Sunday, January 04, 2009

Some Caveats On KNM

Well, at least The Rock tried to explain his concerns over KNM. This does not represent my view, nor do I agree or disagree with his view as I have no way of ascertaining its validity. Thanks to The Rock. This will serve as a good exercise where a recommendation based on analyst reports and annual reports, and to see whether it can stand up to vicious rumours. I hope the SC will investigate these purported vicious rumours. Investing should never be like this - no one can/should base their investing on "inside gtrack information flow", the general public cannot be disadvantaged by such situations. If we cannot rely on publicly available information, if we cannot rely on analyst reports, if we cannot rely on independent auditors verification, if we cannot rely on them... how else should investors base their investing decisions on? Of course, if management decides to defraud (e.g. Transmile, Enron), it will be difficult to detect. At this point in time, I would still tend to side with my view that KNM is a vicitim of the oil plays being out of favour and that many foreign funds have sold down. All counters have influential substantial shareholders, they backing out is not out of the norm. KNM is also not that political a counter as its business model is acquisition/ EPS accretive strategy.

The Rock has left a new comment on your post "What's Shaking KNM":

I have been following KNM since early 2006. Made some small money. Recently I reviewed it again and asked around - what's happening to the price?
Well the inside news is a total shock to me. No analyst or newspaper have a clue to what is really happening in the company or to its financial backers.

While it's probably not going to be a Transmile, but the people[a few of them, not just one] who have dealings with KNM advised me to stay away from the company.
One of the worse thing that happened to them was that the promoter's strongest financial backer decided to pull the plug ! That's is when u see the share price started to crash ! It has nothing to do with foreign funds. This is a local guy.

Second is KNM overpaid for Borsig. When a PE firm sells you something you got to ask WHY WHY WHY ? It was done at almost the peak of the oil cycle. Any acquisitions done in 2007 or even 2006 will be costly to the buyers. Look at Rio Tinto now trying to swallow their USD38 bil debt for buying Alcan ! It can actually bring down Rio if they can't get refinancing or the economy gets worse from here.

The 3rd point is I was told KNM is linked to a political figure whose fortune has taken a turn for the worse since the March 8 general election. This point is related to the first point.

Don't ask me to reveal the names of the no.1 and no.3 guys. If you think what I say here is credible - good. If not - it's your problem.
I have bought Transmile shares before it crashed and suffered massive losses when the fraud was announced. Lesson learnt : when in doubt - don't touch.

They are so many other clean stocks/companies to buy/invest. Why bother with a stock just because it was the darling of the analysts, whom none have had business dealings with KNM !! My sources are people who actually have had dealings with them. It is not based on newspaper or desktop analysis.
You need to have an inside track in the current crisis before you jump in and put your money at risk. The low tide will expose more fraud.

MY advise - wait for a few more months and see if any more funny business surfaces. No point trying to jump in now hoping to catch at the bottom when we just don't know where and when is the bottom !
Just trying to be helpful...caveat emptor.

P/s photo: Amigo Feng


yok hoong said...

price action suggests there's more than meets the eye though I know someone (from the O&G industry) who will vouch for the main promoter's integrity.
well, i have resisted the temptation of putting some money in the stock (it truly looks cheap at 40cents) but my instinct tells more not to.

DiN said...

Dammit, I just bought KNM on Wednesday. My decision was solely based on my technical analysis. I've planned to dump them this Tuesday. If this information is legitimate, then I suspect there will be more rallies in a couple of days, before investors start to lock in their profit.

Ivan said...

TQ Rock for the sharing.

Eric How, said...

It's lucky me not busy KNM at the moment. Let's see after 2 mth...

Richard Cranium said...

If I may, please indulge a pet peeve of mine.

I generally find business owners trying to talk up their companies in the hope that the initial momentum can gain legs.

I do know of analysts who are not too bothered to go in-depth, or worse, omit certain facts from their reports.

Let's face it, even analysts can be bought i.e. you surely know of such people being showered with gifts after a good report, no?

While I agree that investment should be based on publicly available information, in Malaysia, this is NOT an even playing field.

Sometimes internal grapevine is the better yardstick, since we can't trust business owners, analysts, and Star Business pundits.

Hell, I don't even trust myself sometimes.

James Bull said...

main promoter pull plug? Well i think this info is good when the distribution process begin.

technical trader should notice that accumulation and distribution are not something rare. one should ask why the distribution news only surface at this price? Is the distribution over?

further more, I read so many negative comments about knm in forums and blogs recently and i never saw that even when its long term bull trend gone. My experience tells that if there is really a huge problem, ie accounting scandal in a company, retailers are the last one to know but not circulated among small ikan bilis.

Personally I guess the distribution process ended when capitulation happened the day the boss was hit by margin call. This could be the beginning of the accumulation process.

Ops i guess i should stop too much may spoil the game plan.

行情总在绝望中诞生!!! :D

solomon said...

Whatever you named it whether the promoter or financial backer, I believe there are some truth behind it. Every time you have this sort of counter failing every year...but you need them to stir up the sentiment. Maybe they should have other better choice?

Also, I am extremely disturbed if my beloved pension fund bought heavily in this counter lately.

Another indicator is the buying and selling orders are damn artificially input. Are they genuine, one will know it soon. My opinion is avoid this stock, they are better O&G exposure like SapuraCrest or Petra.

If the Authorities really wanted a healthy uptrend market, they should stop the trading of KNM for a few days. For what reason? They know where to find it...Don't let everyone excited abt the market then you find a show stopper middle of the party.

The Rock, I like your sharing. But some times, it is better to keep quiet...?? Some confidentiality will do some good.
No offence.

The keyword we should watch out for the next couple of reporting seasons...Impairment of Goodwill.

Jackie Lee said...

This kind of statement shouldn't be appear at all because there is no truth about it and it merely a speculation only.

I really agreed with Mr Dali as the sharp falls in this counter was based on certain factors and not because of something fishy going on in KNM.

How about KLK from RM 19.00 drop until RM 7.00 a share in six months times. Would you call it something wrong is happeneing inside KLK ?

Let us be right that the global world market is facing a financial crisis. Even a blue chip counter also can go down to a level that sometimes it is hardly for us to believe.