Michael Joseph sells half of his Safaricom stake

What you need to know:

  • Michael Joseph has reaped huge capital gains arising from a recent rallying in the telecom firm’s share price which stood at around Sh15 up from the entry price of Sh5 per unit.

Former Safaricom chief executive Michael Joseph has sold half of his shares in the company even as his successor, Bob Collymore, increased his stake, making a strong confidence statement about the telecoms operator whose stock continues to rally on the Nairobi Securities Exchange (NSE).

Safaricom’s annual report shows Mr Joseph cut his shareholding in the company for the first time since its listing in 2008 with the sale of 1,178,600 shares as at end of March.

Mr Joseph continues to hold a similar stake in the firm valued at Sh24.7 million based on current share price of Sh21 per unit.

Mr Joseph, the founding Safaricom chief executive, has reaped huge capital gains arising from a recent rallying in the telecom firm’s share price which stood at around Sh15 up from the entry price of Sh5 per unit.

His decision to sell a portion of his stake in March has, however, meant that he has missed out on the gains that investors have made in recent weeks that the share price has rallied to a high of Sh21.75 but on Monday dropped to Sh20.75.

Mr Collymore appears to have timed the price tide better with the purchase of additional 314,200 shares in the year to March for a total of 1,222,200 shares.

His portfolio is now valued at Sh25.6 million. Safaricom’s share price has gained 29 per cent since the beginning of the year, making it the best performing stock on the NSE this year.  

Investors are rushing to buy the stock ahead of the December payment of a special 68 cent dividend that will increase the total payout to Sh1.44 per share, including the final dividend of 76 cents declared for the financial year ending March.

The books for both dividends are closing on September 2, for payment on December 1. The Safaricom stock has gained 16 per cent or Sh2.90 per share since the company announced the intention to pay a special or interim dividend on July 26.

Stocks gain value as they approach the date of book closure for dividends and bonus issues, mainly driven by investors taking positions to book the payments.

Those who have invested in the share for a time are wondering whether it is time to sell or there are still more gains to be made.

Last Friday, Safaricom traded 41,411,500 shares, underlining the huge appetite for the stock among investors who believe it will continue rising.
It also underlines the high number of those harvesting their investment believing the time is ripe.

Analysts at Exotix Partners had given Safaricom a target price of Sh20.08 in a report released before the declaration of the interim dividend.

Exotix said it expected the company’s earnings to continue growing, driven by alternative sources of income such as M-Pesa, data sales and handset revenues.

Following the rally, Safaricom now has a market value of Sh841 billion, a Sh188 billion gain since the beginning of the year when its stock traded at Sh16.30.

It stands out as one of only seven counters that have recorded a price gain this year in a bear market that has seen share prices on 41 counters plummet by double digits.

Other Safaricom board members did not trade their shares in the last year but instead chose to hold on to their stakes, pointing to the level of confidence they have in the stock.

Chairman Nicholas Ng’ang’a held 855,100 Safaricom shares valued at Sh17.9 million while Susan Mudhune had 51,200 units of Sh1 million.

Treasury secretary Henry Rotich held 2,200 shares worth Sh46,200 while his investment secretary, Esther Koimett, had 517,600 units worth Sh10.8 million.

Nancy Macharia, who joined the board in 2007, does not have any shares in the company.

Representatives of the largest shareholder, Vodafone — John Otty, Serpil Timuray and Gianluca Ventura — have no stake in the company.

Welcome!

You're all set to enjoy unlimited Prime content.