Sorry for the slow updates, been really caught up at work. I have not sold as much as I had suggested in my last May post due to onerous restrictions at work.
The acquisition rationale felt like the planning was messed up.
Ultimately shorting - you need 7 stars aligned. You cant brute it, need to pick the right fight.
I wont comment on CMZ, but feel free to exchange views with me by dropping a note :)
Just read a local business news publication and saw an article which got me a tad disappointed with the quality of reporting here. Nothing irks me more than generalization and mis-aggregation of information. It talks about China needing to improve quality of disclosures and regulations and goes on to suggest that Indofood taking over China Minzhong (CMZ) is a divine retribution to foreign speculators. In the reporter's exact words, "They should have been aware that Indofood taking up a majority stake would mean they have done their homework".
To explain shortly the story, basically Glaucus (Canadian based research firm) accused CMZ of fraudulent financial reporting with a report and a short position. Stock fell 48% to S$0.53/sh. Subsequently Indofood, a Singapore listed food products and palm oil company affiliated with Salim Group who already owns a 33.49% of CMZ, announced taking over CMZ at S$1.12/sh, valuing the firm at S$734m.
A public announcement to rationalise the offer and to correct the article was rather akward. LINK here and LINK here. My thoughts:
- Does Indofood taking over CMZ mean they are necessarily right and Glaucus is wrong?
- Does taking majority take (30+%) mean Indofood has absolutely done their work and are right?
- If you bought Zhengzhou Siwei Mechanical and Electrical Co like how Caterpillar Co done their work, congratulations, you have just managed to make -84% returns within a few months. Many other examples like China Agritech and China Biotics and the list goes on, and on and on.
I cant fathom how anyone can make such a statement. Fallacious much?