Fraser & Neave (F & N)

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Mr Thai Bev is a shrewed and proven businessman. As he has so many pots boiling, surely F&N's cash hoard is critical to him. Apart from cash hoard, F&N's real estate portfolio is of high quality globally. The established REIT platform is another asset light avenue.

The last time a similar situation arose was OUE. My odd lots certificate was suspended and I thought I will have a piece of memory forever. My F&N odd lot certificate just went through the similar fate. I was hoping to collect all cash and keep the certificate as a piece of history but it never did.

I am confident that Mr Thai Bev after slugging through the fight will extract value over time. Fund managers are the most stupid people in the market place - especially those running passive index trackers. Seriously, I really wonder at times how much value has these fund managers added or more like destroyed over time.

I for one I think I outperformed these blind bats over time.

GG

http://www.businesstimes.com.sg/premium/...g-20130425

Published April 25, 2013
F&N tumbles on index fund selling
By
kenneth lim
print |email this article
application/pdf iCONSharp drop

SHARES of Fraser and Neave (F&N) continued to fall sharply yesterday ahead of the counter being excluded from stock indices.

F&N shed 39 cents, or 4.8 per cent, to close at $7.81 yesterday and was the Singapore-listed stock with the highest turnover value for the day, with $313 million of shares changing hands. The stock is down 17.3 per cent so far this week.

F&N shares have not traded below $8 since July 2012, just before Thai tycoon Charoen Sirivadhanabhakdi's initial purchase at $8.88 per share eventually led to a bidding war for F&N.

Mr Charoen completed his takeover in February with a 90.3 per cent stake in F&N, leading trading in the counter to be halted because it did not meet Singapore Exchange's minimum free float requirement of 10 per cent.

Trading in the stock resumed on Monday after F&N and Mr Charoen said they would seek to restore the public float. The exchange has given until July 19 for the float to be restored.

Jonathan Foster, director of global special situations at Religare Capital, said the selling was mostly the result of F&N coming off MSCI indices after yesterday's close.

In a late announcement on Monday, MSCI announced that F&N would be deleted from its standard and large cap indices from today.

"It's index-related selling," Mr Foster said.

Passively managed index funds buy and sell shares based on fixed rules, and as long as F&N was a component on an index, funds tied to that index would have to hold on to their shares.

F&N had a 3.36 per cent allocation for the MSCI Singapore index, which is one of the most widely followed MSCI indices for Singapore equities, as at the end of March.

Once F&N is removed from the index, index funds linked to the benchmark, such as the popular iShares MSCI Singapore Index Fund, will have to sell F&N shares in order to track the index.

The selling was not just from MSCI-linked funds. The stock has already been removed from the FTSE Straits Times index, the key Singapore-market benchmark, but that action came in the midst of F&N's two-month trading halt.

"F&N was taken out of the index following the trading halt on its stock ... so it could be paring by index funds that need to track the STI performance closely," said DMG & Partners analyst Goh Han Peng.

"The selling is overdone considering the huge gains and cash proceeds from the sale of APB," he added. "The additional capital will either be deployed into growing the remaining businesses, or part of the cash could be returned back to shareholders if the capital is in excess of funding requirements. Moreover, collaboration with Thai Bev on the F&B business will likely yield revenue synergies."

Mr Foster thought the current market price could be close to fair value for F&N. "I just don't know where the aggressive marginal buyers are," he said. "This stock was trading at a steep discount for many years, and if you want to be sensible about it, there's no reason why that would change."
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(24-04-2013, 10:00 PM)swakoo Wrote:
(24-04-2013, 11:53 AM)KopiKat Wrote: With so much cash in hand, the likelihood of a Special Dividend is also very high. The majority shareholder is likely to be equally motivated to have the free cash to pay down their debts (used for this G.O.).

... and also possibly to help pay the bid for his next takeover target: Thailand's Charoen May Counterbid for Siam Makro

Unlikely to be in time. Perhaps as an added assurance to whichever bank he's trying to borrow from.



Additional info for tikam-buddies,

Short Sell data from SGX,

24-Apr-13 : Vol = 3,148,000 ; Value = $25,071,520 ; Avg Price = $7.96
23-Apr-13 : Vol = 2,923,000 ; Value = $24,121,580 ; Avg Price = $8.25
22-Apr-13 : Vol = 652,000 ; Value = $6,054,450 ; Avg Price = $9.29

The observation is that the intensity of shorting was increasing and avg price was dropping over the last 3 days after it resumed trading. The selling was likely still dominated by the Index Fund Mgrs. With the absence of this selling liquidity, let's see whether the shortists will continue to be in action or will scramble to cover their shorts...Dodgy
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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Just curious, when one short sells he/she has to cover his trade within the same trading day right? Or they can just borrow and wait for further declines?
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valuebuddies should take this opportunity to focus on recently benchmarked value from $8.88 to $9.4+.

short term fluctuations is distractions and may present opportunities to adjust portfolios
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(25-04-2013, 07:58 AM)CY09 Wrote: Just curious, when one short sells he/she has to cover his trade within the same trading day right? Or they can just borrow and wait for further declines?

short sellers normally refer to those sell with borrowed shares. Otherwise it is termed as contra trading which sell/buy within settlement period.

Base on lending pool from SGX, there is zero lending available, which is logical with <10% free float around, and around 5% is hold by Davidson Kempner Capital. But lending pool may be still available from other brokers.

So in short, it is likely that mostly trades in the last few days were contra tradings. Any other views?

(vested)
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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(25-04-2013, 10:15 AM)CityFarmer Wrote:
(25-04-2013, 07:58 AM)CY09 Wrote: Just curious, when one short sells he/she has to cover his trade within the same trading day right? Or they can just borrow and wait for further declines?

short sellers normally refer to those sell with borrowed shares. Otherwise it is termed as contra trading which sell/buy within settlement period.

Base on lending pool from SGX, there is zero lending available, which is logical with <10% free float around, and around 5% is hold by Davidson Kempner Capital. But lending pool may be still available from other brokers.

So in short, it is likely that mostly trades in the last few days were contra tradings. Any other views?

(vested)

Extracts from MAS,

GUIDELINES ON SHORT SELLING DISCLOSURE

2.1 Short selling in respect of securities is the sale of securities that the seller does not own at the time of the sale, short selling may either be: ‘covered’ or ‘uncovered’ (also referred to as ‘naked’ short selling). In ‘covered’ short selling, at the time of the sale, the seller has borrowed the securities or has otherwise made arrangements to fulfil his obligation to deliver the securities. In ‘uncovered’ short selling, at the time of the sale, the seller is not in possession of securities or has not otherwise made arrangements to meet his delivery obligation.

Previously, SGX introduced a fine for naked shorts but looks like that may have been removed with the introduction of this new disclosure requirement.

IMO, I doubt that many professional traders will go for naked shorts as they'll not be able to control when and at what price they buy back.

2.4 In Singapore, The Central Depository (Pte) Limited (“CDP”) mitigates short selling’s potentially disruptive effects on the settlement system by purchasing securities on behalf of sellers who do not possess securities for delivery on settlement day (commonly termed the “buying-in” process). Where CDP carries out buying-in, the cost of purchase and an additional penalty is charged to the seller who failed to deliver the securities. In addition, the Singapore Exchange Securities Trading Limited (“SGX-ST”) conducts surveillance to detect market abuse.
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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Hi thanks for the clarification. But in my view for yesterday there wont be many contra sellers unless they are so sure that F&N biz is worth lower than the $8.
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The following is a technical write up from DBS Group research on F&N!!

"F&N shares are due for a rebound after the 17% sell-down
that started just 3 days ago. The stock’s removal from the
MSCI standard and large cap Indices at the end of market
close yesterday had prompted the increased selling pressure in
recent session. Index related selling had increased since the
stock resumed trading this week and ended in a crescendo
yesterday during the pre-close matching period with 17.5mil
shares done in the final 5 minutes. Index related selling has
ceased. We believe this paves the way for a short-term
technical rebound. The Elliot-wave pattern of the stock’s
decline in the past 3 days supports this view. The immediate
support is at $7.85. Technically, we see the stock heading to
the 23.6% upward retracement level at $8.20 first, and then
towards the 38.2% level at $8.44
."

Vested with 2 lots this morning
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(25-04-2013, 12:10 PM)ngcheeki Wrote: and ended in a crescendo
yesterday during the pre-close matching period with 17.5mil
shares done in the final 5 minutes
.

WoW! Exclamation
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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Today is the 1st settlement day, with trade done on Mon (22 Apr)

The CDP buy-in for F&N is 18 lots. I assume there will be more in the next few days.

stay tune.
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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