Kiharu Member of Parliament Ndindi Nyoro has explained why he chose to buy Kenya Power shares after he emerged as the highest individual shareholder in the firm.
In a statement on Monday, September 12, the lawmaker maintained that his decision was guided by investment fundamentals and gut feeling.
He went ahead to say that the company’s stock is cheap as shares trade below Ksh2, maintaining that Kenya Power is undervalued.
Nyoro said that the company’s gross full-year revenues of approximately Ksh150 billion and assets of around Ksh325 billion probably means the firm is undervalued.
“Like any other investment, you make decisions based on fundamentals and gut feeling. The stock is cheap, actually a penny stock. Currently trading at below Ksh 2.
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“With gross full year revenues of Approx Ksh 150 B, assets of around Ksh 325B, probably Kenya Power is undervalued. The market values the company at around 1% of its assets base. The current market capitalisation being at around Ksh 3B,” Nyoro stated.
Nyoro said that hos investment strategy was guided by American business magnate Warren Edward Buffett who he quoted as saying, "Be greedy when others are fearful and fearful when others are greedy.”
He added that his investment journey began several years back while he was in first year in Kenyatta University before he accumulated his shares.
The lawmaker, however, said that he does not make decisions in the company as the government owns the largest share.
“GoK owns approx 50.1% of Kenya Power. All directors are therefore appointed by GoK. Our small stake is passive. We make zero decisions and therefore purely a silent, retail investor,” he said.
He also added that there's no investment with guaranteed returns as far as investing in stocks is concerned maintaining that it is a matter of finding equilibrium between risk and return.
