Wednesday, 31 August 2011

"Good money for good governance"


Good article from Business Times (emphasis mine):
http://www.btimes.com.my/Current_News/BTIMES/articles/RAYADEEN/Article/index_html

Good corporate governance is a key criterion for institutional investors when analysing companies to invest in, says Aberdeen Asset Management

 
Kuala Lumpur: Institutional investors are keen on companies with good corporate governance (CG) and are willing to pay top dollar to invest in them but sadly, few fit the criterion in Malaysia, says Aberdeen Asset Management, one of the country's top investment firms.

"We care about things like GCG because a company with sound governance policies will outperform over the longer term. We don't mind paying a premium for CG because we know there'll be a board that will always be watching our backs," said Abdul Jalil Rasheed, its head of equities, who helps manage US$2.5 billion (RM7.5 billion) of assets at the firm.

He said CG is a key criterion for Aberdeen when analysing companies to invest in.

"If it fails our CG test, we won't invest in the company," he remarked.
Jalil, who has been with Aberdeen for eight years, said the firm visits at least 100 companies a year in each key country in its quest to find undervalued stocks with good fundamentals to invest in.

"It's not as easy as you'd think," he shared. "We're long-term, fundamental, bottom-up investors ... so investing in the right company is key."

In Malaysia, Aberdeen's major investments include AEON Co (M) Bhd (15 per cent stake), Public Bank Bhd (5 per cent), CIMB Group Holdings Bhd (5 per cent), British American Tobacco Malaysia Bhd (5 per cent), Guinness Anchor Bhd (about 7 per cent) and Pos Malaysia Bhd (6 per cent).

Aberdeen has some RM11 billion invested in 29 companies here, Jalil said.

At a recent accounting-related conference held here, he shared his views on what institutional investors like Aberdeeen want to see in companies, especially on the matter of CG.

"We ask if a company will still be in the same business in 20 years' time. And if it's got a good track record, is it run fairly for all shareholders, and are they transparent? How independent are the board of directors?

"What we want are directors that are knowledgeable of the industry. We want experienced and really independent people. There are some companies out there where the independent directors are former employees of the company - it's not wrong, but it's not right in the spirit of corporate governance," he remarked.

Jalil noted that boards play a key role in setting the CG tone for the company, and so directors shouldn't be sitting on boards for too long as investors would then find it difficult to see them as being truly independent.

"Changing board members is a good thing ... it brings a rejuvenation of the board. Younger board members would bring in new perspective," he voiced.
Another problem commonly seen by investors is companies providing sparse information in their quarterly financial reports.

"They should at least have a performance commentary on how the company has done in the past quarter. We see similar words being used in almost every quarter," he lamented.

Jalil said institutional investors like Aberdeen would also like to see a more transparent voting process at shareholder meetings, like a poll voting system.

He noted that Singapore has made it mandatory to vote by poll and have the results audited by an independent auditor. "I hope this is something we can move to," he said.

Jalil said it would also be good for independent directors to be given a few minutes to explain the operations of the company to shareholders at annual general meetings. "We have seen this in Thailand, and to a certain extent in Singapore.

"In Malaysia, they are rather quiet ... it would be nice if they were given a bit of airtime," he suggested.

Jalil opined that in Malaysia, companies do the bare minimum when it comes to CG. "It's more about form than substance, a mere box-ticking exercise, and I think that's wrong. If you want to adopt CG, you've got to do it in the right spirit," he said.


"In Malaysia, Independent Directors are rather quiet", that must be the understatement of the year.....!

Aberdeen is indeed a good fundmanager, their results in Asia are very decent. Here is the Factsheet for their Malaysian Fund, including their Top 10 holding: Aeon, CIMB, United Plantations, Public Bank, Hong Leong Bank, Panasonic Manufacturing, LPI Capital, Digi.com, United Malacca, F&N Holdings.

http://www.aberdeen-asia.com/doc.nsf/Lit/FactsheetSingaporeOpenAMEF

I would rather recommend their Pacific Equity Fund:

http://www.aberdeen-asia.com/doc.nsf/Lit/FactsheetSingaporeOpenAPCF

The geographical spread is better, and the outperformance over the relevant index is more convincing.

However, buyer beware, do not pay the 5% commission charge, and negotiate it down to 2% or lower. Paying the maximum 5% commission on the purchase of a unit trust is simply outrageous, it is like paying an agent a commission of 6 months rental to find a prospective renter.

Aberdeen did in the past fight for its unit trust holders; it managed to squeeze out an extra RM 2 per Malaysian Oxygen Bhd (MOX) share, from RM 15 to RM 17. This was a very rare, small victory for Minority Investors in Malaysia.

They did this together with EPF, one of the rare cases I have seen EPF being active coming up for its investors. Aberdeen owned 9.5% of the MOX shares, EPF 8.6%, so together they could form a block. EPF, PNB, LTAT, Ministry of Finance, etc. could have done this in so many similar cases, either blocking a General Offer with delisting threat for a too low price or blocking a horrible Related Party Transaction where an asset was acquired for a much too high price, but they have very rarely done so. They have also not been transparent at all about their actions. The passive attitude of these funds (hurting returns for their own investors and other Minority Investors) is one of the problems in the Malaysian market, they could learn something from Aberdeen.

Happy 54th Birthday, Malaysia!


Hoping for a more just and fair society.

Tuesday, 30 August 2011

EPIC: Majority Shareholder forgot to make a GO!



In The Edge, August 29, 2011 appeared the article “An EPIC lack of transparency”:

“Last week EPIC Bhd. Announced that Lembaga Tabung Amanah Warisan Negeri Terengganu (LTAW) and parties acting in concert had made a general offer (GO) for the shares they did not own at RM 3.10 apiece.

Apart from the GO to existing shareholders, LTAW plan to compensate those who had sold their shares at below RM 3.10 between Dec 10, 2010 and Aug 23, 2011. The cash payment will be the difference between RM 3.10 and the price at which investors sold their shares in this period.

So, why is EPIC so generous?

The trigger for the GO was the completion of the purchase of a 21.6% stake in EPIC from Ahmad Zaki Resources Bhd (AZRB) by LTAW on Aug 23. EPIC’s announcement says the purchase has lifted the equity interest of LTAW and parties acting in concert to 67.24% from 45.67%.

However, the acquisition process had started way back in on Nov 24 last year when LTAW signed a share sale agreement (SSA) with AZRB to buy its stake in EPIC at RM 3.10. The SSA became unconditional on Dec 10, triggering a GO, the latest announcement says.

The fact is, EPIC’s shareholders were not told that the controlling shareholder was obliged to make a GO. It is baffling why the offer was not made as soon as it appeared that the state, acting via LTAW, had triggered a mandatory GO.

In a takeover exercise such as this, transparency and adherence to the rules of corporate governance are of utmost importance. How can we expect compliance from the corporate sector when state authorities do not play by the same rules?”

Oh my, somebody has been sleeping on the job. And that was not the first time as it was already apparent in the 2010 year report:

EPIC Year report 2010


On page 222 (page 132 of the PDF-file) TISB (Terengganu Incorporated Sdn Bhd) owns 40.59% directly and indirectly. This is wrong since TIS’ ATA’ Ashar Sdn Bhd owned 3.89% of the shares and LTAW 0.98% of the shares, so the percentage of indirect controlled shares should have been 45.46%.

Unbelievable as it is, it seems to be an honest mistake, and the good news is that it is rectified, people who sold their shares in the past after Dec 10, 2010 will also receive RM 3.10. I wonder though what they would do if somebody was actively trading in EPIC shares, would he receive the full RM 3.10 every time he sold his shares and bought some back later on again?

If Bursa Malaysia had followed David Webb’s example, they also should have picked up on this mistake.

http://cgmalaysia.blogspot.com/2011/08/where-is-malaysian-david-webb.html


"Increase transparency by providing a Malaysian database similar to the one David Webb has provided on his website. This will be a useful tool for all serious investors and bring back their attention. Secondly, this will be a very useful tool for the enforcers themselves. Thirdly, journalists can tap from this source for their stories."



On the bad side, this is another GO with “delisting and compulsory acquisition threat”. Again, a GO is good, but I hate the "delisting" threat since Minority Shareholders don't stand a chance to fight it.

The “independent” advisor will most likely follow the wish of the majority shareholders (they do in about 99% of the cases in Malaysia), so Minority Shareholders will not stand a chance. On a side note: I hope that “independent” advices will be abolished soon, but if the Securities Commission decides not to do, then at least I hope they will rename them to “dependent” advices.

The public shareholding spread of EPIC is only 32.7%, since unit trust funds (there are quite a few funds from Public and Great Eastern invested in EPIC) will most likely not be allowed to hold shares in unlisted companies they will be forced to sell. The 25% barrier will be quickly breached, the 10% will most likely follow. Pity, since EPIC is a clearly better than average company:




Bernanke and Quantitative Easing




Bit old, but still funny and highly relevant.

Monday, 29 August 2011

2500 Visitors to blog: Corporate Governance in Malaysia



A new milestone: 2,500 visitors!

I am very content with so much traffic for a website dedicated to "Corporate Governance", not exactly a very populair subject. I will try to post at least once a day, although that is not always easy.

Traffic sources: Malaysia 67%, Singapore 20%, US 3%, Taiwan 2%, Hong Kong, Macau, UK, Thailand, Philippines and The Netherlands 1%.

Feel free to leave a comment regarding errors or omissions, or ideas for future postings or interesting websites, articles or Corporate Governance cases.




Selamat Hari Raya Aidilfitri

Munger's models and his best (Business) Books

Charlie Munger often refers to his mental models which help him in decision taking. Rob Kelly lists 12 of them on his website:



http://robdkelly.com/blog/models-frameworks/munger-mental-models/

Books related to Munger:

http://futile.free.fr/bibliocm.html

Kelly's favorite list of business books:

http://robdkelly.com/blog/personal-development/best-business-books-of-all-time/

Sunday, 28 August 2011

CLSA: Corporate Governance Watch 2010


CLSA regularly publishes a report about Corporate Governance standards in Asia. Their latest report was published in 2010, it is a very interesting read:

https://www.clsa.com/pdf.cfm?link=/assets/files/reports/CLSA-CG-Watch-2010.pdf

The chapter about Malaysia starts at page 87. Some snippets:

"Malaysia retained its sixth spot in our rankings this year, but with a higher overall score of 52% compared to 49% in 2007. Regulators have been making steady progress in the past three years and appear more open to listening to the market. Yet doubts remain. A major issue we have is how much of this is window dressing and how much is genuine change? Will this take corporate-governance practices beyond box-ticking? These uncertainties for CG culture are why Malaysia’s CG culture score recorded a one-percentage drop this year, where as all other categories saw improvement.  

An area that has improved is enforcement. The Securities Commission (SC), in particular, has been active. The score for the section increased from 35% in 2007 to 38% this year. Yet, we find that securities laws have not proved to be a meaningful deterrent against insider trading and market manipulation, as enforcement statistics show.

The two categories that showed a marked improvement this year were CG rules and practices, and political and regulatory environment, which increased by five percentage points and four percentage points respectively.

IGAAP (accounting and auditing) recorded a modest two-percentage-point increase.  

In most markets, it is government efforts that lead corporate-governance reforms, but nowhere is this more obvious than in Malaysia. Looking at our table comparing the scores for political and regulatory environment with CG culture for all 11 markets, the 28% gap for Malaysia is easily the widest. It is this weakness in local CG culture that is holding the market back.

The SC brought three market-manipulation cases to court in the past three years - one in 2008; one in 2009; and one in 2010. The case in 2010 dated back to 2005 and the sentence imposed is being appealed by the SC, as is the acquittal of the defendants in another case in 2009. We find it hard to believe that insider trading and market manipulation happens so rarely in Malaysia, unlike the rest of Asia."  



Singapore and Hong Kong have the highest CG score, however, globally disappointing, for CG they only score tier 2 while they definitely should be in Tier 1 given their high GDP per capita. Malaysia is in Tier 3, together with countries like Japan, Taiwan, Thailand, India, China and Korea.

I agree that enforcement has indeed increased in Malaysia:
  • Bursa Malaysia however is still shooting with a water pistol, giving small fines where much bigger deterrents are required. And then there is the market-manipulation and insider trading which is not dealt with.
  • The Securities Commission is more active and has increased its fire power: some managers of listed companies have been jailed, the only sentence that would-be perpetrators will fear. It is now time to unleash the big guns and to go after the Major Players who went scot free so far.

Saturday, 27 August 2011

PMI: a sad story for Minority Shareholders

The Star: http://biz.thestar.com.my/news/story.asp?file=/2011/8/27/business/9383051&sec=business

"Pan Malaysian Industries Bhd (PMI) yesterday told Bursa Malaysia that it had received an unconditional takeover offer from a consortium of three companies at a cash offer price of 4.5 sen for each offer share."



"If PMI could not comply with the shareholding spread requirement as a result of acceptances received under the takeover offer, the consortium said they would delist PMI."



The "infamous" GO (General Offer) with "delisting threat" against which Minority Investors hardly have any chance to fight unless they don't mind ending up with shares in an unlisted company (and even then their shares could be Mandatory Acquired). The price is only 4.5 sen, that sounds like a bloody shame, the share traded routinely higher than that, even in 2011:


This is one company that has been a nightmare for its Minority Investors:



In the past 10 years several right issues which equal to negative dividend payments (from the investors to the company, if people don't subscribe they get further diluted at a low price). It booked routinely losses but due to the tight control through its Majority Shareholder it could not change its management, hoping for a new team to restructure the company.

This company has been involved with the delisting of Metrojaya, another really bad case of Corporate Governance, as was pointed out by Ze Moola: http://whereiszemoola.blogspot.com/2006/11/muis-purchase-of-metrojaya_02.html

A sad state of affairs and as usual it is the Minority Shareholders who take the brunt.

Charlie Rose – An Hour with Warren Buffett


http://paul.kedrosky.com/archives/2011/08/charlie-rose-an-hour-with-warren-buffett.html

Friday, 26 August 2011

Over-prescriptive regulation and Bumi Armada's Corporate Governance issues

Feedback on the Corporate Governance Blueprint 2011 from Claire Barnes:

http://www.apolloinvestment.com/F110726.htm

"Dangers of over-prescriptive regulation

I welcome the declaration that "the cost to the market of over-dependence on regulatory discipline can be disproportionate to the benefits. It can result in regulations being overly prescriptive, additional costs to the market, and may foster a box-ticking culture. For this reason the SC is always guided by the principle that there should be no more regulation than necessary." (p.61)

Indeed I see excessive regulation as a significant threat to innovation and economic wellbeing, for society overall. It is certainly possible for "unproductive activity" to grow to the point where it crowds out "productive activity"; and although this is hard to measure, I believe that several mature economies may have reached this inflexion point.¹

In the specific field of Malaysian corporate governance, I believe that reintroducing a Continuing Professional Education requirement for directors (p.41) is a retrograde step.² Good directors have many other calls on their time: time spent on courses is likely to mean that much less time available for the strategic affairs of the company.

My impression is that the recent swelling of formalised compliance obligations and of the corporate governance sections of annual reports in Malaysia has been accompanied by a reduction in both extent and quality of the Management Discussion and Analysis text, the most important annual disclosure to shareholders of the current state of the business, principal challenges, and strategic priorities!

Accordingly, while I welcome the "greater focus on substance in terms of meeting corporate governance requirements" (p.47), there may be a danger that it is interpreted by expanding the number of words devoted to the formal CG regulations, when what is really required is a greater focus on the good governance of the company: sensible strategies, good disclosure, and equitable treatment of different stakeholders."



I fully agree with the above. As an example, the IPO document of recently (re-)listed Bumi Armada can be found here:

http://announcements.bursamalaysia.com/EDMS/subweb.nsf/LsvAllByID/6D07124A0BD9D883482578BF00036E2C?OpenDocument

It contains 600+ pages, is there anybody who actually reads such a document?

And most alarmingly, there is no mentioning at all what happened in 2003 when the company announced a General Offer with "delisting threat", discontinued its dividend without giving a reason (which is not allowed and can be seen as a way to pressure Minority Investors), issued a prospectus with lots of important information missing, containing an "independent" report that was (as always) useless because of its biased views and hardly giving Minority Investors any time at all to take action.

The company subsequently mandatory acquired the remaining shares at a paltry PE of 7, despite being one of the highest quality companies of the Bursa Malaysia (which was trading at an average PE of 15). Corrected for all subsequent bonus and right issues this works out to about RM 0.20 per current share.

The company was relisted again in 2011 at a PE of about 20 (despite a much weaker balance sheet and dilution due to ESOS scheme), and is currently trading for about 20 times the prices of 2003. Why were Minority Investors forced out, why were they not allowed to share in the growth? The total amount of money that the Minority Investors missed out on (and which all ended in the pockets of the Major Shareholders) is a staggering RM 2,500,000,000.

I am sure current Minority Investors would be very interested to know how (badly) previous Minority Investors were treated in the past. Also which commitment there is from the Major Shareholders not to do the same delisting "trick" as happened in 2003. However, despite 600+ pages, there is no mentioning at all of this important information.

In general: quantity is no substitute for quality. Minority Investors want good quality, non-biased prospectuses, with truly independent advice, not what is currently delivered. Bursa Malaysia should enforce this and actively punish writers of documents that are biased or where important information is left out. Shockingly, I haven't found a single piece of evidence that they actually do that. And that explains why the prospectuses and reports (especially the "independent" ones) are of such a poor quality.

More about the delisting of Bumi Armada can be found here:
http://whereiszemoola.blogspot.com/search/label/Bumi%20Armada
http://www.apolloinvestment.com/pirates.htm

Thursday, 25 August 2011

Hitting corporate crooks where it hurts

 

"A Question of Business" by P. GUNASEGARAM

The Star, July 3 2010

http://biz.thestar.com.my/news/story.asp?file=/2010/7/3/business/6598973&sec=business

"This year (2010) has been a rough, tough one for corporate governance. Issues have arisen which raise questions anew as to the role of management, directors and shareholders in the running of companies, particularly listed companies, and the role of auditors and regulators.

For some companies, directors and key shareholders have colluded to cause prices of shares to fluctuate wildly, leading to losses and gains. Insiders gained and those who had no information lost, wondering what caused the winds that sent share prices tumbling, flying and then tumbling again.

In other companies, fraud and/or incompetence of management caused huge losses to even some of our best companies raising questions as to how such losses could arise and why boards, internal auditors and external auditors and others who should know were unable to pick them up.

In theory, the management, board and major shareholders are often considered to be separate entities, each with their own rights, responsibilities and interests. But in practice, they often overlap and produce peculiar problems of conflicts of interest. Often management, the board and major shareholder are virtually the same person.

In Malaysia, it is common for a single shareholder or for a few shareholders to have majority control of a listed company. Thus, these shareholders control the composition of the board and through the board the management.

That gives major shareholders complete control over the listed company. This has often resulted in the companies doing things which are not beneficial to all shareholders of the listed company although the law, especially the Companies Act, requires the board to act in the interest of the company and all shareholders.
But, despite all the anecdotal evidence over the years of boards and management acting against the interests of companies, there has been hardly any prosecution by the Companies Commission of Malaysia which administers the Companies Act (please see our cover story this issue).

Thus, it is that many miscreants get away with not quite blue murder but quite a bit and Corporate Malaysia’s crooks still not only remain outside the bars but continue on their own merry way of lining their own pockets at the expense of their companies and ultimately the investment community.

Apart from the direct loss that such crime inflicts on companies, the risk premium that investors demand for investing in our capital markets may mean that many billions more in valuation is lost as well. In other words, our companies will be worth a lot more if the risk of loss was minimised.

While the Securities Commission (SC) has maintained that it is not quite possible to legislate completely good corporate governance and ethical behaviour, it nevertheless stands to reason that proper enforcement of existing laws and rules will be a major deterrent to wrongful behaviour and will be one of the pillars of good corporate governance.

In this respect, one must lament the lack of a unified body that can handle all corporate crime by perhaps incorporating all the relevant legislation under one all-encompassing one and putting a single regulator in charge of this.

The long-mooted idea of merging the Companies Commission and the SC still continues to be an idea despite being proposed as a measure under the mid-term review of the Ninth Malaysia Plan several years ago. That would have brought the securities and companies laws under one roof and made enforcement of overlapping and related offences that much easier. But it was not to be.

But still, one can take comfort in the passing of Section 317A of the Capital Markets and Services Act which came into force on April 1 (2010). This enables the SC to take action against a director or officer of a listed company when his actions cause loss to the company.

Unfortunately, this covers only the period after April 1 this year and offenders prior to that cannot be prosecuted under this Act. And it applies only to listed companies. But still it is a powerful tool that the SC can use to bear upon miscreants who routinely get away with offences because no one is prosecuting them.
Still this is something that will enable some action to be taken at least with respect to the listed companies while the authorities finalise their long-overdue plans to rationalise the functions of the various regulatory bodies."


A good and frank article, but why did Gunasegaram not include Bursa Malaysia? They also play a large part in enforcement:
With yearly staff cost of RM 92,000,000 and on top of that a 5-year allocation of 53,000,000 ESOS options I think the public could expect some decent enforcement from Bursa Malaysia. Apart from some fines (much too late, much too little and very selective, never against the major players) I haven't noticed any improvement in that field.

I agree with Gunasegaram to join the enforcement agencies Securities Commission and Companies Commission, but then all, including the enforcement division of Bursa Malasia.

Wednesday, 24 August 2011

AirAsia's accounting issues


http://biz.thestar.com.my/news/story.asp?file=/2011/8/23/business/9346263&sec=business

 

AirAsia likely to equity account associates’ profits in 2013

"Low-cost carrier AirAsia Bhd will only start equity accounting its share of profits from Thai AirAsia (TAA) and Indonesia AirAsia (IAA) when the amount of unrecognised losses from these associates have been reversed, the airline told StarBiz."

"Analysts added that another consideration would be the impending listings of TAA and IAA, which would see an equity injection and allow them to re-capitalise."

"AirAsia had previously drawn criticism from many parties as to why it never equity accounted the losses suffered by its associates and there were calls for greater transparency over the financial numbers recorded by the associates. The airline subsequently explained that with AirAsia having written down to zero its investments for both TAA and IAA in AirAsia's balance sheet, it did not need to recognise any further losses made by TAA and IAA as it had no accounting obligation to make good on those losses."

I find the AirAsia's accounting much too aggressive. Thai AirAsia and PT Indonesia AirAsia are two strategic investments in which AirAsia has a large share (almost 50%) and to which AirAsia is lending large amounts of money. Conservative accounting would really require these losses of RM 254 million to be accounted for.

There are several possible outcomes, in each of it AirAsia has to take the loss:
  • Their Thai or Indonesian operation goes bankrupt, in this case AirAsia has to write off its loans
  • The equity of their Thai or Indonesia operation is replenished, AirAsia has to write of its losses
  • The Thai or Indonesian operation turns highly profitable, again AirAsia has to write of its previous losses against these profits
There is still the other accounting issue, AirAsia has booked as "profits" RM 659 million deferred tax assets. This is tax it does not need to pay in the future if it makes profit. Again, a very aggressive way of accounting.

In other words, AirAsia is not accounting for losses that have occurred in its strategic investments, but it is accounting for possible future profits.

This does not seem right to me.

Tuesday, 23 August 2011

Marc Faber readies for hyperinflation, dollar’s demise and civil unrest


Marc Faber in his usual optimistic tone:

“Financial conditions are today worse than they were prior to the crisis in 2008,” he said in a telephone interview earlier this week from Thailand. “The fiscal deficits have exploded and the political system [in both the U.S. and Europe] has become completely dysfunctional.”

“The way I look at it,” Faber said, “I am ultra-bearish about everything geopolitically. In an environment of money printing, we have to ask ourselves, how do we protect our wealth? ... Where do we allocate the money? 

“I’m not that negative about equities,” Faber said. “If you’re bearish about the world, you’ll probably be better off in equities than in government bonds and cash.”

1. Avoid Treasurys
2. Cash is trash
3. Stocks offer some safety 
4. Emerging markets will expand
5. Gold is worth its weight

Feedback on the Corporate Governance Blueprint 2011



The Securities Commission Malaysia's five-year Corporate Governance Blueprint (Blueprint) was launched on 8 July 2011. The SC welcomes feedback from all interested parties and the public on the Blueprint. All feedback can be emailed to CGblueprint@seccom.com.my by 15 September 2011.
The link to the Corporate Govenance Blueprint 2011 (CGB) can be found here:
Two very interesting feedbacks (I strongly agree with all they wrote) can be found here:

I mostly underwrite the recommendations of the (CGB), some are good, some are very good (mandate poll voting, more whistleblowing protection, litigation funding, empowering the SC to initiate action against oppression).
I also like the recommendation to try to connect with “Influencers”, there are many out there who could perform such a role, unfortunately from my own experience, being twice stonewalled by SC/BM, each time for three years and those of others, there is a huge gap that SC/BM has to bridge due to the past. See also:
Some other recommendations are meant good, like all recommendations regarding (independent) directors, but I don’t expect much of them, history has shown so far that Malaysian directors simply toe the line, I don’t know a single instance of the opposite (only four directors have resigned as a sign of not agreeing with the decisions taken by the management, all four were foreigners). At most we can hope for is Directors trying to have some influence behind the scenes, but even this will be very limited in my opinion and the results can not be measured.
However, what is very much missing is admissions of current procedures that are completely biased and don’t give the Minority Shareholder any chance at all, most notably:
  • Related Party Transactions
  • General Offers with Delisting Threat
I think that it is very important to get to the bottom of these procedures, why are so many horrific deals approved? And why are the “Independent” reports so hugely biased?
Another issue is the rampant insider trading: http://cgmalaysia.blogspot.com/2011/08/when-smoke-signals-are-right.html 
Also, I don’t find a single word of criticism on the enforcement (or rather lack of it) by the authorities. Although the situation has improved slightly recently, enforcement still only deals with the minor corporate players, never the major ones, why the enormous bias?

Monday, 22 August 2011

The Bernanke Take



http://www.financialarmageddon.com/2011/08/the-bernanke-take.html

"Thanks to policies that have damaged our economy's underpinnings, caused significant hardship to everyone but the rich, and triggered a mad dash for assets that provide some measure of downside protection, we now have what might be described as the "Bernanke Take" (as opposed to the "Bernanke Put") -- that is, a dramatic increase in crimes involving precious metals and other valuables, as the Los Angeles Times reports in "Soaring Gold Prices Trigger Jewelry Robberies, Police Warnings":

As the precious metal has nearly doubled in value from two years ago, gold merchants have boosted security amid a series of brazen store robberies. Police are urging owners of gold jewelry to be discreet about wearing it.
That stunning rise in the price of gold is having a ripple effect: A rash of jewelry store robberies, street muggings and home burglaries. Now, merchants are stepping up security and police are warning everyone against flaunting their bling.
When Capt. Mark Olvera, who runs the LAPD's Newton Division, spotted a beefy man with a gold chain around his neck the other day, he worried the guy might become a victim. "He looked like he could take care of himself," Olvera said. "But that's a couple thousand dollars ... on him."
So far this year, gold chains have been snatched from the necks of at least 110 people during street robberies in Olvera's South Los Angeles division. His officers are circulating fliers and showing up at churches and community centers to warn residents to stop wearing gold in public, or at least to tuck it under their clothes.
"It's easy money. It's easy to get, and it's easy to get that gold fenced. You see all the ads, 'We buy gold,'" Olvera said. "They sell it, melt it down and there's no regulation."

Nice one, Ben. Can't wait to see what you have planned for us next."

I just had to post this photo, I love it! I am not a fan of Bernanke, I am afraid he will feature in many more postings in the future and not in a positive way.

Investing in a zero interest environment

We are living in a low interest rate environment for quite some time already. This makes investing very difficult. Risk averse people receive almost no interest on their money so they are looking for other products, to enhance their returns. Many bank managers, who look more at commissions than what is suitable for their customers, recommend yield enhanced investments. Performance of these products is often linked to another currency, or a basket of shares or commodities. Unknown to their customers, there are hidden risks, very real ones. In Singapore and Hong Kong many investors found this out when Lehman Brothers went down and their Mini Bonds turned worthless. In Europe apparently many people invested in products somehow related to the Swiss Franc, they are now sitting on huge losses.

Be careful with all these financial products, if you don't understand them or they appear to be too good to be true. Also, make sure you get information what the commissions are, customers should be entitled to know that.


Trouble in Paradise

Strength of Swiss Franc Roils Saint-Tropez and Other Cities Across Europe

Municipal officials in the sunny Mediterranean resort of Saint-Tropez are in a cold sweat: The rush into the Swiss franc is creating a time bomb for city finances. The hometown of actress Brigitte Bardot on the French Riviera has a €6.7 million ($9.6 million) loan on its books that carries an annual interest rate tied to the Swiss franc, according to Saint-Tropez officials. The rate currently is fixed at 3.94%. Starting in May 2012, however, the rate becomes variable and rises when the Swiss franc appreciates against the euro. Some officials in Saint-Tropez have calculated that, unless the Swiss franc falls off significantly from the peaks reached in recent days, the interest rate on the 20-year loan signed in 2007 would soar to 30%.
"This is devilish," says Verane Guérin, a member of the Saint-Tropez's municipal council, the city's parliament. "It would blow up our finances."
Like Saint-Tropez, many municipalities across Europe are saddled with loans carrying variable interest rates pegged to fluctuations in the Swiss franc, other foreign currencies or various commodity prices.
Jittery investors have been turning en masse to the Swiss franc and other assets deemed as safe havens amid growing concerns over sputtering economic growth in the U.S. and Europe.

http://online.wsj.com/article/SB10001424053111903639404576518662231498814.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Sunday, 21 August 2011

When the smoke signals are right

I have been actively involved with the Malaysian share market for more than 15 years. Whenever there was a major announcement in a listed company I would take a look at the graph of the share price and the volume traded before the announcement. In more than 50% of the cases (a conservative estimate), there would have been a huge spike in volume and a large change in price, indicating a serious possibility of insider trading. Insider trading is very bad for any exchange, both for its image and for the 99.9% of the normal traders who are not privy to this kind of inside information.

Although I admit that investigating these kind of suspicious trading patterns is not that simple, Bursa Malaysia (BM) has a huge pool of employees and a database full with information regarding accountholders and trades done. It always stunned me why there was never any enforcement whatsoever on the issue of insider trading. Recently I did notice some rare activity on this area, but the alleged perpetrators only had to pay back their ill gotten gains. A one in a thousand chance to get caught and then only having to pay back the gains? I don't see the rationale for these kind of low punishments at all.

In the US Martha Stewart was convicted to 5 months in jail for insider trading and subsequently lying about it, Bursa Malaysia should follow this example. Forcing to pay back the ill gains or giving paltry fines will have no effect, only jail sentences will bring some much needed deterrent.

Next to this there is the issue of Bursa Malaysia being a listed company, with a profit goal. BM plays an important part in the enforcement: both regarding insider trading and the like, but also issuing prospectuses for IPO's, rights issues, RPT's etc and subsequently handling of the complaints (my experience with BM handling my complaints was simply horrendous). But since BM listed in 2005 I haven't seen any improvement in their performance regarding Corporate Governance (I do see though some improvement at the Securities Commission, but from a very, very low base and still very biased towards the smaller companies and players). Needless to say, enforcement does not bring in any money, in the contrary.

I have never liked any exchange to turn into a public company, I think exchanges need to show utmost integrity, transparency and enforcement, and should not be in the business of making money. All the money that the exchange makes is from the investors who trade. In particular I oppose Bursa Malaysia turning in a listed company for the simple reason that they didn't have their house in order (and still don't have). Bursa Malaysia made RM 744 million net profit in their last 5 years alone. Next to that tens of millions of options according to the ESOS scheme have been handed out to the top managers. This all is (for a good part) paid by the minority investors in Malaysia, and I think they should deserve to receive at least some decent enforcement back for that. BM talks a lot about providing a fair market and paying more attention to Corporate Governance. I wish I could agree with that but I haven't seen any concrete improvement on their part at all since they became a listed company. Getting companies from China listed in Malaysia or swamping the market with call options is not exactly what I had in mind when I think about better governance, in the contrary. The only positive news that I found over all those years was that of the implementation of the e-Dividend: too little, too late.

PS: Moolah wrote about the same issue in his very interesting blog. Although I don't like companies being privatised, in this case I agree for the full 100%.


http://whereiszemoola.blogspot.com/2011/08/bursa-malaysia-needs-to-be-privatised.html




P. Gunasegaran of The Star writes an interesting article about this matter (emphasis mine):

"They say that there is no smoke without fire. That may aptly sum up some of the untoward movements seen in the shares of some companies traded on Bursa Malaysia, a common enough occurrence. For years and years, we have had prices of companies move up or down based on what may be obvious insider information with shares often moving in the opposite direction post deal because the announced event had already been expected. What is surprising is that the rising smoke seldom gets investigated and very few, if any people, have been brought to account for the part they have played in leaking the information prematurely into the market for some frenzied trading and price shifts. That's a surprising state of affairs considering that the authorities have an arsenal of weapons to fight this insidious threat to fair trading on the market. But first, let's look at what's been happening. The most recent case was that of Esso Malaysia. This share started moving up in relatively active volume in May, reaching a high of RM5.84 on May 24. But it dipped to just over RM4 along with the broad market earlier this month, and then took a major spurt upwards close to the RM5 level after a news report on Wednesday that Exxon was selling its 65% stake in the company to San Miguel of the Philippines. However, no price was given. When the actual announcement came late that day, the speculators who had rushed in madly to buy the stock were caught the price at which San Miguel was buying was just RM3.50. That will be the price at which a mandatory general offer will be made. The stock declined precipitously by 92 sen to RM4.03 on Thursday. It seems fairly obvious to observers why Esso Malaysia was rising the parent company was selling out and insiders had got wind of it. What they got wrong was they bet the offer price would be a premium to the market but that was not the case. It was an expensive lesson for speculators and perhaps some insiders but there are times too when insiders can and do make a lot of money on leaked information. That may have been the case for some traders with the AirAsia-Malaysia Airlines share-swap deal with major shareholders. AirAsia started moving up strongly from around mid July, bucking the market trend to gain over 60 sen or some 17% ahead of the deal on Aug 9. Malaysia Airlines shares started moving upwards in high volume from around the start of August gaining over 25% in a matter of days. Both stocks bucked the market trend which was strongly downwards. Price and volume movements such as these should have attracted the attention of regulators. Frontline regulator, Bursa Malaysia, has an obligation to ensure orderly and fair trading but its officials have said in the past that healthy speculation is good for the market. In fact, since Bursa Malaysia is a listed company with a profit imperative, one may be forgiven for thinking that it may be a little reluctant to curb activities that increase trading turnover to which its profits are directly correlated. But, a clear line has to be drawn between speculation and insider trading nevertheless, and appropriate action taken for long-term benefit to the market. When somebody looks at a company and surmises that it may be ripe for some kind of a deal and buys the shares on that premise, then he is speculating he has no concrete information. If he has access to market-sensitive information which has not been publicly disclosed and uses this to profit himself or others by buying or selling the shares ahead of the deal, then he is committing an offence under securities regulations no buts or ifs or excuses, it's the law. The key alert here is a suspicious trading pattern. If there is concerted buying ahead of an important announcement which is good or selling ahead of one which is bad, then there is clear indication that there has been a leak of that sensitive information into the market. At those times, regulators must take their big sticks out and start swinging them. They have to mobilise all the arsenal at their disposal, examine the trading records and see where the leak may have come from. That's part and parcel of promoting an efficient, fair and orderly market to drive the message that nobody gets away scot-free by making use of inside information. Otherwise, there will be an erosion of market confidence over time and a degrading of the market. If regulators don't periodically demonstrate that they are against any form of manipulation in the market by taking the appropriate action immediately, they encourage more illegal action.
And, eventually things are going to get out of control. Better to be early now than sorry later."

http://biz.thestar.com.my/news/story.asp?file=/2011/8/20/business/9335568&sec=business

Saturday, 20 August 2011

Chinese Protest $5 Billion Losses Tied to U.S Reverse Mergers

Four wrinkled pieces of paper are all that remain of Xiong Renzhi’s Nasdaq-fueled dream of a comfortable retirement in the southern Chinese city of Nanchang.

The certificates gripped in the former electrician’s sinewy hands represent 46,000 shares of Xi’an Xilan Natural Gas Co., which he bought in 2006 for 166,000 yuan ($25,990) by selling his apartment and moving in with his sick mother-in-law. Xiong, 62, said he expected returns many times his outlay when the natural-gas distributor listed on New York’s Nasdaq Stock Market, which it did on June 5, 2009.

Like thousands of Chinese who bet their life savings on companies aiming for U.S. listings -- some of them among firms that later cost U.S. investors billions of dollars -- Xiong and his wife are still waiting for a payout.

“We put all our eggs in this one basket,” said Xiong, who writes articles online to support protests in the financial capital of Shanghai by others who claim they’ve been cheated. “Is the company going to exploit us for nothing?”

Xiong and as many as half a million Chinese who spent an estimated 35 billion yuan ($5.48 billion) on similar investments want authorities to ensure they get their money back. They bought into companies touted by local officials, investors said, only to have their share purchases later deemed illegal by the central government.

Public Protests

Hundreds have vented their anger in four protests since May led by a wheelchair-bound retiree, Lu Yafang. One desperate man last year publicly attempted suicide. All are victims of a failed Chinese experiment with capital markets, said Xiong.

Xiong’s experience shows how little oversight there is in the burgeoning Chinese securities market. Local and foreign investors have been burned by companies that skirted regulations on fundraising while cloaking themselves in government authority. Now that investors have lost money, they’re finding the government is offering them little protection.

“The Chinese government hasn’t bothered to create real financial markets, where you have the infrastructure that rewards good behavior and punishes bad behavior,” said Arthur Kroeber, managing director of Beijing-based GaveKal Dragonomics Research, a financial advisory firm. “In a country where legal institutions are weak, there are lots of opportunities for retail investors to get ripped off.”

Reverse Mergers

At least 16 firms based in Xi’an, the capital of Shaanxi province in China’s northwest, joined more than 400 Chinese businesses that gained stock-market listings in North America by buying public shell companies -- a strategy known as a reverse merger that avoids the scrutiny of an initial public offering.

Investors in U.S.-listed Chinese companies, including former American International Group Chief Executive Officer Maurice “Hank” Greenberg’s C.V. Starr & Co., have lost more than $7 billion this year in plummeting share values as at least two dozen firms revealed accounting flaws or auditor resignations. U.S. securities regulators are investigating.

For more information:

Moody's: Fraud, Corruption, Greed


I blogged before about the non-event that S&P downgraded the AAA status of the US:

http://cgmalaysia.blogspot.com/2011/08/non-event-s-downgrades-us-to-aa.html

".. as usual, the rating agencies in the US have been hopelessly slow to adapt to reality. Similar to the enormous disservice they did a few years ago rating packaged mortgages as AAA while the collatoral was dubious to say the least. A huge bias due to the wrong incentive: if the agencies would offer high (unrealistic) ratings they would receive more work and thus more money."

There is more support for this:

"A former senior analyst at Moody's has gone public with his story of how one of the country's most important rating agencies is corrupted to the core."

"The primary conflict of interest at Moody's is well known: The company is paid by the same "issuers" (banks and companies) whose securities it is supposed to objectively rate. This conflict pervades every aspect of Moody's operations, Harrington says. It incentivizes everyone at the company, including analysts, to give Moody's clients the ratings they want, lest the clients fire Moody's and take their business to other ratings agencies. In short, Harrington describes a culture of conflict that is so pervasive that it often renders Moody's ratings useless at best and harmful at worst. "
Here are some key points:
 

  • Moody's ratings often do not reflect its analysts' private conclusions. Instead, rating committees privately conclude that certain securities deserve certain ratings--and then vote with management to give the securities the higher ratings that issuer clients want.




  • Moody's management and "compliance" officers do everything possible to make issuer clients happy--and they view analysts who do not do the same as "troublesome." Management employs a variety of tactics to transform these troublesome analysts into "pliant corporate citizens" who have Moody's best interests at heart.




  • Moody's product managers participate in--and vote on--ratings decisions. These product managers are the same people who are directly responsible for keeping clients happy and growing Moody's business.




  • At least one senior executive lied under oath at the hearings into rating agency conduct. Another executive, who Harrington says exemplified management's emphasis on giving issuers what they wanted, skipped the hearings altogether




  • http://globaleconomicanalysis.blogspot.com/2011/08/former-moodys-senior-vice-president.html

    Munger and Buffett have often warned about giving people/institutions the wrong incentives, it will lead to highly biased situations (ironically, they did invest themselves in Moody's, one of the big three rating agencies).

    In Malaysia we have exactly the same situation regarding the "independent" reports. It is in the benefit of the writers to follow the majority shareholders, writers who are critical of them will not be asked again for their services. It is therefore no surprise that these reports are so biased that they are completely useless.

    Recommendation: Independent reports should be abolished and the Securities Commission and Bursa Malaysia should really have come down hard at the writers a long, long time ago. By not doing so they have done Malaysia a big disservice, credibility has suffered and Minority Investors had no chance to fight for their cause.

    Friday, 19 August 2011

    SEC may have destroyed documents


    I just wrote about the movie "Inside Job" in this blog: 


    "But the big exception is the financial world, for some reason they seem to have escaped scrutiny of the 2008 financial crisis. Does this have to do with the generous donations they have made to both parties in the Congress?"

    Now it turns out that the SEC might (also) be involved, see below article. If this is true, it could be very big. I really hope they get to the bottom of this case, all the big names are mentioned: Madoff, Goldman Sachs, CitiGroup, Morgan Stanley, Lehman Brothers.

    SEC may have destroyed documents

    The Securities and Exchange Commission may have destroyed documents and compromised enforcement cases involving activity at large banks and hedge funds during the height of the financial crisis in 2008, according to allegations made by a lawmaker on Wednesday. 

    “From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” said Sen. Chuck Grassley, Republican of Iowa, in a letter to the agency’s chairman, Mary Schapiro. 

    Sen. Chuck Grassley: “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.” 

    Agency staff “destroyed over 9,000 files” related to preliminary agency investigations, according to a letter sent in July to Grassley, the top Republican on the Senate Judiciary Committee, and obtained by MarketWatch. 

    The allegations were made by SEC enforcement attorney, Darcy Flynn, in a letter to Grassley. Flynn is a current employee, and according to the letter, received a bonus for his past year’s work. 

    Flynn alleges the SEC destroyed files related to matters being examined in important cases such as Bernard Madoff and a $50 billion Ponzi scheme he operated as well as an investigation involving Goldman Sachs Group Inc.  

    Flynn also alleged that the agency destroyed documents and information collected for preliminary investigations at Wells Fargo & Co., Bank of America Corp., Citigroup, Credit Suisse, Deutsche Bank,   Morgan Stanley and the now-bankrupt Lehman Brothers

    The letter goes into particular detail about Deutsche Bank, the former employer of current SEC enforcement chief Robert Khuzami as well as former enforcement chiefs Gary Lynch and Richard Walker. 


    http://www.marketwatch.com/story/sec-may-have-destroyed-documents-senator-says-2011-08-17?dist=afterbell

    Thursday, 18 August 2011

    Ben Bernanke: dangerous moral hazard


    The FED under its Chairman Ben Bernanke is engaging in a very dangerous "game" trying to artificially prop up the share market (and bond market for that matter), as predicted by observers like Dr. Marc Faber. It is also doing everything opposite the advice that the IMF gave to the Asian countries in the 1997/98 crisis, rather hypocritical to say the least.


    Two FOMC members voted against the proposals and have openly spoken out against the recent decision to keep the interest rates artificially low for an extended time:


    "Two Federal Reserve policy makers said the central bank’s commitment to keep its benchmark rate near zero for two years may create a misperception it’s aimed at boosting stocks, which contributed to their opposition. Philadelphia Fed President Charles Plosser said in an interview yesterday that taking action after stocks tumbled “signaled that we are in the business of supporting the stock market.” Richard Fisher, the Dallas Fed chief, said in a speech that the Fed “should never enact such asymmetric policies to protect stock market traders and investors.” Both also said the policy won’t help spur growth. Plosser, Fisher and Narayana Kocherlakota of Minneapolis voted against last week’s Fed decision to hold the benchmark interest rate at a record low until at least mid-2013, the most dissent in almost 19 years. The move followed an 18 percent drop in the Standard & Poor’s 500 Index of stocks from the end of April through Aug. 8.
    It was inappropriate policy at an inappropriate time,”Plosser said yesterday in a radio interview in New York on“Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Policy makers will probably need to raise rates before 2013 and should have waited to see how the economy performed, he said." 


    http://www.bloomberg.com/news/2011-08-17/plosser-fisher-say-fed-shouldn-t-prop-up-stocks-through-monetary-policy.html


    Where is the Malaysian David Webb?



    David Webb, a former investment banker who has lived in Hong Kong since 1991, is a well-known fighter for issues regarding Corporate Governance in Hong Kong. I recently went to KL to discuss Corporate Governance issues and his name fell several times in awe. Yes, we need somebody like him in Malaysia.

    In what makes him different, he writes: "Investment banks and brokers are often conflicted from saying what they really think, because their comments would be negative to the companies or government concerned. This is not unique to Asia, it is an industry-wide problem. These firms get a lot of new issue and advisory business from corporate clients, and they also risk being shut off from information flow if their analysts are too negative on a company. Some analysts have even been fired for negative coverage of a company or government. If a firm offends a government, they are likely to lose future mandates for advising on things like bank restructuring or privatisations, and can even find difficulties with licensing and operating their business.
    At Webb-site.com, we don't have these hang-ups. We provide this site as a "pro bono" service to the community. We tell it the way we see it."

    In Malaysia the problems are very similar, just take the "independent" reports as an example, they follow the majority shareholders in close to 100% of the cases, making them so biased that they are absolutely worthless (actually worse, they hurt the chances of the minorities that fight for their legitimate cases).

    Webb's goals are:
    • to increase the transparency and efficiency of free markets and their participants, including companies, governments, regulators and controlling shareholders
    • to oppose all forms of cronyism, favouritism or protectionism by governments
    • to oppose anti-competitive behaviour by monopolies or oligopolies
    • to demand fair treatment for minority shareholders, to educate and inform them, and promote their participation in corporate decision making
    • to promote civil liberties, including freedom of speech, thought, assembly, movement and trade, the right to private property, and the democratic right to elect any office which has the power to interfere with those freedoms.

    Where is the "Malaysian David Webb", we desparately need one


    On his (in 1998 established) website http://webb-site.com/  lots of interesting information is to be found, and all for free (it is run on a not-for-profit basis):
    • Database: simply type the number of the listed company and press "current" and a wealth of information is provided: Key Data, Officers, Overlaps with other companies, Advisers etc. It turns out that shady companies often use the same brokers, directors etc, so this is a very valuable service to the more serious investor. I have never invested in a HK company without checking David Webb's database.
    • "Our Stories": David's findings about listed companies, often he really digs deep to connect the dots. As far as I know, David has been right every time when he discovered dubious events in companies. By signing up for the free newsletter one is notified of new stories when they are published.
    • "Other News": official notifications regarding listed companies, their directors etc. However, often no names are added, but with the help of his huge database, David is able to add the name of the people and organisations involved.
    • In the Hall of Shame you will find the rolls of dishonour of those directors who served jail time as well as those who were found guilty of criminal offences but did not serve time: http://webb-site.com/pages/hallofshame.asp
    My recommendation in the Malaysian context:
    • Increase transparancy by providing a Malaysian database similar to the one David Webb has provided on his website. This will be a useful tool for all serious investors and bring back their attention. Secondly, this will be a very useful tool for the enforcers themselves. Thirdly, journalists can tap from this source for their stories.
    • Start enforcing! In The HK hall of shame there are about 100 people, why are so few Malaysian directors of listed companies been jailed for offences? Finally some jail sentences have been given (I noticed relatively light sentences of 3 months, 6 months and 2 years jail), on one side a clear improvement from before when absolutely nobody was convicted, but this is still much too few. There must have been 10,000+ directors of listed companies in the last 20 years or so, punishing only 3 (and those still too light) is not a deterrent but more of an encouragement to break the rules and disadvantage the minority shareholders.

    Wednesday, 17 August 2011

    Charlie Munger 175 Quotes


    http://wealthymatters.com/2011/02/12/charlie-mungers-quotes-mungerisms/

    Charlie Munger is a pretty outspoken person: "If you mix raisins with turds, they're still turds".

    Some other quotes:

    ”Most people are too fretful, they worry to much.  Success means being very patient, but aggressive when it’s time.”

    ”I think that, every time you saw the word EBITDA [earnings], you should substitute the word “bullshit” earnings.”

    "If you buy something because it’s undervalued, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your ass. That’s a good thing.”

    ”It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

    ”In my whole life, I have known no wise people who didn’t read all the time – none, zero. You’d be amazed at how much Warren reads, at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

    ”Well, the questioner came from Singapore which has perhaps the best economic record in the history of any developing economy and therefore he referred to 15% per annum as modest. It’s not modest–it’s arrogant. Only someone from Singapore would call it modest.”

    ”Everywhere there is a large commission, there is a high probability of a ripoff.”

    Acknowledging what you don’t know is the dawning of wisdom.”

    ”Beta and modern portfolio theory and the like – none of it makes any sense to me."