Activists Take Aim at Singapore's 'Buy, Pray, Hope' Model

[gzbkel]

• Klaus Wille, Jonathan Burgos 
  
• Push is catching on with local shareholders ‘more demanding’
  
• Dektos, Quarz Capital among activists pushing for change
  

Activist investors, having targeted companies in Japan and South Korea in recent years, have discovered a new playground in Asia.
In Singapore, where activist investing was virtually unheard of until now, two companies have found themselves in the crosshairs in the past month alone. Quarz Capital Management Ltd. urged retailer Metro Holdings Ltd. to return excess cash to investors and Dektos Investment Corp. pushed Geo Energy Resources Ltd. to change its debt structure, saying the coal-miner’s shares are undervalued by as much as 60 percent.
The investors are challenging a clubby, consensus-driven corporate culture where shareholder interests have traditionally taken a back seat. In doing so, they’re shining a light on a swathe of small companies that are undervalued, flush with cash and often ignored by analysts.

“We are on the cusp of change here,” said Lawrence Loh, associate professor at the National University of Singapore and director of the Centre for Governance, Institutions and Organisations at the NUS Business School. “Singapore is probably one of the best-kept secrets, it’s a very fertile ground for digging by activist investors.”
[...]

http://www.bloomberg.com/news/articles/2...hope-model

[brattzz]

....pray...hope??? .... gosh.... what are they thinking?? too much money to burn?!!!

[Big Toe]

Like it or not, buy, hope and pray is a model our local market subscribe to. The listed co's management here can pretty much get away with anything that is not in line with shareholders interest if they choose to do so, as long as they are not deemed illegal. Note that shareholders, even though are the owners, is just one of the many stakeholders that a company deals with.

It's great to see the activists landing on our shores and trying to change the landscape and make management of listed companies more accountable to shareholders. I would be an activist investor if I had more money, Metro is just one of the many companies sitting around with too much cash and not doing much about it.

[opmi]

Reading the "Dear Chairman' now...

http://www.valuewalk.com/2015/12/dear-ch...ook/?all=1

https://en.wikipedia.org/wiki/Robert_R._Young

Got money also may not win. Need votes. Buying shares to vote quite troublesome.

Best if substantial shareholders cannot vote for IDs and IDs no less 1/3 of board. Most of the IDs too cozy with major shareholders.

Have this VB crowdsource idea: Start a thread of companies with IDs with self-owned 'consulting' companies or full-time professional directors.
I can verify paid-up capital to see if it is $2 company via ACRA. ( too free on a lazy Sat afternoon...haha)

Do you guys think VBs will chip in to add to the list??

[Big Toe]

Independent director???
Really? Director fees go into pocket no matter how the company is doing.
Happy and contented with money from ah gong, this is as close to free money as it gets, why rock the boat?

[opmi]

Yes, thats why need to have a list of these 'tan jiat' full time directors...

[TTTI]

Like it or not, buy, hope and pray is a model our local market subscribe to. The listed co's management here can pretty much get away with anything that is not in line with shareholders interest if they choose to do so, as long as they are not deemed illegal. Note that shareholders, even though are the owners, is just one of the many stakeholders that a company deals with.

It's great to see the activists landing on our shores and trying to change the landscape and make management of listed companies more accountable to shareholders. I would be an activist investor if I had more money, Metro is just one of the many companies sitting around with too much cash and not doing much about it.

"The listed co's management here can pretty much get away with anything that is not in line with shareholders interest if they choose to do so, as long as they are not deemed illegal. "

Agreed with everything Big Toe says here.

Except that Metro is not "sitting around with too much cash and not doing much about it."
Their BS looks bloated with too much $$$ only as of last quarter, after divestment of the Frontier building and paying off the loans. Prior to that, they had substantial loans in the BS.
The current $$$ is also needed as a buffer as they have further capital requirements for their expansions in UK. Hard to say how much $$ committments is needed, so it's difficult to assess if it's really "too much cash". But sure, they are doing something with it.

I also agree with Big Toe's reply: Independent directors are not really useful IMO.
It is a rarity to see independent directors doing something. On top of  not "rocking the boat", how do you think the independent directors are found in the first place? They are usually acquaintances, friends of the existing management. There are very very very few independent directors who are truly independent.

[HitandRun]

Agree with suggestions by valuebuddies in this thread.

+ each ID should own shares in the company equivalent to 5 X annual directors fees as well.

[TTTI]

Agree with suggestions by valuebuddies in this thread.

+ each ID should own shares in the company equivalent to 5 X annual directors fees as well.

Independent directors can't own shares in the company

[specuvestor]

As usual the truth is somewhere in the middle

Like I posted before a company that listens to short term shareholders who does not have a longer term vision is doomed; it's equivalent to a country listening to tourists about their government policies

On the other extreme a cozy environment with passive IDs and where the owners get bulk of their remuneration doesn't create shareholders' value

Structurally there must be a disconnect with the gravy train. Like I said, auditors should be appointed by SGX / MAS to rotate around the listed companies with a fund contributed by listed companies. It disconnects between the auditors and the hand that hands out the dough

Similarly I would think it makes sense if OPMI who collectively owns more than say 1% of the company can propose an ID, and have a sort of ID election during AGM, whose directors' fee cannot be lower than say, the top3 non ID.