(20-11-2014, 11:06 AM)DCF Wrote: (12-03-2014, 10:48 AM)GFG Wrote: Advanced Holdings Director Dr Wong Kar King, sold 17million shares (personal stake) to BD Corporation in Sept 2013 in a married deal worth $0.42 per share. This is substantially ABOVE the market price then of 20 something cents.
3 months later, Advanced Holdings announce a MOU to wholly acquire BD Cranetech from the same 3 people who bought his personal stake at a high price.
I get very skeptical when I see deals like this.
Of course, it could be that this is just a prudent move to acquire BD Crane business, and get their management team to be aligned to the company interests even after selling out.
But it can also be interpreted as a director getting his personal interests taken care off by selling off a big stake at rich valuations, and then getting the company to pay a high price to take over the business interests of the original buyers.
The business is also unrelated to their core business of manufacturing.
Very important info, thanks for sharing. I was just wondering why Dr Wong still get nominated by E&Y as one of the 4 finalists for their best enterprenuers of this year?
@ZZF: yes, there doesn't seem to be any further updates, but that's not important. The fact that management is willing to try to pull a fast one, shows their lack of integrity. When the top management includes the founder AND his wife, you can be sure the board is surrounded by his friends. So forget about the corporate governance measures. They're there to make you feel better. Maybe he realised there are people who bother to monitor such tricks.
I haven't followed the company since my last post in August 2014 regarding this.
At that time, the share price has already started falling and it was around $0.22.
Since then, the company has undergone a 1 for 3 shares consolidation, and the share price is now around $0.26!
Shareholders who have been loyal to the company have really gotten skewered. This is a permanent loss of capital, there's no coming back from a 70%? (thereabouts) loss like this.
While I'm not suggesting that the poor performance of the company is solely due to what I pointed out, again I'd note that in my experience, whenever the management is more interested in enriching himself, the company in the long term always falters. That's the same everywhere
Eg. Cheniere energy CEO just got ousted by Carl Icahn. He enriched himself (was the top paid CEO in the entire US at 1 point!) but look at how Cheniere is doing.
Since by post 1yr 4 mths ago, there have been some other comments that I didn't bother to reply to, because it is very hard to tell an existing SH who is in the red, to take the losses. When you're vested, it is emotionally painful to admit that the management which u supposedly trusted in, is less than honest.
Someone commented that this bulk deal (married deal) could be due to the lack of liquidity, so BD couldn't buy on the open market.
Such a comment illustrates exactly what I'm saying: that it is really emotionally painful to admit your mistake once you are vested. It is ridiculous to think the deal is because BD is DYING to acquire shares such that they had to do so in a married deal. Why?
1) The reason given by the commenter is that the top 20 shareholders accounted for 70% of the shares. This does NOT mean there is low liquidity. The top 20 SH includes OCBC nominees for eg, which is basically the public. There can be hundreds or thousands retail investors that collectively form the OCBC nominees. There are also several individual shareholders, none of which are directly involved in the executive functions of the company
2) The BD deal that was done was done at a PREMIUM to the market price. Sure, there are married deals done such that its at a premium, but this is only in special situations. for eg, the investor is a strategic investor, and they'd usually require certain conditions. (like having board representation). OR if Advanced holdings has certain branding, knowhow, IP etc that is highly desirable by the investor, who is seeking a potential takeover in future
Not this case. A simple purchase of shares. IN AN ABSOLUTELY DIFFERENT INDUSTRY.
I haven't done this, but the MOU reveals the 4 shareholders of BD Tech. If someone wishes to, you can hire a PI to investigate and I'm sure you can find links between these SHs and Dr Wong. (CEO)
Another comment is that if so, why did he become one of the finalists of the entrepreneur of the year award. (he won it btw)
Here, I feel I am absolutely qualified to give my opinion. I belong to a company who has won several of such awards. Many of the awards are basically mass branding exercises. You pay a certain sum to participate, it's a 100% chance that you'd "win", after which, you'll pay to have your award details published in the media etc. Sure, granted that his award is a much more established competition, and it's not as simple as that.
However, the judges of these competitions do no such due diligence. I doubt they even know about this MOU. The judging panel relies on a proposal, submitted by the company itself (over the years there are actually companies that HELP other companies prepare these proposals for submission)
Their DD is confined to a current analysis (probably cursory) of the individual or company's current standing and history. They sure as hell wont be digging for information to the extent of an enthusiastic value investor.
Lastly, someone else commented that if it's illegal, let the "authorities investigate"
Oh boy. where do I start with this
You're very sorely mistaken if you believe the authorities are of any help. Their job is to punish those who infringe on the law.
Unfortunately, this is very arbitrary in many instances. The law says no insider trading.
But how do you prove insider trading? If I am the CEO, and my wife buys just before release of good news, is that insider trading? Perhaps this is a bit easier to prove, although it'd already require some work.
But what if I'm the CEO, and my primary school friend bought before the release of good news. If I say its coincidence, can you prove otherwise?
Many things fall within the grey zone. This is one of them.
Is it illegal? Probably not.
Is it ethical? Depends on how you define ethical.
But is it Fair to the other shareholders? I'd say certainly no.
I've seen many of such instances, and all I can say is that once the management proves to be more interested in the personal wealth than the company's well being, the trust is gone. You're better off investing somewhere else. Even if the share price shoots up, you didn't make a mistake. Those who contributed to the rise in the share price did.
Let me state the facts now: the CEO sold a substantial bulk of the shares he obtained through GENEROUS SHARE OPTIONS at $0.42 cents a share
The loyal and common shareholder, would have seen his 3 shares supposedly worth $0.22 then, combined into 1, which is supposed to be worth $0.66, but that value has vaporised to $0.26 and is still falling.
To put it another way, he sold 3 shares at $1.26, while the poor common shareholder would be able to sell 3 shares now at $0.26
(and it's still falling)
I can list several other instances of management of public listed companies behaving in a way that enriches themselves at the expense of common shareholders. I believe they were once focussed on building their companies, but once it got listed, hey its no longer my baby. Its a machine to reallocate the wealth of clueless "investors" to the management.
There's a publicly listed company, whose management just lifted the moratorium to sell their shares. In the IPO, they gave a promise not to sell shares for 10 years, but now they've lifted that. The common shareholders though, have short term memories and nobody seems to think that's a problem.
After selling out a substantial stake, the share price tanked.
To top it off, after tanking, the CEO bought BACK the shares at the reduced lowered price, and the share price rose a bit again (albeit not back to before)
The CEO sold at an all time high, watched the price drop, bought again, and watched it rise (presumably the market thinks since the CEO is buying, it is a good sign)
All this after a moratorium that is supposed to be in place for 10 yrs to limit any selling.
Is it illegal? Prob not. Unless the CEO does this several times in a row, in which case for sure it's insider trading.
Was there any investigation done? Hell, no.
Is it fair to common SHs? what do you think?
I've refrained from naming the said company directly, as I know the CEO and management on a personal basis.
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