is there any way to track performance of company from outside?
(e.g. using tools available in the public domain)
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08-08-2014, 02:28 PM (This post was last modified: 08-08-2014, 02:29 PM by CY09.)
At nav 0.281, the company has 20% it in cash or 0.056. Netting it off, market is valuing its investments in venture capital firms at 0.092. However hotung book states it's vc investments at 0.221 per share. Seems like market is sending a signal it's vc component is only worth 41%.
08-08-2014, 02:46 PM (This post was last modified: 08-08-2014, 04:19 PM by BlueKelah.)
(08-08-2014, 02:28 PM)CY09 Wrote: At nav 0.281, the company has 20% it in cash or 0.056. Netting it off, market is valuing its investments in venture capital firms at 0.092. However hotung book states it's vc investments at 0.221 per share. Seems like market is sending a signal it's vc component is only worth 41%.
Think this is too excessive
<vested>
Agreed, maybe due to the fact quite a few China based companies it is holding. But considering they are wholly owned, the risk of accounting irregularity should be very very low. This stock has been around for quite some time too.
Possibly its suffering from being relatively small and unknown, quietly chugging away.
They have quite a few growing companies now which are probably bringing in the cash to enable them to be giving good dividends, so very stable base. If one of their ventures becomes the next alibaba or tencent we will see the price skyrocket, till then I am happy to get paid decently to wait.
09-08-2014, 03:40 PM (This post was last modified: 09-08-2014, 03:48 PM by CY09.)
So what is Hotung's long term investments in companies worth?
Using Ar 2013, we notice Hotung's investments varies across different industries and diff stages of company growth: start up (18.5%), Expansion (61.7%), Mature (19.8%). To many founders, their wish is always to cash out of their founded companies (via buyout or IPO). Thus for other parties who fund this founder's company, they are likely to cash out together with the founder
For start ups, the holding period is 5 years or more before they are grown to be bought out/IPO, Expansion (3-5 years), Mature (1-2 years). For venture capitalists, the annual rate of returns sought are 40-100% or more for start up, 20-40% for expansion, 10-20% for mature. As for the survival rates of a company at each stage, I do not have the data.
While critics may point out that Hotung's investments may have false accounts, it is important to note in VC funding, Venture capitalist do not just invest money and forget about it, the manager do also participate in the company's operation by bringing their expertise know-how and introducing contacts. The manager for Hotung would have sensed something wrong by then
Back to Hotung, given the above info, it is likely Hotung's investment should not be valued at book value but at a premium to the book. For me, I will ascribe a conservative 10% premium to book.
(08-08-2014, 02:28 PM)CY09 Wrote: At nav 0.281, the company has 20% it in cash or 0.056. Netting it off, market is valuing its investments in venture capital firms at 0.092. However hotung book states it's vc investments at 0.221 per share. Seems like market is sending a signal it's vc component is only worth 41%.
Think this is too excessive
<vested>
Agreed, maybe due to the fact quite a few China based companies it is holding. But considering they are wholly owned, the risk of accounting irregularity should be very very low. This stock has been around for quite some time too.
Possibly its suffering from being relatively small and unknown, quietly chugging away.
They have quite a few growing companies now which are probably bringing in the cash to enable them to be giving good dividends, so very stable base. If one of their ventures becomes the next alibaba or tencent we will see the price skyrocket, till then I am happy to get paid decently to wait.
-vested- too
They are not small and unknown in Taiwan. They have a bigger following there compared to here.
(21-07-2014, 03:58 PM)Shrivathsa Wrote: Interesting that they bought back shares when share was at 0.163-0.164 in April and have been silent now, when the share price has fallen to 0.15 SGD per share.
That is because one unhappy shareholder scolded the management and urged them to be more prudent with regards to the share buyback programme.
(09-08-2014, 03:40 PM)CY09 Wrote: So what is Hotung's long term investments in companies worth?
Using Ar 2013, we notice Hotung's investments varies across different industries and diff stages of company growth: start up (18.5%), Expansion (61.7%), Mature (19.8%). To many founders, their wish is always to cash out of their founded companies (via buyout or IPO). Thus for other parties who fund this founder's company, they are likely to cash out together with the founder
For start ups, the holding period is 5 years or more before they are grown to be bought out/IPO, Expansion (3-5 years), Mature (1-2 years). For venture capitalists, the annual rate of returns sought are 40-100% or more for start up, 20-40% for expansion, 10-20% for mature. As for the survival rates of a company at each stage, I do not have the data.
While critics may point out that Hotung's investments may have false accounts, it is important to note in VC funding, Venture capitalist do not just invest money and forget about it, the manager do also participate in the company's operation by bringing their expertise know-how and introducing contacts. The manager for Hotung would have sensed something wrong by then
Back to Hotung, given the above info, it is likely Hotung's investment should not be valued at book value but at a premium to the book. For me, I will ascribe a conservative 10% premium to book.
Hi CY09,
Actually, most private equity holding companies, have a similar discount level to Book value.
But, the good thing about Hotung, again relatively speaking is that the discount to book value seems to be narrowing.
It was 61% discount in 2009 and it is 'just' 48% discount now.
I would however, think that is unlikely to be at a premium to book value, the holding period uncertainty itself will dictate that.
(09-08-2014, 03:40 PM)CY09 Wrote: So what is Hotung's long term investments in companies worth?
Using Ar 2013, we notice Hotung's investments varies across different industries and diff stages of company growth: start up (18.5%), Expansion (61.7%), Mature (19.8%). To many founders, their wish is always to cash out of their founded companies (via buyout or IPO). Thus for other parties who fund this founder's company, they are likely to cash out together with the founder
For start ups, the holding period is 5 years or more before they are grown to be bought out/IPO, Expansion (3-5 years), Mature (1-2 years). For venture capitalists, the annual rate of returns sought are 40-100% or more for start up, 20-40% for expansion, 10-20% for mature. As for the survival rates of a company at each stage, I do not have the data.
While critics may point out that Hotung's investments may have false accounts, it is important to note in VC funding, Venture capitalist do not just invest money and forget about it, the manager do also participate in the company's operation by bringing their expertise know-how and introducing contacts. The manager for Hotung would have sensed something wrong by then
Back to Hotung, given the above info, it is likely Hotung's investment should not be valued at book value but at a premium to the book. For me, I will ascribe a conservative 10% premium to book.
Hi CY09,
Actually, most private equity holding companies, have a similar discount level to Book value.
But, the good thing about Hotung, again relatively speaking is that the discount to book value seems to be narrowing.
It was 61% discount in 2009 and it is 'just' 48% discount now.
I would however, think that is unlikely to be at a premium to book value, the holding period uncertainty itself will dictate that.
I have looked at this company a few times. Was attracted to it due to the discount to NAV, the fact that it is a portfolio of investments (ie diversification) and as a potential proxy to a growing world economy (at least through their Taiwanese tech investments). However, I never pulled the trigger as there didn't seem to be a catalyst to crystallise value. In the case of K1 Ventures, the board is winding down the portfolio and returning the proceeds to shareholders as dividends but with Hotung, they will just continue to reinvest the proceeds. Also, if I am correct, they don't mark to market the investments (unless they are listed - which is a similar problem with K1 Ventures) so you never really have a good sense of the true value of the portfolio (this is different to normal private equity firms who try to put a value on their private investments based on their economic performance). If the portfolio is of a good quality, then I agree that a premium to book is probably warranted but, in prior years they have also taken significant write-downs, so who knows ? It is a bit of a black hole, and that is why I have hesitated.....
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