As this is a forum, I respect your views, especially as you're a skilled investor. For this post, I share your conclusion as my view is bonus/split can produce a higher market cap for companies with good earnings, but it can't turn stone to gold.
Agree. Condemning is his motive. KC also a lot of Holland counters. Pls refer to my past posts. If he is really good he must be very rich and no need to beg people "joining his course for a fee" in his numerous blogs.
Posted by John Chang > Oct 15, 2016 10:01 PM | Report Abuse Vivocom example of stone? ^ haha
If the stock that you have invested based on FA is giving bonus, splitting and free warrant , do you feel happy and expect the price will rise tomorrow ? (I am talking about tomorrow not 10 years later )
If your answer is "YES" , then 1+1 = 3
If your answer is "NO" , then 1 + 1 = 2
In any market play , muture or not mature, other than TA , FA and luck , there is also some element of market sentiment or psychology
Remember
I am talking about the immediate effect ofrom the exercise , not 10 years later that everybody would have forgotten the exercise long ago .
I share pisanggoreng's opinion, share split, bonus issue and free warrants will benefit shareholders in short term due to market psychology and human psychology of the market. I know very well that in term of FA, there is no increase of value.
Stock market is not 1+1=2, market psychology and human psychology comes into play. A person will think that buying Gadang at 3.00 is expensive, buying Gadang at 1.20 after corporate exercise of share split, bonus and free warrant is very cheap. Most investors are not so knowledgeable about fundamental of the stock.
Actually u need to view the freebies in 3 perspective;
1. academic; thereotical No different like most university professors said.
2. Practical View bonus as positive....if your counter is undervalue, having bonus will bring up and sustain a higher value in your stock, even short and long run. Bcos this bonus call for rerate the valuation of your stocks.
3. Practical View bonus as negative...if your counter is overvalue, having bonus, give u is chance and opportunity to sell....as usually short term it will bring up the value, thus u should take the opportunity to run fast. Bcos long run, it will come down bcos of overvalue
Raider see bonus are use as a publicity campaign tools use by companies, u need to make use of it intelligently in order to profit from it
Not all what he wrote is 100% correct. For short term holder , when the share price not go according to expectation, you will mention is pariah stock. But when it go up at 0.370, you mention a darling stock. If a greed blind u not profits taking, pls don't blame the stock. Blame yourself. Many company has history. The most important the company need to amend his mistake and start reconstruct urging and generate revenue. If Vivocom share price stand at 0.200 is not attractive enough, when it's go up 0.400 you will say it expensive enough.
Conman will use bonus issue to manipulate naive investors thru bonus mah.....!! Usually if the stock is ovevalue with not that good prospect and the company announce a bonus issue....it is better to take the opportunity to sale loh....!!
Posted by John Chang > Oct 15, 2016 10:01 PM | Report Abuse Vivocom example of stone? ^ haha
Posted by CKNYAM79 > Oct 16, 2016 10:58 AM | Report Abuse When Vivocom reach target revenue rm500mil after q3 and q4, then I want to see what he will write later.
Go back to the link below and see how all those corporate exercises carried out by Vivocom in the event study graph made many investors lost tons of money, and also the historical share price movement of Vivocom in the link below.
Posted by pisanggoreng > Oct 16, 2016 09:41 AM | Report Abuse Ask yourself a simple question If the stock that you have invested based on FA is giving bonus, splitting and free warrant , do you feel happy and expect the price will rise tomorrow ? (I am talking about tomorrow not 10 years later ) If your answer is "YES" , then 1+1 = 3 If your answer is "NO" , then 1 + 1 = 2 In any market play , muture or not mature, other than TA , FA and luck , there is also some element of market sentiment or psychology Remember I am talking about the immediate effect ofrom the exercise , not 10 years later that everybody would have forgotten the exercise long ago .
Hi Pisanggoreng my good friend, how are you?
If your answer is "YES" , then 1+1 = 3 If your answer is "NO" , then 1 + 1 = 2
EAH and Vivocom's management wanted the general public to believe that 1+1=3, and true enough, many of them believed. The insiders, and also the minor shareholders if they have sold at the high, certainly benefited enormously because they were able to convince that 1+1=3. What happen then?
The poor new shareholders who believed that 1+1 =3 chased the share price up while the insiders and major shareholders dumped them in drove. Finally the truth prevail. 1+1 is not equal to 2, but 1+1 actually equaled to minus one.
The truth exposed was not after 10 years, not 5 years, but one month, or just a few months.
Please go and read what I have written there and my event studies.
For good companies 1+1 sometimes does equal to 3, or 10, but sadly most of the time, 1+1 is indeed equal to 2, and even equal to -1, or -5 very often.
Bonus, share split and free warrant are all 'gimmicky' exercises carried out by companies, typically in Malaysian stock markets. Technically it does not create any extra value to the share price. However, like what most commentators says, psychologically, investors 'think' that they have 'gained' extra shares.
In the longer term, any short term movement after the bonus, split or free warrant will return to its original equivalent price if there is no additional positive/negative factors occurring to affect the movement in the price.
Directors should concentrate on running the business instead of carrying out all these unnecessary, useless and costly corporate exercises to artificially inflate the company's share price.
If the fundamentals of the company are so good then they should increase or declare special dividend payout to all shareholders.
fundamentally it can also be argued that these corporate exercises actually increase value by improving the liquidity of the counter. In valuation, a discount can be ascribed for lack of liquidity so improved liquidity actually improves valuation of illiquid counters.
that said, most companies that have these corporate exercises actually already have pretty good liquidity. so I agree with the views above that it is more of a market psychology thing, good counters will still shine with or without these exercises, the opposite is true for lousy counters.
one also cannot ignore the forces of traders who will buy up the shares when such exercises are announced and sell at a high. it is nothing more than another technical indicator for them. such traders will increase the price volatility and if the company has poor fundamentals, it will crash hard when it's under selling pressure
It is a double edged sword For a great undervalue company , it is definitely a goodie For a pariah overvalued company, it is definitely not a goodie What KC wants to tell you is you must have the knowledge to identify whether it is a goodie or non goodie So join his online course if you want such skill
Honestly speaking to me and most of the people here including KC himself, it is a goodie . Because we buy great companies, not vivacom or Egh so fond of corporate exercise
Posted by apini > Oct 17, 2016 06:44 PM | Report Abuse It is a double edged sword For a great undervalue company , it is definitely a goodie For a pariah overvalued company, it is definitely not a goodie What KC wants to tell you is you must have the knowledge to identify whether it is a goodie or non goodie So join his online course if you want such skill
Honestly speaking to me and most of the people here including KC himself, it is a goodie . Because we buy great companies, not vivacom or Egh so fond of corporate exercise
Thank you very much my friend apini. I absolutely agree with your last paragraph.
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Posted by ronnietan > 2016-10-15 21:44 | Report Abuse
As this is a forum, I respect your views, especially as you're a skilled investor.
For this post, I share your conclusion as my view is bonus/split can produce a higher market cap for companies with good earnings, but it can't turn stone to gold.