Valid Question
rask3: Hi, Thanks for your views. I enjoy your arguments as well as your humour. :) An avalanche of statistics can be trotted out to stress the validity of a projection. Yet those statistics can fail to capture a very crucial factor or point that casts reasonable and valid doubts on the prophecy. I would like to illustrate what I mean by an example from your own blog. Several weeks ago you called a buy on UEM World at around RM4.00 or thereabouts. Correct me if I am wrong. (I made a bigger call when stock went to RM3.20) You painted a rosy scenario on how the stock could double or triple from there, before the year is out. Well, you may turn out to be right and make many people rich by your prediction. Being the cynic that I'm I checked the stock on Bursa's website. You know anyone could do that easily. What I found was, insiders of UEM were selling the stock like crazy and en masse. Knowing that insider selling is not always an ominous sign, I considered the reasons for them to do so. They may have sold them for any of the following reasons:
1) They all had better investment opportunities elswhere.
2) They all were not greedy and wanted to leave some money on the table for others.
3) They all had to meet urgent financial obligations.
4) They all were taking partial profits as an insurance, in case the market tanked and took away their paper profits.
5) Being better informed about the company, they didn't put much credence on the rosy projections made in the print media or the internet.
6) Well, there could be other reasons.
I wondered at that time why your scenario didn't point out the crucial fact of heavy insider selling. May be you weren't aware. May be you thought it was not all that significant. May be ........ Well, readers, take all investment or trading advice, be it in the print or internet media with a pinch of salt before you plonk down your hard earned money. Check out the story. Dig deeper. You owe it to your financial health. Despite the disclaimers that people who make recommendations cover themselves with, people do act on recommendations if they seem plausible at first glance. Sometimes their prophecies become self-fulfilling. Thanks and good luck. Rask
Nice job Rask. I am aware of the insider selling. Good advice too. Me, I tend to think all people should pull back and take a snapshot where they are most comfortable over the situation. You assume insiders know the destiny of a stock price. Of course insider selling is not a terribly good sign but it is also not necessarily a sell sign. Yusli can tell you that already!!! He sold at RM6.50 and then at RM8.50 ... call him up!!! I do agree that insider selling is more important when it comes to very speculative or low paid up counters, more prone to manipulation, not so much when it comes to bigger caps.
Just think of the time when you LOST the most money on a stock, think clearly, ... wasn't it because you were so close to the source, very inside already!!! 9 out of 10 times, that's the case, which is why its better to pull back and take an overall snapshot of a view. That's why Warren Buffett can operate better by not being in NY or London but Omaha. The same insiders who are selling are just as intelligent as you and me. To take insider selling as an indicator is ok.
11 comments:
Hi Rask,
The reason why there is huge insider selling is because there are a lot of ESOS being granted out to UEM employees, especially the top management.
Lower levels get 15 lots, some higher management gets 40 lots , ex price around 1.50 (this was when there was IPO). You have to also understand that UEM was 50 cents very recently back too, so comparing 50 cents and RM4, seems like a pretty good time to cash out a bit too.
You will see a lot of filiings of disposal of shares, most of them are by top management, who are not all that rich if not for that UE shares. So realising some cash to buy a new house might be a good idea. However, bear in mind that a lot of the employees are still holding on too a lot of those shares.
These people are also may not be finance people (top management, only 1 out of 20 knows what price earnings is, trust me on this) , so they thought RM4, heck that's a lot of money, why not cash out.
So I would not put too much weight on those disposals if I were you, unless you see someone dump a huge chunk like 5% of the entire UE shares on the open market, then maybe then peopple whould start worrying.
Besides, sometimes insider selling is to strategic investors. And in relation to the IDR, there are many investors wanting in.
For example, one of JP Morgan's vehicle as well as one of USA's biggest funds took a signifigant stake in ekovest bhd, which is another IDR stake.
I'm sure salvatore will tell you that there are many investors wanting to buy in UE as a proxy to rising land values in Johor. Why not buy land there? Hard to get good land at reasonable prices, people are holding out for more. so why not just buy a listed entity as a proxy to rising land in IDR.
Well, just to soothe your concerns (but that does not neccesarily mean that you should not monitor your investment) CMY bought a large chunk at this current price level.
CMY bought in a lot at current levels?? where u got this info??
Tan,
jom, if i may answer for you ... while it might seem ok to ask these direct questions, to the person supplying the info, its too much information to reveal ... as this is a public blog, its only to reveal certain info, i have been communicating with jom before n knows why his views are believable ...
it is a bit much to expect jom to say:
a) i'm his mistress adopted son
b) i'm dating his beautiful daughter Carmen
c) i'm cmy asshole nephew
what do u want him to say that would not incriminate himself ... we need to learn to ask better questions
d) i'm one of his remisier
e) i used to be his lackey boy in the Phillippines
f) i'm screwing two of his 5 maids
g) i'm his helicopter pilot
h) cmy is my chor-dai-dee partner
the list goes on...
I'm CMY!
Thanks Salvatore. Although I'm sure that anyone would not mind being in possibility B, I would have to say that it's purely hearsay. I suppose everyone has friends who heard from their friends and so on and so forth. Also a lot of this information is readily available if one does his research.
I'm not sure how much he bought or at what price levels, but he did buy , maybe not too much to attract attention, but enoough to invest.
And Tan, if you do your research , you will indeed find that CMY's name keeps appearing eveywhere in relation to the IDR, such as ekovest's annual report, and his daughter was also involved in the RPGT thing. His name does lend a lot of credence to the IDR.
Apart from that, other reputable investors like JP Morgan should also warrant similiar attention.
Hi All,
Dali, thanks for front paging my comments. I dindn't mean to insinuate that you had less than noble intentions, in your UEM World call.
They say the most important information in an annual report of a company is contained in its fine print. Not in the bold print.
One of the reasons why insider dealings are required to be reported to the stock exchange is that, while it may not mean much to investors sometimes, the information that is accessible to the insiders give them an unfair advantage over public investors. The public should never take insider dealings lightly, especially when it is done en masse. I Capital keeps reporting insider dealing as and when it deems it fit and necessary.
My post was not aimed at questioning the validity of the premise that the stock price of UEM World could do well in the near future. That it may, with or without the presence of CMY.
All I wanted to point out was inconvenient truths can be swept under the carpet when a reccommendation is made. For reasons know to a select few. There could not be a level playing field in such cases, could there?
Just my two cents.
Rask
When market is low, everybody is cold and hide.
When market is high, everybody is hot and fight.
Internet discussion only....WHAT?
RIGHT?
"Being Right may mean you soon have nothing left. Especially when you are against the long term trend."
rask - pt taken, appreciate yr views
cin - lol
jom - u can't be the one cos i'm the on dating her
pricechart - noted
interesting, salvatore. You might want to warn your girlie not to wear such a tight blouse in a construction site. Accidents are bound to happen y'know? anyway do let the world know when she's back in the market.
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