This UAE Stock Is Up 70% in Three Weeks and Nobody Knows Why
By most standards, International Holdings Co. PJSC's recent performance has been an investor's dream.
Shares in the Abu Dhabi-based group are up more than 70% since March 22nd. This is an uninterrupted 13-day winning streak that pushed the company's value past the $ 40 billion mark for the first time and is even higher than that of the United Arab Emirates' largest bank.
Backed by Abu Dhabi's ruling family and making investments from Elon Musk's SpaceX to a local fishing company, the IHC is not for the shy, however. All but a fraction of the shares are focused on Emiratis, not a single analyst covers the company, and few observers want to guess what is behind the rising share price.
"IHC is no different," said Vijay Valecha, chief investment officer at Century Financial, a Dubai-based advisory firm. “The stocks are not for the faint of heart as any management misstep can be costly. The stock is suitable for growth investors who understand risk. "
This growth is reflected in IHC's thirst for acquisitions. Under the leadership of the powerful Sheikh Tahnoon Bin Zayed Al Nahyan, who became chairman about a year ago, the company has stepped up its investments inside and outside the oil-rich UAE. At the end of last year, the company had assets of $ 3.8 billion, about four times more than a year earlier. Profits rose 159% to 3 billion dirhams ($ 821 million) in 2020.
Sheikh Tahnoon, national security advisor to the United Arab Emirates and brother of Abu Dhabi's Crown Prince, is also chairman of the Royal Group, a major UAE conglomerate and largest shareholder in IHC.
However, none of these explain the stock gains. And the company itself doesn't offer much to explain, either.
"I can't say much," said Syed Basar Shueb, IHC's chief executive officer and managing director in Abu Dhabi, in a telephone interview on Wednesday, adding that the company is sticking to its acquisition strategy. "We have two, three, or maybe four deals on a monthly basis," and more are being negotiated, he said.
IHC invested in 36 new companies last year, bringing the number of legal entities in its portfolio to 97. The company has been giving presentations to investors at its Abu Dhabi headquarters, and there may have been discussions with "some" brokerage houses I'll be reporting on IHC this quarter, Shueb said.
Of course, it doesn't take much to move the stock. The average daily volume for that year is roughly 0.2% of the company's outstanding shares.
The IHC rose 1.7% to 87.65 dirhams at 11:44 a.m. local time on Thursday, bringing its year's increase to 110%.
Many of IHC's plans "are bold and sometimes confusing to an investor," said Valecha. "But this company has pretty aggressive management and so far they have been delivering the goods."
(Updates to stock performance on Thursday from the second paragraph.)
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