It has been an excellent year for the regional powerhouse National Commercial Bank Financial Group NCBFG shareholders as they enjoyed the growth in price from March 16, 2017, at J$63.00 to November 13, 2017, at J$107.74.
It was certainly not surprising when NCBFG made a takeover bid for Guardian Holdings Limited after acquiring 29.99% in May 2016.
In anticipation of the takeover news, the price of NCBFG declined by 16.74%, typical for any firm acquiring another entity. In fact, sounds like a great buying opportunity for investors.
On Monday, December 11, 2017, the price of the stock went the opposite direction hitting the J$100.00, contradicting the typical market behaviour when these transactions occur.
The acquiring company’s stock will experience short-term decline of their stock price while the targeted company’s stock will rise.
So why is NCBFG going the opposite direction?
The answer is simple.
Investors are bullish on the conglomerate as they reported a net profit of J$ 19.1 billion as of September 30, 2017, a 32% increase over same period last year.
Investors have been enjoying over 100% increase in capital growth, and they don’t want it to stop. With this acquisition of Guardian and Clarien Group, it is obvious NCBFG has big plans for 2018.
Are you ready …?
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