The Chairman of United Bank for Africa (UBA), Tony Elumelu has purchased 62.6 million shares of the bank, according to a filing on the Nigerian Stock Exchange (NSE).
The shares were purchased at an average price of N6.20 per share on Monday, July 20, 2020 for a total consideration of N388 million.
Insider purchases can be seen as a vote of confidence on the direction the company is heading to and we have always advised investors and readers at MoneyCentral to carefully watch what the smart money is doing and follow suit.
UBA shares have soared by 33.6 percent in the past year as the bank increasingly begins to see accelerated gains from its Rest of Africa operations, which shields it from the tough regulatory environment at home in Nigeria.
UBA is currently trading at a price to book ratio of 0.3 times and closed at N6.15 per share on Monday at the NSE, for a market capitalization of N210 billion.
If it traded near fair value at 1 times book value, the shares would be closer to N18 per share, and the bank as a whole would have a market capitalization of over N600 billion.
We believe the stock is closer to the bottom than the top and investors would do well to pick up some of the shares at these levels.