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11/30/2012

Olam did the right thing



Olam is perhaps the first locally listed company that stood up to defend its position in the face of an attack to run down the value of the stock. This has saved many investors from having the value of their investments wiped out over night. Olam’s price is holding steady at 1.55. It could be seeing $1.20 or a run with its value crashing if Olam did not stand up to fight. The act itself is an assurance and affirmation that the management is confident of what they are doing and no hanky panky operations is going on.

And also must thank Temasek for speaking up to in support of Olam. Otherwise, its investment in Olam could also be sold for a song and another big write off. The position of Temasek is very important to hold back local investors from shorting the counter to kill off Olam.

The battle is still not over yet. The selling is still going on. No one really knows who or how many funds are behind the sell down of Olam. It can’t be just computer trading that is putting the pressure on the stock. The final picture is still unclear and this could be a temporary hold fire stage. The collaborators could come out selling again when the coast is clear. They have not show hand yet.

22 comments:

Anonymous said...

I've already sold my Olam shares. No point in helping to prop up the share price right?
Benefit who?

If Olam is a sound company, it will survive a lower share price.
You mean a good company needs a high share price to survive?
Like that how can be a good company?

Anonymous said...

If Olam shares so good. So undervalued. Then let's see the top management buy more Olam shares. Vote of confidence right? Putting your money where your mouth is.

Matilah_Singapura said...

What if the short-sellers are right?

Then what? Temasek use CPF money to lend "assistance"?

Now that would be interesting.

Chua Chin Leng aka redbean said...

You think Temasek like you anyhow hoot huh? Temasek says or does think is always after serious consideration by the experts. So when they came out to support Olam, it is after due diligence. A pat on the back of Olam.

Matilah_Singapura said...

I don't know for sure, and neither do you. So don't be a smarty arsey.

All I'm saying is it pays to be skeptical and suspicious when it comes to public companies and their "accounting".

Wah, just because Temasek says something everything automatically OK ah?

Please lah.

oldhorse42 said...

Does Olam has any choice but to put up a semblance of a fight? It is a hugh conglomerate vs a one man show called muddy water!
When there was talk of Olam losing big time in cotton trade, its price went down to $1.36. I think its price may even go down to below $1.30 this time.

Matilah_Singapura said...

If they are doing naughty things, they should be viciously shorted.

I'm tilting towards the opinion of Mr Blocks -- he is like a bloodhound exposing nefarious goings-on, like fraudulent Chinese companies etc.

I smell a rat. Too much cronyism in Asia...anything is possible (and probable)

Anonymous said...

Maybe Singaporeans should join in the short selling?

Chua Chin Leng aka redbean said...

Must respect big name companies and the high paying professionals paid to do due diligence.

Why must you be so cynical? Just because I say must believe and you believe? So naive.

Chua Chin Leng aka redbean said...

My apologies to the other bloggers. I talk to Matilah is like dat one. This stateless bugger needs some scolding then he feels shiok.

Anonymous said...

Let us hope that your faith in Temasek`s judgment is borne out. You seem to forget Temasek pumping a further $150 million into beleagured ABC Learning shortly it collapsed. But for the fact that Temasek is a major shareholder Olam`s shares will be even lower. Analysts value companies with GLC participation, first on a stand alone basis and second, with GLC participation. The first can sometimes be much lower because obviously a major shareholder with deep pockets will respond to a call for further injection of capital. This in fact is the boast of Olam in its response to Muddy Waters.

Walau said...

I read reports from both sides but for muddy waters report they mentioned olam is cash negative till few years down the road and on this point there is no dispute as olam state that they are in investment mode. Generally I do not like company goes into extended period of investment mode as this not only burn up all the cash, it also expose the company to what if there is a major economic recession? Then all the assumptions made for all the acquisitions will go up in smoke.

Based on this fact alone which is not disputed, I decided to take losses and bail out. Unless there is a strategic rethink, I think the risk is high.

Matilah_Singapura said...

What if they are really bozo crazy...and what if Carson Block's "discovery" is only the tip of the iceberg and that many other public companies are also doing their "Enron thing", burning cash like it was a disease.

Now that would be simply entertaining.

Chua Chin Leng aka redbean said...

I think we all know the track records of Temasek, officially and unofficially. I have no further comments on that. Caveat emptor.

I even raised the issue of who is really shorting the shares of Olam all this while. Your guess is as good as mind as the devil will not show its horns. We are looking at things at face value and we are also looking at things from our own perceptive minds and questioning everything we see. I do not think anyone here is so naive to believe in anything.

I don't even believe in what I said: )

The real entertainment, ok this I agree with Matilah, is when the good turns bad and the bad turns good. It will be so hilarious for sure.

Word of caution, the angel could be the devil and vice versa.

Matilah_Singapura said...

Redbean sitting on the fence again, neither here nor there.

I can't understand why he's so "upbeat" when usually it is doom and gloom as far as the finance sector is concerned.

Got money and power involved. Also special interests at stake.

Chances are, shenanigans are afoot. Not a guaranteed scenario, but the possibility is distinct.

Anonymous said...

I read both MW 133 page report and olam subsequent 45 page rebuttal. I find MW is just too opportunistic in it's claims.I think they are just out to make big bucks.But olam response is quite effective and it us making it hard for MW and it's accomplices to succeed.

Chua Chin Leng aka redbean said...

Matilah, for someone of your age, you are so presumptious and naive. No one in this case really knows the truth. Who is the angel and who is the devil only the parties themselves know.

But you are adopting a stance that you already know. How fallacious can that be.

Everyone being presented with a news or position should not take them at face value but to look at the facts and make his own conclusion. Sometimes when formed, it is best to keep it confidential, as the truth is hard to bear.

Anonymous said...

Why don't you put your money where your mouth is and buy some peanutty S$1.50 million worth of Olam shares like what uncle Verghese did.

For good measure, you might also like to invest some of your CPF savings in Olam bonds which are now trading at giveaway prices.

Haha.

Chua Chin Leng aka redbean said...

I would have put my money in if I know what is going on. Do you?

The point I was making is that no one knows who is the real devil. So don't be presumptious unless you have inside knowledge of the whole saga. The person who is saying he is supporting could be shorting the stocks for all you know.

How many parties are working with Muddy Waters to short the stock? And who are they? Do you know? I don't.

Anonymous said...

Questions, questions, questions.

Then why are you taking sides?

Your piece suggested that MW had ulterior motives.

It is pretty obvious to the general reader who you think the devil is.

Anonymous said...

Eventually short sellers have to buy back the shares they had earlier sold.

Matilah_Singapura said...

redbean, pretending to be old, wise man:

>>Matilah, for someone of your age, you are so presumptious and naive.<

Yes, you are 100% correct. That is why no one should ever take what I write seriously.

However, that doesn't mean what you write is any better ;-)

>> Who is the angel and who is the devil only the parties themselves know.
<


WTF? Just any how hantam and guess lah. As if this is sooo serious. It is not. It is some motherfuckers doing wild things in the finance sector -- it happens occasionally, because the "authorities" tend to be asleep.

It is "entertainment" just beginning....as we have seen in many "entertainment blockbusters": Long Term Capital Management, Lehman, Bank Of America, AIG, WorldCom, Enron...finance and capitalism lah...there's bound to be "a jolly good show" from time to time.