits
    Recover ‘whatever’ was invested …plus
    Convert the brass bowl idiots from producers to consumers…

    NO ONE in Canada would allow such clear rape of unique national assets by foreign mercenaries ….
    …well – except for that ingrunt Bajan brass bowl wunna got up there …🙂

    Like

  28. The Observer October 10, 2015 at 12:31 PM #

    I have tried to refrain, but allow me to enter this discourse.

    Barbados is a very small island and on the world scene is a very small economy. Growing up in Barbados, I remember how walking from St. Lucy to Holetown was seen as the equivalent as walking from New York to Miami. It is not.

    I am not an economist, but I know that a large multinational company can enter or market and buy stocks and having bought these stocks they can act in such a manner so as to depress the stock prices. Without adequate ‘governmental’ controls, we will find local companies on the stock market being valued at prices well below their truth worth,

    Until we abandon the fallacious thinking that company like a BHL can be considered the equivalent of an Apple we will have given away our birthright. It is time to abandon the free market policies and impose restrictions on acquisition and mergers. A fly does not negotiate with an elephant. Our notion of size is limited by or smallness.

    I love Barbados and Bajans, but sometimes I consider our exchanges as nothing more than an exercise in self stimulation and verbal masturbation.

    Stop it. Stop the nonsensical exchange and address reality. You are a pimple on elephant butt. You are at your weakest, when you think you are the elephant.

    Like

  29. The Observer October 10, 2015 at 12:38 PM #

    as a national who is based in the US and who plans to stay there, I try not to interject my opinions on local; discussions. But sometime I get frustrated by the circular debate.

    Like

  30. Atrue Freeman (? for Caswell) October 10, 2015 at 12:49 PM #

    Caswell, the current credit union model clearly attracts net borrowers, but appears to have very little to attract net depositors, notwithstanding that the recent reduction in the commercial bank interest rates has provided the credit unions with a relative advantage in this area. I think that one of the reasons usually given for credit unions not investing in shares is the reluctance to expose members’ funds to the higher risks associated with share investments. Do credit unions have the authority to create a “stock deposit account” where: interested members could deposit a portion of their funds for investing in shares; the credit unions would aggregate and invest the designated funds in shares on behalf of those members; and all dividends, capital gains and other income earned on the shares would be distributed to those members? If members are encouraged to allocate any amount that they are comfortable with ($5, $10, $50, $100, $500, $1000, $5,000, $10,000, …) the aggregate could be significant because of the thousands of members.

    Like

  31. Bush Tea October 10, 2015 at 12:54 PM #

    LOL @ Observer
    …bushie was wondering why you were so reluctant to share your observations.

    Man don’t hold back… Interject …we need some REAL big city interventions to balance the likes of the ingrunt Canadian hit-men🙂 …and don’t worry about the circular debates … most of life is based on cycles …. water constantly goes through one …and eventually, even political yardfowls like AC will take a drink….

    Like

  32. Bush Tea October 10, 2015 at 1:12 PM #

    @ Atrue Freeman
    Caswell will tell you a lotta shiite in answer to that question, so before he does that, let bushie give you the truth LOL
    It is not true that the current Credit Union model attracts more borrowers than savers.
    Many persons are attracted indeed because of the opportunity to borrow, but the ‘model’ ties such borrowing to concomitant savings…
    Typically if you want to borrow $X you will need to have savings of $ (1/3)X , and to keep on saving even while repaying the loan. Often. members find themselves accumulating savings in the process that would otherwise NOT have happened.
    Bushie is pretty sure that net loans in the movement do not exceed net savings.

    The BIGGEST reason why Credit Unions do not invest in shares is Caswell, along with a clique of super-conservative outspoken members who feel that black people should keep out of big business….and stick with what works…
    …Caswell don’t want the Credit Union to own a bank (although banks have been making MILLIONS in profits every year in Barbados)
    …Caswell is against Credit Unions buying shares in business … he thinks that this will lead the leaders to mimic business people and steal all the money
    …Caswell was against the Credit Union Insurance Company
    …Caswell was against Capita

    Caswell is a MAJOR asset in governance, but a total pest when it comes to visionary management and risk taking …🙂

    The point is that Credit Unions CAN invest; CAN become politically active; CAN own shares… but they are held back by conservative forces inside, by government policies (post Tom Adams) that seek to retard black enfranchisement; and of course by the Establishment – that wants to maintain the status quo…

    Credit Unions need visionary leadership …like everything else in Barbados.

    Like

  33. David October 10, 2015 at 1:26 PM #

    @Bushie

    According to the last financials 2011 updated on the BCCUL website savings lag assets.

    http://barbadoscoopleague.org/cms/index.php/example-pages/2011-12-13-02-44-18?download=8:annual-report-2011

    Must be more current financials.

    Like

  34. Atrue Freeman October 10, 2015 at 1:37 PM #

    Bush Tea October 10, 2015 at 1:12 PM # Bushie is pretty sure that net loans in the movement do not exceed net savings.

    I agreed that this is likely the case – the net savers funding the net borrowers and the few investments – but the net savers do not seem to really benefit. The results of the insurance company and the financial company do not appear to result in a higher interest rate on savings. And the same will likely apply to a bank. My suggestion is for the credit unions to provide a flow through service to willing members.

    Like

  35. MoneyBrain October 10, 2015 at 1:48 PM #

    Bushie,
    Did you seriously read what I wrote how I distinguished between what we might sell and what we should keep? Canada/ USA is not a perfectly analogous situation to Bim and Tdad but it is close enough. If you have a better comparative please present it.

    Bottomline the US is 9-10 times bigger than Canada in most respects excepting Geographic area where Canada is a significantly larger and fresh water reserves where Canada leads the entire World with 61% of Total.

    Please note that Tdad GDP is approx US$ 10.7bn and Bim is $4bn. So you are right, relative to Bim , Tdad is much smaller at 2.675 X than the 9-10 of USA to Canada. The US is far more powerful and dominant compared to Canada than Tdad to Bim!

    Bushie wrote–NO ONE in Canada would allow such clear rape of unique national assets by foreign mercenaries ….

    I wish that were true! There have been numerous examples eg Vale of Brazil owns both INCO/ Falconbridge, Labatts is owned by AB Inbev.

    I have advocated that Banks is a special situation, it is part of our fabric, our taste/ alcohol content etc. and that Inbev’s track record calls for extreme caution for many reasons. I was encouraged by the recent Advert caution BHL share owners to consider carefully. Where is the Govt???

    What Bim’s leaders need to do is ensure the people are receiving an excellent PRACTICAL education in relevant disciplines and then do whatever is necessary to attract Foreign businesses and encourage locals via training, Professional retirees consulting, Entrepreneurial Centre/s etc.

    Yes there are Cycles and one of those Cycles is that people with big, easily attained $$$$ like Japan in the 1980s and Energy Nations like Tdad will misallocate their wealth and eventually have to Sell assets at much lower prices. Regression to the mean, Bushie! The real question is whether Bajans who save at the Bank will appreciate when to pounce on the sweets?

    Like

  36. Atrue Freeman October 10, 2015 at 1:58 PM #

    David, you seem to be looking at the league’s statements. These are the 2015 statements for public workers’ credit union – http://www.bpwccul.com/2015_annual_reports/consolidated/index.html#18/z. Should those high reserves in equity be allocated to the members as restricted balances, so that members may will such balances to their children and relatives before passing on. At some point in time, that equity will become available.

    Like

  37. Atrue Freeman October 10, 2015 at 2:14 PM #

    COB 2015 report http://cobcreditunion.com/content/cob-annual-report-2015

    Like

  38. Bush Tea October 10, 2015 at 2:51 PM #

    Anyone not listening to Louis Farrakhan on VOB is missing a vital educational experience…

    Like

  39. NorthernProwler October 10, 2015 at 4:10 PM #

    Final thread comment.
    To answer the goodly professor, yes most companies traded on the local stock exchange, trade at a discount. The reason is they are CLOSELY HELD. Book value is less important than what they can produce (income). And their share return, which is therefore mostly ‘dividend only’ versus a combo of capital gain + dividend is poor. Many investors can do as well in fixed income.
    BHL while being potentially wider held than most, was still dominated by its former BS&T holding. Without Massy selling, getting control is near impossible. Unless you bundled a few of the lesser blocks like Hadeed, Sagicor etc
    In theory, because Massy is a Trini company, as is Blue Water, and SLU (or associated companies) isn’t Bajan either, one can say BHL hasn’t been owned by Bajans for some time. Bajans or Bajan companies maybe the majority of shareholdERS, but not the majority of the shareholdINGS.

    And because they are closely held, the impetus to increase dividend is minimal. The larger owners getting a ‘nice piece of change’ annually.

    Don’t pressure the smaller financial institutions. The loan experience of the big international banks in the Caribbean has been a disaster.

    Like

  40. Atrue Freeman October 11, 2015 at 9:57 AM #

    Lessons for BHL directors and shareholders

    Clock ticking for AB InBev and SABMiller over deal

    “Markets will be watching to see if AB InBev now raises its bid from last week’s £42.15 per share offer. It had also previously bid £38 and £40.”

    http://www.bbc.com/news/business-34499645

    Like

  41. David October 11, 2015 at 11:09 AM #

    Brasstacks is hosting a discussing on this transaction.

    http://v5.player.abacast.com/v5.1/player/index.php?uid=6376

    Like

  42. David October 11, 2015 at 3:26 PM #

    Those who listened to Chairman Grenville Phillips of the Stock Exchange this afternoon heard him agree to a prevailing view on BU BL&P that NIS shares should never have been sold.

    Like

  43. Hants October 11, 2015 at 5:11 PM #

    “Patrick Hoyos is a journalist and publisher specialising in business. Next week look out for Caswell Franklyn.”

    http://www.nationnews.com/nationnews/news/73197/black-white-backwards-future#sthash.oK5klj6s.dpuf

    Like

  44. Justin Robinson October 12, 2015 at 8:58 PM #

    Northern prowler, would being closely held justify a sizeable discount from the book value?

    Like

  45. NorthernProwler October 14, 2015 at 3:52 AM #

    @JR
    First. Book value is a somewhat irrelevant measure in stocks. A guideline, nothing more.
    So, could closely held stocks result in a sizeable discount in share price?

    In principle no. Each shareholder is seeking maximum value, regardless of who owns how many. The BSE is a small exchange, so some amount of market manipulation is possible. However, they are instituting a minimum trade volume per listing to alter the board price to help eliminate this. In other words, You and I cannot agree to sell small quantities between ourselves, either pumping or dumping the price as we go along.

    One might argue that since BHL has 5 owners who own 63%, and Cave Shepherd has 5 family members who own +/- 60%, they are similarly closely held. And over the past few years the shares in each have traded at +/-$3. However, Cave Shepherd had a few money losing years, where the dividend paid was 20c/share. While BHL never lost, and their dividend was 7c/share. And BHL had double the retained earnings of CS.

    The argument, that failure of BHL to return more money to shareowners, in combination with admitted share dilution, resulted in the price discount noted on the exchange, has some teeth.

    And did this happen because the directors, the shareowners representatives, failed to increase those dividends?

    But look, BHL created their own monster; the funding formula for their new plant, opened the door. Based on sales, it is very unclear why they needed extra capacity. And if you read past annual reports, the sale of Wildey (which I don’t think ever happened?) was to pay for a good part of the new facility. Problems in Belize, problems with the Dairy, one phuck up after another. Now, AmBev has extricated them from their misery.

    The potential buyers for an operation of that size are few. Beer marketing is a cut throat business. If you don’t have the brands, and subsequent production needs, why buy BHL?

    Like

  46. David October 14, 2015 at 5:49 AM #

    What is clear from the twitter being generated as a result of the BHL/SLU transaction is that we are followers.

    Like

  47. Bush Tea October 14, 2015 at 7:02 AM #

    @ David
    What followers what??!!
    Followers actually MOVE…

    We are stationary brass bowls….period!

    Like

  48. Justin Robinson October 18, 2015 at 1:22 PM #

    At a 3.4% dividend yield And no capital appreciation BHL shareholders have had a tough time of it.

    Like

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