NCB Financial Group HQ.
NCB Financial Group released nine months results just over a week ago, with earnings rising 33 percent over the prior year, helping to push the stock price to a record $94.99, with investors sending the clearest message, that a stock split will and must take place, whether management wants to or not.
In an investors’ briefing, the day after the released results, Group Chief Financial Offer and Deputy CEO, Dennis Cohen in response to the question, whether they would consider a stock split for NCB shares, said they were not considering one and have not discussed the matter. According to Cohen, they see no benefit to the group from a stock split.
The response by management, if they are honest, indicates that they don’t have all the answers in managing. The reality is that companies do benefit from stock splits, they may not be readily visible in all cases, but over time they do. In reality, it starts from the time the announcement of a split is made.
It is true that shareholders are the ones who benefit most from splits. Good management will ensure that all stakeholders benefit from their skills. They are managing the company for shareholders and ought to ensure that the owners get maximum benefit for their investments and not just the major shareholders. Too often, management feel that their role is to manage a company for profit maximization without factoring the shareholders fully into the equation. This is unfortunately the message the top executives at NCB were sending to shareholders, with their comments. Some of that was visible not so long ago, when they pursued an erratic dividend policy that no one knew what it was, creating havoc for the stock.
The stock now has less than 7,000 units on offer at the close on Friday while no stock was offered in Trinidad were it is listed. Supply in the stocks has virtually dried up in the last three weeks. Under this situation there is going to be limited trading in the stock and management will have to move to do something about it before the year ends.
