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If you want to outperform the Nigerian stock market this year, it might be better to follow the smart money moves of Femi Otedola, the billionaire investor.
Otedola who is the Chairman of Geregu Power and FBN Holdings has begun 2024 with a bang, moving markets with prescient trades and making money for other investors who own shares in companies in which he is invested in.
It is no surprise then that the top 2 best performing stocks on the Nigerian Exchange so far in 2024 are those in which Otedola has significant stakes in.
Geregu Power, where Otedola is the largest shareholder, has gained 150.63% year-to-date and is the best performing stock on the NGX in 2024.
The stock which has hit N1,000 per share and has a market capitalisation of N2.5 trillion is benefitting from strong growth and steady leadership. Profit for the 2023 period rose 61 percent, while total revenue rose 74% to N83 billion.
Geregu Power has also announced a dividend of NGN20bn proposed for the year ended December 31st 2023, which has delighted investors.
Otedola’s revelation of a significant acquisition of shares of Dangote Cement Plc’s also helped propel the cement maker to be the second best performer on the NGX this year. Dangote Cement’s stock is up 114.66% year-to-date.
Dangote Cement is attractive because it’s the “only Nigerian cement company with two export terminals and a substantial export capacity,” Otedola said.
“In my investment decisions, I focus on long-term wealth preservation and ensuring shareholders are the ultimate beneficiaries of a company’s success,” Otedola stated.
“Companies like Dangote Cement, which consistently deliver value to their shareholders, are fundamental for sustainable economic growth. My investment reflects my belief in its capacity to continue providing significant returns and my commitment to businesses that prioritize their shareholders.”
Dangote Cement, which is Africa’s largest producer of the building material, has a production capacity of 51.6 million tons a year across 10 countries. The cement maker recently rewarded investors with a dividend of N502.5 billion as the board of directors approved a final dividend of N30 per share subject to withholding tax and approval.
Analysts tell MoneyCentral the commencement of operations of the new 650,000 barrel-a-day Dangote oil refinery would also free up cash for Dangote Cement and provides some synergy within the group, especially in areas of fuel cost, which may slightly improve Dangote Cement’s margin and its ability to further outcompete and outgrow peers.
“Some investors just want to follow the lead of Otedola, who everyone knows is close to Alhaji Aliko Dangote, hence if he is so bullish in staking his capital into Dangote Cement, and other companies, they want to buy too,” Abiola Rasaq, economist and former head investor relations at United Bank for Africa (UBA) Plc, told MoneyCentral.
Geregu Power and Dangote Cement have both massively outperformed the broad stock market as measured by the NGX All Share Index which is up 34.19% so far in 2024.
FBN Holdings is best performing financial
The business tycoon’s 2022 investment in FBN Holdings Plc, (FBNH) where he is now the Chairman and largest shareholder has shaken up the financial holding company, with a major rally occurring in the shares since then.
This year, the tight money stance of the Central Bank of Nigeria (CBN) which hiked banks cash reserve ratio (CRR) to 45% has posed a bearish risk for bank stocks, with most of them selling off.
Unsurprisingly, FBNH is the only one bucking the trend, and is the best performing bank stock year-to-date, with a 39.07% surge in its share this year.
The NGX banking index, by comparison, has returned -4.5% in the same period (year to March 07), while all other major tier-one banks have underperformed FBNH this year.
Access Corp has returned -13.61%, GTCO +0.49%, UBA -16.18% and Zenith Bank -12.16%, respectively year-to-date.
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