Investing in junks is gambling, $713m is placing big bets

The Asia Times reported last week (8 Mar) that Singapore’s Government Investment Corporation will subscribe to 50 billion rupees ($713 million) worth of Bharti Airtel’s rights issue in exchange for an approximately 5% stake in the latter. The Delhi-based Telecommunications Company is the second largest mobile network operator in India and the third largest in the world with operations. It has operations in 20 countries across South Asia and Africa.
Airtel said that the rights issue was initiated to “further strengthen our balance sheet with desired financial flexibility so as to meet future opportunities, particularly in the rapidly transforming Indian mobile market.””....

Just last week, Moody’s has lowered the credit rating of Bharti to “junk” grade Baa3 as it has concerns over weak cash flows over the next few quarters.
In the same article, Moody’s forsees that this would increase Airtel’s cost of borrowing by 30 to 50 basis points.
As at 31 Dec 2018, Airtel’s net debt stood at more than $15 against a Market Value of around $17.5 billion.
Would you invest in debt-heavy Airtel?

Above is TRE Editorial article.

Over a longer time frame of 25 years, the Indian rupee and Indonesian rupiah have fallen against S$ by 62% and 87% respectively.  Philip Ang

People reading the above would have the impression that this kind of investment in junk status companies is bad. No need to think further. Why would anyone throw good money after bad money? This is the view of the common laymen, taking things superficially.  This investment made good sense, just like buying all the junk American and western banks during the world financial crisis. It is a rare opportunity to be able to buy once good companies at junk prices.

Think long term, in the long run or long term, junk companies would turn from ashes to gold. The rupee too in the long term would turn up as India is the next super power. They claimed they had shot down a Pakistani fighter aircraft, which the Pakistani have proven to be a lie. They also claimed to have shot down a satellite, no one has proven that this is also a lie.  Lie or truth, in the long term everything would be right or alright.

It takes geniuses to invest in junks and hoping to turn them into gold. It requires exceptional talent and foresight. This is better than venture capital investment where they hope to  make one good killing after hundreds of failures. The principle of investing in junks or failed companies is the same.

The advantage of investing in junk stocks over venture capitalists is that one is investing in a failed company that was once successful. The other invested in companies that are just starting from scratch and has yet to see success. Sure one would be lucky after a few hundred misses and the one good junk stock could earn back all the monies lost. So do not worry about the hundreds of millions lost or billions lost in failed investments. In the long run, all the losses would be recouped with a few successes in junk stocks.

This is just my view, please feel free to disagree.


Anonymous said...

Con men and women are everywhere, at every level. Sime are so cunning that they can go around all legal constraints and limitations. Some can twist and turn any activity or definition in their favour, to make $millions for themselves, and not get entangled with the law. Some if and when caught up by the laws, simply vanished in thin air, hiding and enjoying life with their loved ones (usually mistresses) in some safe havens that they have planned well in advance.

For example, read excerpts from ZeroHedge's article that appears today, titled:

Is This "Orgasmic Meditation" Business Really Just A Prostitution Sex Cult In Disguise?

OneTaste is controversial "business" that focuses on a practice that the company calls "orgasmic meditation" (OM). On its website, the company describes "orgasmic meditation" as "a unique wellness practice that combines mindfulness with the power of the deeply human, deeply felt experience of Orgasm" and which Bloomberg describes as "a trademarked procedure that typically involves a man using a gloved, lubricated fingertip to stroke a woman’s clitoris for 15 minutes"

Or in other words, and despite what it may claim otherwise, the company is selling sex.

Founded in San Francisco (of course), the company is trying to make a business out of selling better orgasms to potential marks customers, focusing mostly on emotionally walled-off women, while allowing nerdy men to finger woman (in exchange for a price). And they're not just selling videos or brochures - they're selling interactive classes, where participants are encouraged to learn by doing.

Former members spoke anonymously for fear of retribution from the company. Some called the company a "kind of prostitution ring" that would exploit trauma victims and others searching for healing. Some members believed that the company used flirtation and sex to lure in targets that were emotionally vulnerable. It is also accused of having employees be conditioned to work for free and "ordering staffers to have sex or OM with each other", or customers.

The company's classes can range from $199 for an introduction to $4,000 for a retreat, to $16,000 for an "intensive". The company also started charging $60,000 for an annual membership in 2014. According to the company, about 1,400 people have taken its coaching program, 6,500 have come to an intro class, and more than 14,000 have signed up for online courses and its app."

Comment: Like orgasmic meditation, sometimes, directors of sovereign wealth funds get their orgasms (mental and/or physical) through "making a kill" in investing in a loss cause. In this complicated capitalist world, money can flow in any direction. It can also boomerang back to the one who deliberately made a "bad" investment decision.TYou get the drift?

Moral of the story:
End of the money flow is more important than the beginning of the money flow.

Because modern robbers are extremely good at the game of deception, and covering up their tracks, to ensure they won't get caught/charged.

Anonymous said...

It's a poison pill by Bharti Airtel (to fund their massive offensive) that Singtel & GIC has to swallow, else they would be massively diluted. S'pore is playing defense in depth & will need to take tactical opportunities going forwards to exit positions profitably.

No worries, the IRR for both Temasek & GIC is much better than RB, LOL.

Temasek & GIC performance not fantastic in the last 10 years (and certainly very overpaid), but definitely much better than most on this blog. Hahaha!

Anonymous said...

In my opinion, investing with the people's money in India junk stocks is OK if it can lead to enhanced India-Singapore relations. CECA ! CECA !

Anonymous said...

@11:01 am:

"Temasek & GIC performance not fantastic in the last 10 years (and certainly very overpaid), but definitely much better than most on this blog. Hahaha!"

EXACTLY! These are highly intelligent people. That's ehy they arr highly over-paid and over-powered (pun intended). Making profits for any corporation is a daily routine. But making deliberate losses by buying high and selling low requires a lot of guts and skills. That makes the difference between boys and men, in the financial world of OPM.

jjgg said...

Anon 11.01.. if RB had been gifted the same treasure trove as temasick..could he not have achieved better results than the bunch of monkeys currently running it? Really .how does one invest in falling knives n hatchets..what imagination do you require to invest in standard chartered..sell your power assets.. invest millions into fnb business championing showmanship instead of culinary skills.. perhaps you are bamboozled by luxuriously outfitted offices protected by gurkhas..myself.. temasick has yet to prove itself beyond its original investment.

Anonymous said...

Aiyoh, those who manage GIC knows this is other people's money.

When they make, all accolades accrue to GIC. When they lose money, they just keep quiet and let the kpkb-ers have their say.

How many Sinkies actually know or are aware of this? And what difference does losing a few billion S$ make to their daily struggle of making ends meet. They still have to slog to pay their bills, eat and shit, day in and day out. Any benefit to their financial position when GIC make or lose money? Ignorance is indeed bliss! Knowing too much is bad for health!

Anonymous said...

India is rising, like the snake inside the basket rising when the music starts.

Now who else can master the rising rope trick but the Indians. Let's hope GIC does not fall for the Indian rope trick, otherwise it will be gazing and holding on to thin air when the music stops.

Anonymous said...


No need to KPKB about GIC or Temasek or CPF.

1st look inside at yourself. Whether you can create a self-sustaining portfolio that can provide all your living expenses needs till you die, without you having to work?? This is what's important.

Your portfolio can be stocks, or properties, or businesses, or a combination ... whatever.

If you can achieve this before 40 --- you're damn fucking good.

If by 45 --- you're in the top 5%.

If by 50 --- you're in the top 10%.

If by 60 --- you're in the top 20%.

Lye Khuen Way said...

Redbean and almost all who comment before me are superbly cynical.

We have all mastered the art of cynicism to stay sane.

Stay healthy.

Anonymous said...

'No need to kpkb about GIC or Temasek or CPF'

For the same reason no need to kpkb about how much money you make or what kind of portfolio or 'whore stocks' you are holding. Irrelevant information all the same!

Anonymous said...

So long as l collect my salary and COMMISSION,
WHY do l care if l make or lose on the Bet ?
You Daft ?

Anonymous said...

Once a person is convicted for saying fake news

Anything he say will be 50/50.

Anonymous said...

Investing is another word for gambling. It only makes it sound a nicer and "cultured".

1. Both involve value (money, shares, commodities, objects).

2. Both are subjected to risks.

3. Both lead to either win or lose.

Ⓜatilah $ingapura⚠️ said...

@ I suspect GIC quietly take cover...smoking ganja

Market cap 17.5b, owe-money-money-pay-money 15b.

Yah, suck on those joints harder boys. You are not high enough yet. 😂🤣

If you are high enough, you will know that debt MUST be HIGHER than equity! Therefore after you buy the company, you should borrow more and offer MORE junk bonds. Better still, get Temasek to buy up the junk bonds. Keep it in the family. 🤪

Anonymous said...

This is just my view, please feel free to disagree.

So how much discount to be given for such views? LOL

Anonymous said...

If RB is a billionaire or CEO of GIC, do u think he will have the same views as what he wrote?

CEO of GIC he is not but billionaire I don't know lah.

Ⓜatilah $ingapura⚠️ said...

@ be patient lah

I don't know all the fine details of this deal, but the smart play would be to wait for a collapse of this debt ridden company which has massive market share, then come in aggressively and buy CHEAP, like PEANUTS.

Pay the junk bond holders (junior debt) 2-5 cents on the dollar, after settling the senior debt. Share holders get zero of course. Fuck them 😂

Then I would say it's a good buy. Temasek and GIC not aggressive enough lah. Smoking ganja too much 🤣

Ⓜatilah $ingapura⚠️ said...

@ RB,

If suckers want to gamble, be wise and become the CASINO and warmly invite them to play. 😆

Ⓜatilah $ingapura⚠️ said...
This comment has been removed by the author.
Ⓜatilah $ingapura⚠️ said...

@ no money, sell backside

Rights issues. You know the company already utang money and pokai boh lui so must lelong lelong sell backside at “special price”.

One must ask the obvious lah, how come such a large company with majority market share get into a bucket of shit? Something not right lah. Probably a lot of things not right.

So how come the GIC puts OUR sovereign funds into such a fucked up company?

Anonymous said...

You either buy over a new starter that has good potentials to grow - like MS Dos, or old small business that has huge potentials like McDonald. You don't buy a failing company that is going bankrupt, unless you (eg Iacocca) have the skills to turn it around (French company that bought over the mal-managed and mismanaged NOL that the useless green-horn paper general sold for a song).

Temasek sold good companies to use their proceeds to cover the huge losses made in foreign investments? Yet thinking of buying bad, losing big time, Indian company? If so, it would be a laughing stock like Brexit isn't it?

Anonymous said...

Seems to me the natural aristocrats here are totally infatuated with all things Indian. They are so spell bound by India that they can't differentiate between the genuine and the fake or what is of value and the worthless. They pursue and embrace and welcome here anything Indian, including bankrupt companies, fake talents, terrorists, criminals.

Virgo49 said...

ST past few articles highlighted so much publicity on that what's Vlogger or Blogger making Sinkieland his home.

What's so great about this Black Ant?

Now you see any Publicity Videos of Sinkieland. First human creatures will be the Black Ants before others.

Loved Indian Curries.

Think too many overriding the stooges in the House.

Better standby to stay with the Mats in near future when been overran.

Anonymous said...

There are bad ahneh stocks as well as good ahneh stocks. So far my $200K position in an ahneh equity fund has grown to almost $1M from the bottom of GFC in 2009 till now.

I have similar large positions in US, tech, China, ASEAN ... although at different amounts of returns.

I'm a macro guy focusing on big trends & medium to long plays in countries & regions. Hence I seldom get nitty gritty with individual companies. Instead I simply use established funds & ETFs to realise my ideas. I then use long term indicators to get out when the trend turns against me, and go back in again when the trend returns. So far it's worked over the past 15 years.

Anonymous said...

1.21am anon, u must be the WSG can't sleep at 1.21am and starting to blow cow again.go get treatment from your xiful Matilar and let him sodomize you to cure u lor 😀

Anonymous said...

Since 2004, when the Cancerous Sissy (CS) took over, the Tiny Island of Fadding Fortune (TIFF) has been slowly but surely taken over by Ah Nehs. The CS, owing to fear of another remission, has been practicing MED-I-TA-TION day and night, thereby requiring 8 other minions-stars to assist in the running of the Pee-Aim-Ooh. This has seriously increased the already high costs of running the Gabramen. This also reflects his incompetence and inefficiency.

Owing to his incompetence, inefficiency and fear of high stress (that will cause the return of cancer), he has let those power-crazy millionaire-stars to assume and absirb most of his functions, tasks and responsibilities. As a result, the Ah Nehs in power silently but determinedly took over control (almost total control) of the TIFf.

That is why Yew are now witnessing so many key and important top positions are being held and controlled by either local Ah Nehs or Black Ants from that 3rd World rapists and fake degrees Cunt-tree.....

The aim of the huge numbers of Black Ants influx is to replace and overwhelme the majority local Chinkies.

This has been the third phase of Social Engineering Master Plan of the treacherous thinker. The first phase was "Two is Enough" to reduce the Chinkies population. The second was the "Graduate Mothers Scheme". This third phase to make the Chinkie Majority to become a Minority is disguised as the "Foreign Talons Scheme".

P/S: Talons are the sharp claws of the eagle. They swoop down out of nowhere frim above and snatch the meat in your hands, thereby scratching your hands that feed them, and leave you bleeding...
That's why you see eagle or falcon trainers always wear very thick leather long arm-gloves.

So, in order to deal with the Foreign Talons, you need a pair of thick, long, leather arm-gloves to protect your hands that feed these ungrateful and vicious creatures.

Anonymous said...

Anon 643am

I'm not WSG. He's retired shaking legs while I'm still working.

Although I suspect my investment thoughts & philosophy similar to his. I find his take on long term trends in defense, security & healthcare industries to be quite interesting.

Anonymous said...

@Anon 7:31am,

Careful ... what you wrote is sedition & instigating racial disharmony involving 2 official racial groups in S'pore.

Somebody showing or raising complaints about this type of comments to ministers, MPs, or police will definitely invite uncomfortable followup/investigation with RB, forcing him to tone down his writings, & to have much stricter censoring of comments or disabling comments altogether.

Don't give other people the ammunition to hurt yourself, or in this case RB.

Ⓜatilah $ingapura⚠️ said...

@ WSG, Macro Guy and other like-minded folks who enjoy The Zero-Sum Game:

>> You don't buy a failing company that is going bankrupt, unless you (eg Iacocca) have the skills to turn it around <<

This is true. However, this big Indian telco has a huge market share (the biggest). In "Buffett-speak" this is known as a MOAT. And the world of business has talented folks to do this sort of "turnaround" thing, even if our GIC itself doesn't.

Or...althernatively.... this might be a VALUE TRAP and a low share price could be the result of a completely fucked company with NO HOPE of recovery, no matter how talented the new management is. I certainly don't know what the real situation is.

The GIC and its subsidiary, Temasek are double-edged swords. On the one hand they have a huge amount of deployable capital to take large positions of significant advantage.

On the other hand, they suffer from the Principal-Agent Problem: do these financial managers act in the interests of "shareholders" (ie.e the State and the People os Singapore), or do they operate by being motivated by SELF INTERESTS. Since there's no effective over-sight, this is IMO a BIG PROBLEM.

They can suka suka use "other people's money" to yaya papaya and capture gains when they "win" and distribute losses when they lose money. Damn big problem lah.

Ⓜatilah $ingapura⚠️ said...
This comment has been removed by the author.
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