Dennise Williams, Staff Reporter
WEHBY
GRACE, KENNEDY & Company's share price experienced an impressive bounce on Wednesday, October 6, by 13 per cent or $13.96 to close at $120.
Grace investors no doubt
salivated at the unbelievable one-day gain (six month treasury bills pay 14.79 per cent before taxes), but others were left wondering.
"I'm trying to understand the price movement myself," Don Wehby, Grace's chief financial Officer, told the Financial Gleaner. "I went to the market and was told that there was a really positive response to our joint venture with Guardian Life Limited."
Wednesday Business reported that within the next six months, Grace and Guardian Life would be establishing a health insurance company together here in Jamaica and within the rest of the Caribbean. Mr. Wehby said, "People are very excited with the prospect of our new company earning profits outside of Jamaica." However, the analysts at Mayberry Investments see the leap in share price as a natural reward for a well run company. "It's a good stock! I believe that since we recently put it in our Mayberry Performance Index (Mayberry's tracking tool of their top picks of Jamaican listed equities) the market has reacted positively. But when you look at the fundamentals, Grace, Kennedy is not an expensive stock. It's a good buy."
Still, there is at least one sceptic. Nigel Geoffe, equities manager at Barita Investments stated, "On Wednesday, of all the Grace shares that traded, only 5,000 traded at $120.00 per share. I think that was the result of an overzealous trader or investor. And notice that Grace shares did not trade on Thursday. That is because of one of two reasons. There is a shortage of Grace shares in the market.
SHORTAGE
"Investors in Trinidad & Tobago and Barbados are demanding Grace shares, so that creates a shortage in Jamaica, so there were to shares to trade. Another possible reason there was no shares traded on Thursday was that the high price is not sustainable and the movement on Wednesday was exaggerated. If this reason proves to be the one, then it is my opinion that a correction is imminent." Price correction or not, Grace, Kennedy has a way to create excitement on the stock market with its dynamic business moves. One such the is initial public
offering of Grace subsidiary, First Global Bank, which had been expected in the first quarter of 2005.
"The rumour of the 2005 first quarter listing came about because people have been pressing us to go ahead and list to take advantage of the bullish stock market," Mr. Wehby said. "We have been repeatedly asked to reconsider our dates, but we are on track for the third quarter of 2005. Yet I am flattered that there is such an interest in us."
