Is UBA alright?😃
This was my first reaction when I got their mail today, offering me a rights issue to buy additional UBA shares at 50naira per share more than its current market price at 48.5naira.
For those who may not be familiar with capital market operations, when listed companies issue existing shareholders rights, it is a way of encouraging them to buy more shares at a discounted rate less than its current market price.
But UBA has gone counter tradition😃 Why would I buy at 50naira, when I can easily get it cheaper from the market at 48.5N? It’s like buying goods from a wholesale dealer at a more expensive price when you can easily get it at a cheaper rate from a retail dealer.
The motive for this approach by UBA is still being debated but one thing is sure, UBA is betting against itself with confidence that its share price would soon exceed 50naira and more.
What should you do as an investor? When a company goes counter tradition like this, and you know the company has very solid fundamentals, buy more. If you can get a better deal from the retail market directly, buy more, because i see UBA stock rallying to the skies very very soon.
