Amin Shah and the Singapore-Batam ferry (2)

I have written before about this case, for more details I recommend the reader first to read that blog post.

There is a new development, a judgment in an appeal by JR Marine Systems Pte Ltd against Bernadette Adeline Rankine.

The crux of the matter:

 

 

 

The Decision, going against Amin Shah in favour of Bernadette Rankine:

 

And one final observation by the judge:

In the case of the Singapore-Batam ferry, reference is made to an Australian court case between JR Marine Systems Pte Ltd and Wavemaster International Pty Ltd (a shipbuilder), I found this link.

To complicate matters even further, Ms. Rankine had filed a complaint against lawyers for professional misconduct, but withdrew the complaint later on, the case can be found here.

SGX advertizes company featured on the MAS Investor Alert list

I went to the SGX website to do some research and by chance I ran into the below advertisement at the bottom of the SGX website:

I was rather curious about which company can guarantee 3% per 3 month in the current climate of uncertainty.

The website of Infinity Treasures can be found here.

I expected a list of managers with their proven track records, lists of long term investment returns of the past, lists of concrete assets that the funds own, detailed year reports, auditors and trustees etc., but I didn't.

Instead I did find many pictures of happy smiling people, and returns offered that sound simply too good to be true:

 

 

High returns are always accompanied by high risk, but there is no mentioning about risks.

As a personal choice, I avoid these kind of investments like the plague, these investments are sold (not bought), often the hard way.

My curiosity increased further when I looked at the website of MAS (Monetary Authority Singapore) at their investor alert list:

Infinity Treasures is listed on the MAS Investor Alert List!

Going back to the SGX website, a detail popped up as my mouse went over the small blue triangle on the right:

In other words, the advertisement is ran by Google AdSense. According to Wikipedia:


"Google AdSense is a program run by Google that allows publishers in the Google Network of content sites to serve automatic text, image, video, or interactive media advertisements that are targeted to site content and audience. These advertisements are administered, sorted, and maintained by Google, and they can generate revenue on either a per-click or per-impression basis."


Does the SGX really need the money of AdSense that they allow on their website targeted advertisements selected by Google (not by SGX), which might include advertisements for websites that are on the Investor Alert List of the MAS?

Frequent visitors of my blog know that I am very much against privatizing stock exchanges (including Bursa and SGX). Stock exchanges should not be about maximizing profits for their shareholders, and thus should never have been listed in the first place.

No XMas present for Hibiscus shareholders

Hibiscus Petroleum announced yesterday its findings regarding the first oil well:

• Mud losses in two carbonate sections of the well prevented Masirah Oil Limited from reaching its planned target depth.
• Data analysis indicated presence of non-commercial hydrocarbons.

In other words: bad news for Hibiscus shareholders.

I have written in the past in cautious terms about SPACs and Hibiscus, I think many investors who rushed to buy its shares went over their head in expectations. The oil & gas industry is a hit and miss industry, with much more "misses" than "hits". Fortunes have been made, but also been lost, many well known entrepreneurs have tried it and failed.

The above drilling result does not mean the end for Hibiscus, but it does put things in perspective. Expectations were high, very high, probably too high, also partly fuelled by the company itself:

"The prospect MNN #1, which is about 1,000 metres in depth, was selected for drilling after in-depth technical evaluation and verification using the proprietary Rex Virtual Drilling technology, in addition to confirmations provided via conventional methodologies."

And before the company wrote this about their Rex technology:

• "significantly increases the chances of success in drilling for oil and gas"
• "repeatedly and accurately predicted the presence or absence of oil without physically drilling a well"
• "in eight 'blind' tests .... the technology was successful in all cases". 

"MalaysiaFinance" wrote about the possibility of insider trading, which does indeed look worrisome, hopefully the authorities will investigate in depth.


I would like to draw the attention of the readers to the rather peculiar timing of the events, announcing the results during the holidays, when most likely authorities and fund managers etc. are on holiday.

We saw the same happening to Protasco's Puzzling Purchase which was announced during the Christmas break. It is one of the strangest corporate proposals in Malaysia in the last ten years that somehow or the other was done just before the year end. Despite expectations raised by the company that the deal would be wrapped up in a short time, now, one whole year later, minority shareholders are still left in the dark.

Returning to Hibiscus, the company has booked operational losses so far in its history, which in itself is not such a surprise, given its short existence and the long lead time to earn real revenue.

It was able to book a paper profit due to the following corporate exercise:


Hibiscus Petroleum Bhd said a corporate investor, Palladium Fund Management Inc has acquired a 15% stake in its joint venture company Hirex Petroleum Sdn Bhd via a US$10 million (RM31.5 million) investment.
 
"The subscription is expected to provide Hirex with sufficient working capital to fund its other operational costs for the next two years,'' it said in a filing with Bursa Malaysia yesterday.
 
Palladium's entry is expected to result in an increase in the proforma earnings of Hibiscus for the financial year ending March 31, 2014 by RM12.6 million, or 4.2 sen a share.
 
"The increase earnings is mainly derived from the one-off gain arising from the dilution in Hibiscus' equity interest in Hirex from 48.24% to 41%,'' Hibiscus said.

The strange thing is that searches on "Triax Ventures Corp" and "Palladium Fund Management" do not reveal any information at all about these companies. Which is rather speculiar for a company engaged in fund management in the age of the internet.

SPACs: two very different views

Frequent readers of this blog probably know that I am very sceptical towards SPACs, in general and more specifically in the Malaysian low enforcement environment. Articles can be found here, here and here.

However, I do acknowledge that the SC has tightened the initial rules regarding SPACs and also rejected quite a few SPAC applicants (even with some VIPs involved), so that is definitely good news.

Two articles about SPACs this week, two very different opinions.

To start with Errol Oh wrote "Time to end the SPAC-ulation?" in The Star.

A good, well balanced article I think. I especially like the last two paragraphs:

"There are a lot of ifs and buts about SPACs. That’s not necessarily reason enough to reject them, but if people ignore the uncertainties and are quick to believe just any story about an imminent QA, we may be better off without SPACs.

Executive editor Errol Oh was once intrigued by the idea of SPACs being listed in Malaysia. He may have overestimated the maturity and sophistication of investors here."


Completely different is the article in The Edge Malaysia "SPAC, a new promising investment platform" from Gan Kim Khoon, who we encountered before in this blog article.

Gan's article leans very much towards SPACs in a rather unabashed, positive way. To write in detail what I don't like about it would take too much space, so I will just stick to the main points:

"In introducing new instruments, the intent is to bring variety and vibrancy into financial market activities, while safeguarding investors’ interests and promoting confidence. In that respect, the Special Purpose Acquisition Company (SPAC) instrument introduced by Securities Commission Malaysia (SC) in 2009 is no different from any other financial instruments introduced by SC in the past."

That is quite a statement, as far as I remember Malaysia never listed companies with no track record, no assets, no business.

Another issue is, why should a market actually be vibrant? The companies that have brought the most value to minority shareholders are often the most boring companies.

"SPACs are a well established instrument designed to help entrepreneurial, skilled management teams to start new businesses and can represent high-return investment instruments for public investors at the earliest stage of value creation."

Well established, in which country exactly? I have read mostly negative stories about SPACs so far in a global context.

"High-return" often is accompanied by "high-risk", should people who invest in counters listed on Bursa invest in high-risk companies? The current batch of listed companies which IPO-ed with a business is already risky enough, I think.

"Clearly, the SPAC model can and does work."

I would first like to read some thorough research on that before I would agree with that statement.

"Imagine being offered the opportunity to buy into Facebook when Mark Zuckerberg was still in his Harvard dormitory (or Bill Gates or Steve Jobs, for that matter)."

Wow, talking about making statements with 20/20 hindsight. Just pick some of the most successful companies ever and then assume the managers of SPACs can identify them correctly in an early stage and act upon that with confidence by investing in them. Which SPAC actually did invest in these three companies? My guess is none. And what about the hundreds of failures for each success case, which is quite typical for these tech start-ups?

"SPACs may be assetless at the time of listing, but they do have a business plan that is as detailed and robust as that of any IPO."

It seems that Gan and I have a rather different opinion about what a business plan is. For me it describes past, present and future (including forecasts etc.). Regarding past and present, one sentence will do for SPACs since there is nothing except for a few people in a management team. Regarding the future, at the moment of an IPO the assets that the SPAC is going to acquire are unknown, therefore there is no possibility to give any forecast whatsoever.

"It stated that the average return of SPACs that completed a business combination between September 2003 and March 2006 was nearly 40%."

The period over which the profit is reported (only 2.5 years) is much too short to make any reliable assumption whatsoever. Also, readers should note that 2003 until 2006 was during the "happy go lucky" Greenspan/Bernanke time. I would like to see the returns from March 2006 until September 2008, the hart of the global financial crisis. I am sure that numbers will be very different, and will start with a minus sign. We need to see at least ten (preferably twenty) years for measuring returns, with at least one recession included.

The whole article "Special Purpose Acquisition Companies: SPAC and SPAN, or Blank Check Redux?" can be found here. The article is based on US companies in their environment, which is quite different from the Malaysian situation.

How SPACs in Malaysia will perform in the long term (in real operational earnings or in profitable asset disposals), I guess we have to wait and see. For the time being, I remain (very) sceptical.