(21-12-2015, 09:43 PM)GFG Wrote: (20-12-2015, 09:16 PM)marandaz Wrote: Hi Cityfarmer,
let's say it is listing in ASX, and indeed their ASX website do say that the min. shareholders needs to be 400.
My other question is
1. What is the average ROI/ROIC of a HFT firms or proprietary trading firms/individuals that use trading algo to do trading? Is it possible to have the average MONTHLY ROI to be >20% over three years period (Personally, I am skeptical) .
2. Is Proprietary trading firms based in SG regulated by MAS?
I have experience investing in private companies, and all I can tell you is to proceed with EXTREME caution.
There are millions of ways you can get screwed as a minority shareholder in a private company. I say this from experience.
It's a very simple thought process. Either:
1) Invest enough so that you are the majority shareholder and call the shots.
2) Invest as a MI, but have almost blind trust in the guy running the show aka the CEO.
Blind trust in i) the honesty and integrity ii) the competence
For example, the major SH/CEO/whoever has a controlling stake can issue share options to himself or allies and dilute you and there's nothing you can do about it as a pte company. (seen the movie about Facebook? happens in real life too)
Sure, they can do that in a listed company as well but there is much more public scrutiny.
The major SH can set up a separate company, divert business to that company and eventually you own a MI in a shell, useless company. In a listed company, it's illegal as the director/CEO has a fudiciary responsibility and can be called out by SH.
In a pte company? good luck proving that.
The major SH and allies can simply keep the company going, pay themselves fat pay cheques and there's nothing you can do. Essentially, indirectly your investment would be for paying them.
In a listed company, again they'd get called out for that in AGM, media attention, share price would drop etc.
Now I can go on and on and on, and trust me I'm speaking from real life experience so be really careful.
In this particular instance, I'd be even more wary because isn't doing an IPO the way to increase your SH base and sell shares to the public?
The pte companies I've invested in or considered investing in, are always more than keen to show me their financials. sure, mostly unaudited but still they're more than happy to show me with a caveat that it's confidential. How else would they be able to get investors? At that stage, there is no branding, no revenue visibility (I'm talking about mainly Series A venture funding), almost nothing to talk about except an idea and a sexy story.
I'd walk away immediately from anyone who is reluctant to show me audited financials and still ask for money.
Even if you're wrong and you miss out on a supposedly "good" investment, it's not a mistake. You can only make good judgement calls from data available to you. In this way you miss out on potential catastrophic disasters. There's always another opportunity around the corner if you work hard enough to unearth it. But 1 catastrophic disaster is enough to screw up many many yrs of hard work.
That's my honest opinion.
"The major SH can set up a separate company, divert business to that company and eventually you own a MI in a shell, useless company. In a listed company, it's illegal as the director/CEO has a fudiciary responsibility and can be called out by SH.
In a pte company? good luck proving that."
In this week's issue of the edge magazine, is a report about kingboard copper foil. It is basically a real life exact illustration of what I said
Quoted from the article:
"..... kingboard copper foil holdings, which sells the bulk of its output to its parent group on terms that it's minority investors say are unfair"
Guess who owns the parent group? That's right. The same management in kingboard
So basically divert business to support your own interests
The minority complained to SGX and MAS.
If you read my earlier replies on several threads, scenarios such as these are what I have always been talking about (re. The CDW Holdings thread too)
Now the minority has sued n won in the Bermuda courts
Now imagine this is a listed company n all these can be done n the minority has to invest $$$ to sue, regulators still haven't done anything as yet, there's media attention etc
Now imagine this same scenario in a private company.
Think my points should be pretty clear.
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