Hyflux

(22-04-2011, 10:18 AM)etan Wrote: Btw, Lee Joo Hai, a director of Hyflux, divested his shares completely at $2.18 per share in open market sale on 15 April 2011. Total: 375,000 shares.

Does he know something that we don't? Sell mother share to buy CPS? Possible?

Link to the SGX announcement on Lee's share sale on 15Apr11.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument

Clearly, Lee has taken a resolute decision to divest everything in one go. Such is usually not a quick and easy decision for a smart/informed investor - here I am not at all suggesting that Lee is acting based on some insider info, even though he is an ID of Hyflux. Shareholders of Hyflux and potential investors should take a cue from Lee's decision/action and apply their own rational thinking.

Some background info on Lee.....
http://www.bdo.com.sg/cv_joohai.html
My own view is that Lee is a good ID and a smart/experienced/proper professional accountant, and likely a smart investor.

short term wise, CPS is better than common share. no surprise the ID sold all his common share and bought CPS

(23-04-2011, 08:13 AM)freedom Wrote: short term wise, CPS is better than common share. no surprise the ID sold all his common share and bought CPS

How can you or we know that Lee has sold all his Hyflux common shares and has used the money to buy the new Hyflux CPS?? How can you or we know that Lee is acting short-term, even though he has been a long-term investor in Hyflux, having held on to his just sold common shares for some time already??

The new Hyflux CPS offers at best only a fixed, promised, potential yearly return of 6%p.a, but the Hyflux common shares offer ultimate ownership of the entire business - including likely regular (though undefined) dividends, plus the possibility of a further increase in its intrinsic value and share price. Indeed, if an investor likes Hyflux as a business and as a long-term investment, he should own the REAL THING - i.e. the common share, and not the CPS!

While it is not easy to guess/speculate on what's behind an investor's mind, in this case, it is quite clear to me that Lee doesn't like any more his Hyflux common shares as a long-term investment. And I will be quite surprised if Lee has put the proceeds from his share sale all into the new CPS. He will be far better off if he puts his money into the Adampak (in which he has been serving also as an ID for many years now) common share - which, on top of the ownership of the business, still offers a higher (but non-defined, when compared with the new Hyflux CPS) current dividend yield - provided he is lucky enough to buy a reasonable quantity of it at the prevailing share price.

if he's vested (to certain significance), then how is he independent?

can i see this as a step towards better corporate governance?

(23-04-2011, 09:06 AM)dydx Wrote:

(23-04-2011, 08:13 AM)freedom Wrote: short term wise, CPS is better than common share. no surprise the ID sold all his common share and bought CPS

How can you or we know that Lee has sold all his Hyflux common shares and has used the money to buy the new Hyflux CPS?? How can you or we know that Lee is acting short-term, even though he has been a long-term investor in Hyflux, having held on to his just sold common shares for some time already??

The new Hyflux CPS offers at best only a fixed, promised, potential yearly return of 6%p.a, but the Hyflux common shares offer ultimate ownership of the entire business - including likely regular (though undefined) dividends, plus the possibility of a further increase in its intrinsic value and share price. Indeed, if an investor likes Hyflux as a business and as a long-term investment, he should own the REAL THING - i.e. the common share, and not the CPS!

While it is not easy to guess/speculate on what's behind an investor's mind, in this case, it is quite clear to me that Lee doesn't like any more his Hyflux common shares as a long-term investment. And I will be quite surprised if Lee has put the proceeds from his share sale all into the new CPS. He will be far better off if he puts his money into the Adampak (in which he has been serving also as an ID for many years now) common share - which, on top of the ownership of the business, still offers a higher (but non-defined, when compared with the new Hyflux CPS) current dividend yield - provided he is lucky enough to buy a reasonable quantity of it at the prevailing share price.

since he continues to be an ID, we can reasonably assume he will have certain stake in Hyflux. since no more common shares, CPS should be the one.

(23-04-2011, 08:46 PM)bb88 Wrote: if he's vested (to certain significance), then how is he independent?

can i see this as a step towards better corporate governance?

I prefer an independent director with a sizable stake in the company.
At least, our interests are aligned.

(23-04-2011, 10:10 PM)yeokiwi Wrote:

(23-04-2011, 08:46 PM)bb88 Wrote: ;
if he's vested (to certain significance), then how is he independent?

can i see this as a step towards better corporate governance?

I prefer an independent director with a sizable stake in the company.
At least, our interests are aligned.

you mean a director and not and independent director in this case.

there are a few type of people that sits on the board of directors:
- executive directors (they hold executive appointments for the daily management of the company i.e. ceo, cfo).
- (simply) directors (they sit on the board to discuss strategic matters of the company but do not involve themselves in the running of the company; do not get a monthly salary aside from director fees).
- independent directors (subset of directors) who are everything a director (above) is, but are also perceived to be independent - they are not vested in the company, no personal interest, etc. and hence and it does not benefit them to make bias decisions.

what you are advocating is also what is a debate of the chairman and the ceo being the same person. some say they being the one and the same person, creates opportunity for too much power in a single person and there is issue of biasness. conversely, like what you say, since they are vested in the company, they will only want the company to deliver positive results. of course there are other parameters like short termism in the conflict of interests.

a note is that the directors' interest and yours can never align. who's looking for long term growth? who's looking for capital gain? who's wanting stable dividends? even then, the director can bail out way before you.

Well, my definition of "sizable" for ID is less than 5% but holding significant amount of shares in the company. Anyway, if the ID holds more than 5%, he will not be able to hold the ID position.

I think it is easier for an ID to go through motion if they hold no stake in the companies. There is really no incentive to ask probing questions and looking out for any irregularities. As long as the company is functioning and the report is audited, their presence on the board is basically to fulfill the listing requirements.

Besides that, it is also difficult for the law to prove that the IDs are not doing their due diligence in reviewing the company's performance and financial status.

To me, an ID without a small stake in the company is, by default, a sitting zombie in the board. There are IDs that defy this definition though but judging by the number of S-chips' failures, there are not a lot of them.

Below is an interesting link on the role of ID.
http://www.sid.org.sg/main/good_practise...SGPNo72007

(23-04-2011, 09:58 PM)freedom Wrote:

(23-04-2011, 09:06 AM)dydx Wrote:

(23-04-2011, 08:13 AM)freedom Wrote: short term wise, CPS is better than common share. no surprise the ID sold all his common share and bought CPS

How can you or we know that Lee has sold all his Hyflux common shares and has used the money to buy the new Hyflux CPS?? How can you or we know that Lee is acting short-term, even though he has been a long-term investor in Hyflux, having held on to his just sold common shares for some time already??

The new Hyflux CPS offers at best only a fixed, promised, potential yearly return of 6%p.a, but the Hyflux common shares offer ultimate ownership of the entire business - including likely regular (though undefined) dividends, plus the possibility of a further increase in its intrinsic value and share price. Indeed, if an investor likes Hyflux as a business and as a long-term investment, he should own the REAL THING - i.e. the common share, and not the CPS!

While it is not easy to guess/speculate on what's behind an investor's mind, in this case, it is quite clear to me that Lee doesn't like any more his Hyflux common shares as a long-term investment. And I will be quite surprised if Lee has put the proceeds from his share sale all into the new CPS. He will be far better off if he puts his money into the Adampak (in which he has been serving also as an ID for many years now) common share - which, on top of the ownership of the business, still offers a higher (but non-defined, when compared with the new Hyflux CPS) current dividend yield - provided he is lucky enough to buy a reasonable quantity of it at the prevailing share price.

since he continues to be an ID, we can reasonably assume he will have certain stake in Hyflux. since no more common shares, CPS should be the one.

Lee remaining an ID of Hyflux is obviously a weaker position when compared with he also holding 375,000 Hyflux common shares as a long-term investment, even though we can still reasonably expect him to be a responsible ID looking after the interests of all shareholders.

It is still premature to know if Lee is actually re-positioning most of his $817.5k (from the 375,000 Hyflux shares x $2.18) to the new Hyflux CPS, but we should know later if and when he does it. Meanwhile, it is nothing more than guess. As for me, I will not assume this at all!

it's dangerous to start seeing things that aren't there !!

It's just a simple case of.. systematically "back-to-back" excercising of stock options and selling off the shares to fund the excercise.
- he will have more stock options coming in.

As at 21-Feb-2011, he held 750,000 stock options

On 01-Mar & 04-Apr2011: excercised half of his stock Options:- 300,000 on 01-Mar2011 and further 75,000 on 04-Apr2011

Total excercise cost for these 375,000 options @$1.7747 each = $665,513
and soon after (on 15-Apr2011)
he sold off all 375,000 shares @$2.18 each for some $815,000 =} making a Pretax gains of around $149,000