Thursday, 20 October 2016

Doing nothing can be pretty good

Article in The Wall Street Journal:

"What Does Nevada’s $35 Billion Fund Manager Do All Day? Nothing"

Some snippets:

Steve Edmundson has no co-workers, rarely takes meetings and often eats leftovers at his desk. With that dynamic workday, the investment chief for the Nevada Public Employees’ Retirement System is out-earning pension funds that have hundreds on staff.

His daily trading strategy: Do as little as possible, usually nothing.

The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes.

Mr. Edmundson may make one change to the portfolio a year.

His strategy is to keep costs low and not try beating markets, he says. “We’re bare bones.”

From his one-story office building in Carson City, Mr. Edmundson commands funds whose returns over one-year, three-year, five-year and 10-year periods ending June 30 bested the nation’s largest public pension, the California Public Employees’ Retirement System, or Calpers, and deeply-staffed plans of many other states.

With no one else on his investment staff, Mr. Edmundson rarely uses his conference table and four extra chairs. He volunteered his office to pension-fund employees who work for accounting or benefit calculations.

Last month, a wall went up dividing the room. “I’m not going to complain about my office,” he says. “It was too big.”

Monday, 17 October 2016

SC sues Stone Master executive

The Securities Commission announced:

Securities Commission Malaysia (SC) recently filed a suit against Datin Chan Chui Mei, Deputy Managing Director, Stone Master Corporation Bhd (Stone Master) for allegedly causing wrongful loss to the listed corporation.

In the claim, the SC alleged that Stone Master had entered into several agency agreements with 23 foreign companies for the exclusive rights to market and promote, in Malaysia and Singapore, products belonging to the foreign companies. In consideration of the exclusive rights granted to it, Stone Master paid several local representatives of the 23 foreign companies a sum amounting to RM11.59 million in the form of a non-refundable deposit. The SC alleged that of the RM11.59 million, a sum of RM11.54 million was subsequently paid by the local representatives to Datin Chan’s personal account, in breach of sections 179 and 317A(1) of the Capital Markets and Services Act 2007 (CMSA).

Section 179 of the CMSA prohibits a person from using any manipulative device for the subscription, purchase or sale of any securities. Under section 317A, a director or an officer of a listed corporation shall not do anything with the intention of causing wrongful loss to the listed corporation.

In order to prevent dissipation of the RM11.54 million paid into Datin Chan’s banks accounts, the SC had, on 28 September 2016, obtained an injunction from the Kuala Lumpur High Court to restrain Datin Chan from dealing with the monies in her bank accounts up to the amount of RM11.54 million. In granting the injunction, the High Court also ordered her to provide a detailed account of the RM11.54 million which she had received.

In the suit, the SC is seeking various orders, including an order that Datin Chan:
a.contravened sections 179 and 317A of the CMSA;
b.makes restitution to persons aggrieved by the contravention;
c.pays the SC the said sum of RM11.54million, to be held in trust for Stone Master; barred from being a director of a public-listed company for a period of five years.

SC is also seeking a civil penalty for the sum of RM1 million against Chan.

The High Court has fixed 14 October 2016 for her to respond to the injunction application.

Well, that is quite heavy stuff and rather specific in amounts and payments made (except for the exact time line).

Not surprisingly, the share dropped like a stone (pun intended) after the news.

Bursa queried the company on the above, and the company replied in a rather disappointing way, without giving much specifics.

It also appears that Datin Chan stays on as an executive director, no announcement of her resignation has been made.

Would it not be much better if she steps down for the time being given the seriousness of the allegations, as long as the air is not cleared?

Friday, 14 October 2016

Slater and Gordon: hubris, a roll-up and "work in progress" (2)

According to this article in the WSJ:

There’s a cautionary tale playing out in Australia over what can happen when law firms take money from outside investors, something that’s still prohibited here in the U.S.

Slater & Gordon became the world’s first publicly-traded law firm back in 2007, after the passage of legislation that allowed Australian firms to move beyond the traditional partnership model. The United Kingdom soon followed with its own law allowing outside investors in the industry.

Now, after a disastrous acquisition and crashing share price, Slater & Gordon finds itself on the wrong end of a class action suit.

I am sure the reader notices the irony in the above. The article continues:

Slater then went through a restructuring and laid off staff to avoid bankruptcy, but in August the firm said it had lost more than 1 billion Australian dollars. It’s share price has gone down by more than 95% in less than a year, reports.

Tuesday, 11 October 2016