I shall touch on Olam now (sorry for the delay! Busy with some stuff recently...)
Fundamental:
As for the recovery, Olam is issuing a big sum, US$750m, of 5 year Bonds which comes with "free" warrants.. trying to boost its war-chest. The cost of this debt is a whooping 13.7% according to the article by Michael Dee, saying that it sorts of instills the notion that what Brook was correct in saying that Olam is cash-poor and debt-intensive.
If you wish to read the entire report, Like my Facebook Page and message me and i can send it to you :)
In the meanwhile, Olam is still continuing to acquire businesses using the expensive debt. It's like borrowing money at 13% annually and using the money to buy businesses. You have to get more than 13% return from the acquisitions to be yield-accretive - not really my cup of tea.
Technical
Thus, short-term traders can choose to take profit at $1.90 and set a stop-loss at the $1.50 mark established in June.
Conclusion:
I agree that confidence is boosted by the support of Temasek Holdings, which upped its stakes to 18% as one of the major shareholders. However, this bad news is not one which is temporary, it divulges real significant balance sheet problems for Olam - causing equity dilution in the future due to the issue of free warrants.
Furthermore, I have read reports on how 27% of net income comes from inflated biological gains. Therefore, personally, I would regard Olam as a short-term play. For longer-term wise, its better to go for Noble group or Wilmar which are more stable.
Besides quoting other people's research, what research have you done for your readers? Or you simply agree with whatever opinion whether right or wrong of people you quoted?
ReplyDeleteSorry i don't get your meaning. This is my opinion which i infer from all the reports i have read. If it makes sense, i don't see why i should not agree with it.
DeleteAt the end of the day, it's what works that counts, not the amount of research which yields no results.
There are a lot of different ways to calculate the cost of Olam new right issues. The least you can do is to present all other possibilities and state why you don't agree with them, rather than just to present the one suit your agenda the most.
DeleteThe same for the Muddy Water's allegations. Whether true or not, the least you can do is to present both sides of stories(Olam management and Muddy Water) and state why you agree with Muddy Water and disagree with Olam management. Otherwise, I just feel you have an agenda to deceive certain people.
Woah, I take it as a personal insult saying that i have an agenda to deceive certain people. Personally, i am not vested in Olam and a blog is there to share whatever interests me or my readers.
DeleteIf you feel unjustified reading what i have to post, feel free to create your own post or go some other blogs. What i post is what i believe makes sense just like - Osim and Sarin stock picks in the past.
At the end of the day, You don't see what you like, you can choose to ignore this blog. Seriously, no one forcing you to come here.
I can make do with people who like what i am posting. Thanks for your feedback but no thanks.
If you are so sensitive, you should not post in public domain, or why not just close comment section. The power of free information is to present both positive and negative side, to let the readers decide whether the free information is fact or rumor.
ReplyDeleteMaybe you would like to share on your idea's on the different ways to calculate the cost of Olam new right issues instead of keep asking James Yeo to post on topic that suit your preferences?
ReplyDeleteMaybe you can advice and share with us in the comment section?
I personally feel that it is James Yeo personal view and comment on the stock and he may or may not choose to present as a neutral party. It up to his personal preference on how he want to present on his view.
Very great blog
ReplyDeleteI had fun reading this post. Very informative as well. I didn’t know the procedure can be easy. your blog is very nice.
ReplyDelete