First, it's just a mere coincidence that Oando is the first in my series on stocks to avoid. I have nothing personal against Oando nor the company managers. All my points are strictly from an objective and investment perspective. And as no one knows the future, you shouldn't take my word like it's God's.

Meet Oando

What better way to introduce Oando than using their own very words from their 2016 annual report on their principal activity.

The principal activity of Oando Plc. ("the Company") locally and internationally is to have strategic investments in energy companies. 

The Company was involved in the following business activities via its subsidiary companies during the year reviewed:
a) Exploration and production (E & P) - Oando Energy Resources Inc., Canada, engaged in production operations and other E & P companies operating within the Gulf of Guinea.
b) Supply and distribution of petroleum products - Oando Trading Dubai and Oando Trading Bermuda.
c) Pipeline construction and distribution of natural gas to industrial customers - Alausa Power Limited.

During the year, the company divested the following business activities conducted via its subsidiaries:
a) Marketing of petroleum products, manufacturing and blending of lubricants - Oando Marketing Ltd (formerly Oando Marketing Plc) and other petroleum products marketing companies.
b) Pipeline construction and distribution of natural gas to industrial customers - Gaslink Nigeria Limited, Oando Gas and Power Limited, Akute Power Limited and other gas and power
companies.
c) Supply and distribution of petroleum products - Oando Supply and Trading Limited and Ebony Oil & Gas.
d) Energy services to upstream companies - Oando Energy Services, and other service companies.

The Company’s registered address is 2 Ajose Adeogun Street, Victoria Island, Lagos, Nigeria.

Revenue, Net Income and Debt

Just so you wouldn't think I am cooking up the figures, below are the snapshots of Oando's revenue and net income for the last four years.



So now you should trust my chart below of the Revenue, Net Income and Total Liabilities of Oando for the last 12 years. Net Income is the green line, Revenue is the blue line and Total Liabilities is the red line.


Don't think that the green line is on zero. Oando obviously operates a very low margin business but one also of very high revenue. So those net income figures you are looking at are all in billion naira.


The Red Flags

The number one red flag for me is that Oando is in a very margin sensitive section of the industry. It spent 93% of its revenue on COGS (Cost of Goods Sold) in 2016 and 77% of revenue on COGS in 2015. Somehow, it is having a very tough time passing any increase in its production costs to its customers, and that is a big red flag in my investment analysis.

Number two red flag is that its debt is worryingly high. Too high for me to sleep easy putting my money in the company's shares. Just take a look at its Total Liabilities, see how it's gone way high above its revenue. That breaks a lot of gearing ratio signals. 

Number three red flag is that the industry is a very troubled one. Until I see a clear improvement signal in that industry, I would rather put my money to work in another industry company's shares. And what makes things worse for Nigerian upstream companies is that they are not innovators. They import almost everything -- even to manpower. The US shale companies at least are innovating and bringing down their cost of production; the big IOCs are technology leaders. Our dear indigenous oil producing companies have no innovative edge that helps them better face the troubles in that industry.

Finally, all the audited RO's are low. Return on Equity is at 3.93, Return on Assets is at a very poor 0.32, Return on Capital, despite the heavy leverage, is at 10.51 and Return on Invested Capital is at 5.03. And it's same for all the margins: 6.32% for Gross Margin, 5.94% for EBITDA margin and 1.84 for Operating Margin.

My Verdict

If you are not a speculator, trying to make a quick bucks of market volatility, then I'll say you should stay clear of Oando shares for now. 
I have been getting worried by the aggressive bond sales by the Federal Government in the last one and half year. My initial worry was that it was crowding out private sector loans, making it more difficult and very expensive for companies/businesses to access loans. Banks would rather borrow the government, via its treasury bills and bonds sales, and be contented with its theoretically worry-free guaranteed unusually high 18% yield (return) than give itself migraine over private sector borrowers. Also, it was crowding out investments. People with money and who would have put it to some business use are now putting it in treasury bills. But then, I understood what the government, CBN specifically, was trying to achieve.

CBN's paramount concern is inflation rate. Keeping it within its target bounds, which for some years now has been below 10% (single digit). So since the Oil triggered Naira crash that caused inflation to rocket, CBN has been mopping up liquidity to bring down the amount of Naira chasing scarce dollars by putting in place anti-market FX rules and selling bonds like crazy. And it is working. Inflation has stopped rising, and, impressively, is now falling. But the government is now drunk on borrowing. It is now beyond curtailing inflation, the new goal bandied around by our finance minister is "to reflate the economy and fund capital projects". So we now go borrowing dollars like it's the late 1970s.

We are now undoing all the gains we made with the Paris club debt cancelling. The very things that happened in the late 1970s and early 1980s that ultimately made us almost drown in debt in the early 2000s are now happening again, and I don't think there will be any international club to save us in the future.

Currently, we spend over 60% of our government revenue to service loans. So now, the reason we can't fund our national budget is no longer just because our oil revenue has dropped but because what is left after paying creditors can no longer sustain us as a nation. And this is very worrying.

World Bank is even getting worried on our behalf. IMF has been even more vocal since last year.

Below is the our debt profile as published by the Debt Management Office (DMO) as at March 31, 2017.


To help put things into perspective, last year the total Federal Government revenue was N2.97 trillion. 

And from DMO, in just the first quarter of this year we spent N474 billion to service our domestic debt and N39 billion to service our foreign debt. That is a total of N513 billion in just first quarter of the year.

So let's make a very conservative assumption, that the government is not trying to blow up its loan books further and will just refinance old loans, then we can roughly expect the government to spend about two-third of its annual revenue on debt servicing. But from all the signals coming from Madam Kemi and Oga Udoma, we are just getting started with the borrowing spree.

Personally, my worry is double fold -- that buying bonds/TBills is no longer very financially sensible and that we are back on the road to repeating history (and bad history for that matter). I can't do anything about the second worry as I am nobody to the government even if I can get the message to them, but I can do a lot about the first worry and profit handsomely from it. Currently, an insane amount of money is pouring into bonds -- even Iya Basira is being enticed with the FGN Savings bond -- when all these money realise something is amiss they are going to want out. And a good portion of it, especially from the institutional investors, will head straight for the stock market. So what I am going to do is to position well in the stocks market, take out all my remaining fund in the bonds and money market, and put them into the stock market. Just today, I have analysed the potential stocks to invest in and I am settling for Total, Zenith Bank, Dangote Cement and Unilever. Would have added Nigerian Breweries if I wasn't too religious and not trying to close the door to my being a saint someday.

And in another news, I will be starting a series of posts on stocks to avoid. I figure out that it is a lot easier to write about what is wrong and should be avoided than writing on what to do (which stock to pick). 

So stay back and watch out!
Mixed news -- I have restarted my online MBA. I still don't know how I will make out the time for the class work and assignments/projects but I think the whole effort and money spent will be worth it in the end.

So yesterday, I paid some of my outstanding fees and enrolled for one of the seven remaining modules. In all I have 12 modules and they are listed below.

  1. MBALN-603 Decision Making Methods & Tools         Completed
  2. MBALN-609 Organisations & HR Management         Completed
  3. MBALN-611 Business Economics                                 Completed
  4. MBALN-622 Financial Management                         In-progress
  5. MBALN-667 Strategic Marketing                                 Completed
  6. MBALN-670 Operations & Quality Management         Yet to Start
  7. MBALN-612 Financial & Managerial Accounting         Completed
  8. MBALN-685 Corporate Strategy                                 Failed
  9. MBALN-701 Organizational Behavior                         Yet to Start
  10. MBALN-703 Business Ethics                                         Unavailable
  11. MBALN-707 Entrepreneurship and SME's                 Yet to Start
  12. MBALN-736A Enterprise Information Systems                 Yet to Start


I had enrolled for seven out of the 12 modules before now, but right in the middle of the seventh one the result of the sixth came out and I was failed because of plagiarism. I wrote the professor explaining that I didn't plagiarize but he trusted the Turnitin plagiarism software more than my word. I was very demoralized and lost all motivation to continue, so I pulled out from the seventh module and wrote the school to defer for a year. Now it's been two years and I feel I should just complete it and not let money and previous efforts go to waste. Especially when I have been having solid grades before the unfortunate incident.


I should have been done by now. And in 2016 graduated. Maybe now be thinking of how to make the MBA count. Such is life. It is only what you do that gets done, not just what you started.

Now that I am back, I hope to not encounter any disheartening events and go on to successfully complete the entire MBA by next year. Making it a four year programme, 2014 - 2018, instead of the two year programme it should have been, 2014 - 2016.

One big lesson I have taken away from it all is that time does really speed by. And more than marking our birthdays we should be worried about filling each year with targeted activities. We should do more of the things we would be proud we have done and try to focus more on success than failure. I was too confident of my success that I wasn't prepared to accept failing at a course for a reason that I didn't hold true. It made it look like all my hard work went to waste and I couldn't learn anything useful from it because I didn't agree with the professor's judgement. So I just projected that into future efforts, that even when I put in my best, one annoying software called Turnitin can make it all futile by marking my work as plagiarized. 

Anyway, now I am less proud and more willing to embrace whatever outcome I get while still putting in my best. 

Wish me luck!


Apply at: https://airtable.com/shrylh18qjC0Wzl9A
Culled from: http://bym.co.za/

Every year we identify 100 new young leaders to join our network. The new recruits first connect at our 5-day summit. Here they teach and inspire each other and, most importantly, act together.

After being inspired by established leaders, which have included Ahmed Kathrada, Advocate Thuli Madonsela, Michael Jordaan, Ketso Gordhan and more, the delegates participate in leadership development and lean start-up methodology up-skilling. Beyond the summit, delegates can use these skills to improve their efforts to change the world.

The culmination of the summit is a team challenge, in which the delegates apply their new skills as they work in teams to design practical solutions to social challenges in the form of sustainable initiatives or businesses with a social impact. It is our aim that all viable solutions come to life by entering into an exclusive BYM incubation fund.

After the summit, delegates officially become part of the BYM network and have access to things like intra-network mentorship, leadership development, networking and further access to funding and business support.

Summit applications are open to 20-32 year olds that are African or living in an African country. We select based on the applicant’s demonstration of their commitment to action and social impact. Even though the summit focuses on very practical up-skilling, we pride ourselves on selecting a rich diversity of delegates, including artists, engineers, scientists, consultants, public servants, civil leaders and more!


All summit costs, including lodging, food and transportation once at the summit are covered. However, those invited to the summit will be asked to cover their travel to and from the 5-day event.

Early application deadline: Jul 28, 2017 23:59 (UTC +02:00)
This application deadline applies to all applicants who will require a South African visa to attend #BYM2017.

Late application deadline: Aug 4, 2017 23:59 (UTC +02:00)
This application deadline is open for applicants who will not require need a visa. 

Have a PDF, .doc or .docx version of your CV/Resume to complete this application. For more information email info@bym.co.za

Learn more about BYM: http://www.bym.co.za/


This week I set up a new forex account with Alpari. I had done some forex trading before, 2014 to 2016, and lost all the money I put in. The painful part is it was just when I thought I had figured it out and had patiently traded with some gain for more than eight months, then in days I lose everything.

I managed, though, to come away with one strong learning -- I can't successfully do manual forex trading. So I had given up trying to trade myself. This leaves me with two options -- use an automatic always on robot trader or invest my money with successful traders sharing profits with them (called PAMM investing). PAMM stands for Percentage Allocation Management Module, a very long phrase for you sharing the profit with another trader who you let trade with your money and you bear all the loss (can't share that one with the trader).  I already have some experience with an auto robot trader, all the small consistent profit I made during my almost two year stint with active forex trading were by an auto trader software I bought and run almost always. It required my laptop being always on and connected to the internet, then I must remember to start the trading application every time I restart or power on my laptop.

This time I decided to go with the PAMM one. And so far it's giving some good results. Already making profits in just two days. The main advantage to it is I can forget about it. Go on with my other hustles without negatively impacting how that investment does. The main work is upfront, picking a very reputable forex broker that has a very robust trading and investment system with enough long-time traders with verifiable results of their trading success in the PAMM system. Alpari managed to edge out the others I checked out and the one I previously used (instaforex). And that's not the end, you have to also pick a PAMM manager who has over three years consistent success and not very volatile trade results. Again, I managed to find a couple on Alpari. Unfortunately, past result is not a guarantee of future success. But that is all I have to make my decision. 

So now, I am back into the forex trading. I consider it as part of the speculative portion of my investment portfolio. I am also adding cryptocurrencies in that speculative mix. Already made up my mind to do Alpari's Crypto Fund that allows me to invest $100 and above in a cryptocurrency fund that is 40% Bitcoin, 30% Ethereum and 30% LiteCoin. I am just waiting for a good enough crash of the cryptocurrency market, then I'll invest for the long term -- years. The same way I do with my stock investments.

I still have the bulk of my investments in stocks and fixed income (bonds and money market). I am a risk lover and rather than go out to parties for adrenaline rush I prefer to have it from taking highly intellectual risks. Trying to predict the financial markets, stocks, bonds and currencies. I can stay indoor for days and get faster heartbeats than the guy at the nightclub. It sometimes make me jump up in the middle of the night to execute an idea.
God be praised, we had no technical glitches today. You can watch the video recording on YouTube at https://www.youtube.com/watch?v=pLOfPuwcUKI




For this month's webinar, we explored the powerful Microsoft Excel VBA. 

Too many people wrongly think that VBA is hard or for just for core programmers. 

I will be helping you  see the benefits of learning Excel VBA and then help you make your first steps into becoming proficient at Microsoft Excel VBA.

In this webinar, I will be showing you:
1. How to record Excel VBA macros
2. How to edit recorded Excel VBA macros
3. How to carry out simple tasks with Excel VBA
4. How to work with Userforms
5. And introducing you to loops (If loop, For loop, For Each loop, Do loop, Do While loop and Do Until loop), they form the backbone of Excel VBA coding

Ultimately, I don't expect you to become proficient by just watching in this webinar. The goal is to get you started and comfortable with exploring Excel VBA. To take away any fear you have for it and replace those fears with a curious admiration.


If you have not, do join our webinar directory list to be kept aware of every future (monthly) webinars at http://eepurl.com/bKwoaT 

Cheers!
Our beloved Etisalat Nigeria is now 9mobile (9mobile.com.ng).





They even managed to make it look like it had always been their plan -- 9 the time of birth, 9 the years they've been in Nigeria, 0809ja. But we all know better. We all have one thing to learn from the current sad situation of Etisalat Nigeria. And it is how dangerous taking on debt can be.

It is not only companies that can be crippled by debt. Individuals, you and I, are not immune to its charm and harm. Remember my recent talk about getting a credit card so I can access interest free loans to put in treasury bills (money market actually). If not that all the banks I went to -- Diamond bank, FCMB, Stanbic IBTC, Standard Chartered and First Bank -- all gave me stupid conditions like I must have a cash collateral of more than the limit on the credit card in a separate account, savings extra or fixed deposit account, before they would give me a credit card and I must service the card with new money aside the cash collateral or I risk being labelled and reported as a loan defaulter. It made absolutely zero sense so I gave up on the credit card mission. It seems it is only easy for salary earners whose company already worked out a scheme with the bank to allow credit facilities to their staff. I have one such friend, he got the card from Standard Chartered and they were the ones begging him to have it. He is able to access N2 million interest free for 55 days. He was the source of my envy/desire. 

See how easily I rant about the credit card. I still belief it would make a lot of sense for me to have that loan facility.

I have another friend who borrowed N400,000 from me in March and promised to pay back in two months. He originally wanted N800,000. It's not yet two months. And I understand. He is a business man like me. None of us could have predicted how tough business has been this year. Even I who was singing seven years of plenty just last year had to remix the song this year. Imagine if it was a bank loan. Then you are already imagining Etisalat. How what made perfect sense when you were about doing it suddenly didn't turn out as expected. And what I want to bring out is that it can happen to anyone of us.

To some people, it is doing an expensive Masters. They use up their life savings and even borrow believing they would be able to quickly make lots of money back from the increased earning power the degree should give them.

To another some, it is buying a land. Mortgage or the high interest rate unregulated version of it that's now popular. 

And we still have people who take loans to buy car. 

Whatever it is you intend to borrow money to have upfront and pay back gradually later, remember Etisalat Nigeria and ask yourself, "Am I not chasing a 9mobile moment?"

Today, I finally joined the AWS train. As part of the big data analytics project I am working on for a client, I would need to host a cloud server to mine data off Twitter and Google, saving them daily in a CSV file. Ordinarily, I would have used my laptop as the server for this task, but since this is a commercial project and I can pass the cost to the client, I have to use a dependable affordable virtual server.

I then went on Google to search. I didn't want to go with Microsoft Azure as I have issues with the payment system and I heard Azure isn't the best pocket-friendly option for a very small business. I stumbled on Alibaba Cloud Service but before long I settled for Amazon Web Services.



Setting up was really easy; easier than I expected since it was common statement online that AWS is not as straightforward to use as Azure. Now having experienced both, I disagree.


I used the EC2 service and created a t2-micro Windows Server 2012 R2 instance.




On connecting to the Server via Remote Desktop Connection, I set it up for my data analysis work. I installed Microsoft R Open and RStudio for my R based data analytics work. And I installed Anaconda and PyCharm for my Python based analytics work.

Below is how my server setup looks like.


I even pinned my commonly used tools to the taskbar -- Powershell, Task Scheduler, RStudio and PyCharm.

What is left is how to estimate how much this would cost me per month and if I would need to automate startup/shutdown of the server to save compute time/costs. Some aspect of the startup/shutdown decision will depend on if Twitter approves my request to get unrestricted access to their Tweet database and don't charge me some crazy amount. I have already initiated the request and they have requested I provide them some information they will use to decide whether to grant my request or not. My current way around the limitation in how many tweets per 15 minutes I can scrape is to run the scrapping script every three hours, and still I think I don't get enough representative tweets and some tweets keep showing repeatedly.

Overall, I am loving my new adventure into the deep side of data analytics. And I will always keep you all updated on my progress and share my learning.

Yesterday, I bought a couple of new books.

Flash Boys: A Wall Street Revolt

Liar's Poker (25th Anniversary Edition)

Capital in the Twenty-First Century
The Big Short: Inside the Doomsday Machine
It was after I watched the movie The Big Short for the second time.

image: trilbee.com

I have been doing a lot of work lately around economic analysis, financial analysis and investment. I am extremely interested in understanding how they all interplay and how I can profit off the knowledge. 

Like today, at about 4:30am I managed to get to work a trend scrapper for a big economic indicator project. Been working on it for two weeks. The project has helped open my eyes to how there is a business in every news or even tweet. That everything is interconnected and opportunities abound to anyone who can find the patterns in all that is happening -- tying everyday happenings to the bigger economy, to specific companies and to the financial markets. 

Michael Lewis, the author of all except one of those books I bought, has been generous enough to explain from an insider's view, how people in the financial markets profit off everything in the US. And for me that is like reading the future in Nigeria, as our financial markets are decades behind the US one. I hope to learn practical tips that I can deploy profitably here in Nigeria. To be able to read the signs, to know which processes to put in place and which system to be a part of.

And as usual I will share whatever interesting useful find I make.


Bitcoin and Ethereum are experiencing a crash now. Which means an opportunity will soon be opening up for those seeking to add them to their investment portfolio. Bitcoin has dropped more than 30% in the last four weeks while Ethereum has dropped over 50% in the same time period.

I have been reading up lately about the future of cryptocurrencies, especially Bitcoin and Ethereum. And one thing has become very certain -- they are here to stay and will play a huge role in the future of financial transactions.

They have been notoriously volatile. Been pushed by speculators and online criminals who demand payment in cryptocurrencies (especially Bitcoin). Then I hear Nigerians who know very little about technology talk up the huge rewards in Bitcoin. And almost all the new investment ponzi schemes are now using Bitcoin as primary mode of transaction. All these made me stay away. It was like 2008 all over again -- when everyone was talking about the wonders of stocks.

The results of my research on cryptocurrencies point out that Bitcoin and Ethereum are the most reputable. They are at the forefront of the cryptocurrency race. Bitcoin has established itself as a widely acceptable cryptocurrency while Ethereum is seen as the most secure crytocurrency with lots of corporate/technological back-up. 

My investment strategy is to wait for them to drop to or close to their last year prices and then I will invest in cyptocurrency funds like Alpari's CryptA Capital which I have already opened account for. I am also checking out eToro.

I will keep you all updated on how it all goes.