ARA Asset Management

[freedom]

ARA is down nearly 11%. I wonder what is pressing down the share price today ? It will be great to acquire a piece of this great business at a good price.

(Not Vested)

the business is great, but the valuation is rich. so it probably came down due to different valuation applied to the general market.

[corydorus]

Their Business is Great. And if i am not wrong related to LKS. Problem is volume is low so fluctuation can be large.
Collecting slowly.


(Vested)

[Nick]

Results will be out today. Hopefully, the more economic outlook will not derail plans of ADF 2.

[Contrarian]

CEO bought 800,000 shares at $1.42.... Cool man

Their dividends are increasing... 60% of earnings paid off....

[corydorus]

Well is great and comforting to me that the CEO invest 800 lot which amount to more than S$1 Million.

Cheers
Cory

[FFNow]

I'm looking to acquire stakes in this company too. But waiting for price to come down further. IMO, valuations too high currently even though it yields around 3-4% now.

[Stocker]

Upside looks limited.

[Stocker]

Upside looks limited.

[freedom]

I took a further look into ARA. No doubt the business is great, the company just requires minimum capital to operate and the earning is quite stable in a way(assuming all fees received in units can be realized) and at the moment. but can all fees received in units be realized at issued price? Not necessary, especially when market is going down like now.

from the history of ARA on Suntec, from early 2007 to early 2009, ARA did not sell its units received as management fee, I don't know what was the exact reason from early 2007 to 2008. maybe they thought Suntec was a good investment at around 1.5 - 2? All those units were sold within the group (ARA Investor II), price unknown as only certain transactions were filed (between 30/01/2008 and 30/04/2008, my guess it was transferred within the group at loss assuming at market price). from late 2008 to early 2009, ARA had a difficult time to sell its units received as management fee as the market was going down all the way. Instead of selling to open market, ARA sold its units within the group (ARA Investor II) at loss (averaging down its earlier investment in Suntec at 1.5 - 2?). Since market bottomed out in early 2009 til recently, ARA sold all its units received as management fee in open market.

from accounting perspective, maybe ARA is not required to reverse its early revenue/profit if it incurs loss from its units received as management fee. in reality, ARA does earn less if it incurs loss when selling units at a loss(in open market or within the group). Just recently, ARA did not sell its units received as management fee and in this market, it could not sell at profit given issue price at 1.48 and current market price of 1.17. At least for the moment, ARA earned less from its 2Q than what it reported earlier in a way.

With bear market talk all over the world, equity market performance could be getting worse and worse. ARA may face a difficult time to sell its units in open market at profit again. will it keep the units as a strategic stake again? Will the actual earning be stable at 8 cents per share as reported?

[Jacmar]

Will the actual earning be stable at 8 cents per share as reported?

I sat in a presentation 1-2 weeks back by ARA(John Lim and his staff)and here are something worth noting:

1.someone ask about the units that they hold and its impact on mark to market. His response was that the impact to earnings would be minimal as they don't hold a lot unless if the whole market collapse.

2. he eluded an interesting point on how to determine the intrinsic value of such a company like ara. he said that typically such companies in US would price it at 5% of mkt cap to AUM. So this would put the price of ara at about $1.22. voila! as this is what it is right about now giving a yield of about 4%. not great(below inflation rate) and not bad(relatively safe and definitely much better than FD) either. just right. so the only way for the price to go up would be for AUM to go up. so this beg the question as to why he buys at $1.42 right? well see below.

3. there is going to be a big jump in earnings in 3rd qtr of $10million as they will receive a performance bonus from one of the funds.

4. the earnings of 8 cents for this year will be intact as mentioned above. next year can't say.