This and last week Lin Zuojon CEO of Asian Bamboo bought via his Green Resources Enterprise Holding Ltd. some shares and revived the bombed out chart.
I just added up his purchases until now, as you can see its not all that much and my guess is that it wont have a lasting effect on the stock price:
Day of purchase Day of reporting Nr. of shares Price per share Total volume
21.06.2013 25.06.2013 1.000 2,75 2.750
20.06.2013 25.06.2013 5.000 2,41 12.055
19.06.2013 20.06.2013 2.000 2,37 4.740
18.06.2013 20.06.2013 2.000 2,05 4.092
17.06.2013 18.06.2013 10.000 2,05 20.497
14.06.2013 18.06.2013 37.876 2,03 76.767
13.06.2013 18.06.2013 12.124 1,95 23.631
Total shares bought: 70.000
Total volume: 144.531
As of 25.06.2013 17:00 GMT+1
Update 01.7.2013, 09:30:
Since the first post Lin Zuojon bought more shares on two days:
Day of purchase Day of reporting Nr. of shares Price per share Total volume
25.06.2013 28.06.2013 3.000 2,40 7.200
24.06.2013 26.06.2013 5.000 2,55 12.731
That makes a total of 78.000 new shares bought, a total of 5.836.000 shares (incl. treasury shares) now belonging to Mr. Zuojon. That is a 37,83% of total shares, an increase by 0,51% of all shares.
If one doesnt take the treasury shares into account, shares outstanding would be lower.
Now the buying spree seems to have come to a halt, stock price is at 2,23. Interesstingly there is no significant increase in share price since the start of the CEOs purchases, what is just another prove how low confidence is in German-Chinese stocks.
For most other stocks purchases of the CEO of 0,51% of total shares would be a kick-starter.
Tuesday, June 25, 2013
Wednesday, June 19, 2013
US: Mean reversion on Macro level?
The Bank of America released a survey indicating that institutional US investors reallocate their money from government bonds to equities.
This is the first step on the reversion towards a more "normal" interest level. Investors expect interest rates to rise and abandon (fixed rate) bonds so they don't get stuck with the low interest coupons. They rush into equities as alternative assets.
When bond interest levels have gone up according to investors expectation the move will reverse. Now bonds will get more popular again until a balance is established.
Of course FED's actions will have a strong influence:
a) FED does nothing or FED slowly decreases asset purchases: Scenario as above
b) FED decides to stop purchases faster then assumed: More rapid and stronger rush to equity.
c) FED decides to increase asset purchases: Increased popularity of bonds, since interest levels might decline even further in the future.
In my opinion alternative a) seems to be the most likely outcome, since this also includes a vague statement without a decision about future actions.
For Europe the situation is entirely different. The ECB seems willing to escalate the situation in order to force banks into lending more money. Yet the EUR is getting stronger, investors seem to doubt the willingness or ability of ECB to further cut interest rates.
Edit1: Aswath Damodaran posted a very interesting research opionion on the power of the FED and the perception of it by investors. Highly recommended as always!
Edit2: Harald Preißler Chief-Economist of Bantleon (investment bank) seems to have the same opinion: Handelsblatt (German only)
This is the first step on the reversion towards a more "normal" interest level. Investors expect interest rates to rise and abandon (fixed rate) bonds so they don't get stuck with the low interest coupons. They rush into equities as alternative assets.
When bond interest levels have gone up according to investors expectation the move will reverse. Now bonds will get more popular again until a balance is established.
Of course FED's actions will have a strong influence:
a) FED does nothing or FED slowly decreases asset purchases: Scenario as above
b) FED decides to stop purchases faster then assumed: More rapid and stronger rush to equity.
c) FED decides to increase asset purchases: Increased popularity of bonds, since interest levels might decline even further in the future.
In my opinion alternative a) seems to be the most likely outcome, since this also includes a vague statement without a decision about future actions.
For Europe the situation is entirely different. The ECB seems willing to escalate the situation in order to force banks into lending more money. Yet the EUR is getting stronger, investors seem to doubt the willingness or ability of ECB to further cut interest rates.
Edit1: Aswath Damodaran posted a very interesting research opionion on the power of the FED and the perception of it by investors. Highly recommended as always!
Edit2: Harald Preißler Chief-Economist of Bantleon (investment bank) seems to have the same opinion: Handelsblatt (German only)
Mid-tier bonds ("Mittelstandsanleihen") in Germany
In the prevailing low interest environment in German so called Mittelstandsanleihen are being increasingly offered. Those are bonds my small/mid-tier companies, often with a well recognized name and good reputation for a narrow industry niche.
The bond volume is usually max. 60 million EUR with a coupon of 6%-8% p.a. In fact all the bonds I could have purchased since September 2012 were Mittelstandsanleihen.
I strongly discourage anyone to invest into those bonds, chances are high that at least some of the money will go for good.
The companies usually lack equity capitalization and due to the new „Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen“ (ESUG) a debt to equity swap and a higher haircut for bondholders is easier for companies to enforce. Management now has 3 months time for putting a plan together, they can also group stakeholders into different pools. The plan is accepted if the majority of pools accept it. Accordingly management has a strong incentive to balance the groups in a way that they split the votes of people that are likely to oppose the plan (such as bondholders).
For German readers i recommend this very interesting article on WiWo.
However in my opinion the prime of Mittelstandsanleihen has passed, they are under a lot of scrutiny by the media, especially by financial press. A quick internet search will find loads of bad publicity.
I receive a daily newsletter Finance Today by German paper Handelsblatt. For one whole week the newsletter featured a flashy ad for such a Mittelstandsanleihe by Gamigo.
That made me wondering if the will also feature the negative articles about the SME bonds they published online/in print in their newsletter.
Well they did (good!):
The bond volume is usually max. 60 million EUR with a coupon of 6%-8% p.a. In fact all the bonds I could have purchased since September 2012 were Mittelstandsanleihen.
I strongly discourage anyone to invest into those bonds, chances are high that at least some of the money will go for good.
The companies usually lack equity capitalization and due to the new „Gesetz zur weiteren Erleichterung der Sanierung von Unternehmen“ (ESUG) a debt to equity swap and a higher haircut for bondholders is easier for companies to enforce. Management now has 3 months time for putting a plan together, they can also group stakeholders into different pools. The plan is accepted if the majority of pools accept it. Accordingly management has a strong incentive to balance the groups in a way that they split the votes of people that are likely to oppose the plan (such as bondholders).
For German readers i recommend this very interesting article on WiWo.
However in my opinion the prime of Mittelstandsanleihen has passed, they are under a lot of scrutiny by the media, especially by financial press. A quick internet search will find loads of bad publicity.
I receive a daily newsletter Finance Today by German paper Handelsblatt. For one whole week the newsletter featured a flashy ad for such a Mittelstandsanleihe by Gamigo.
That made me wondering if the will also feature the negative articles about the SME bonds they published online/in print in their newsletter.
Well they did (good!):
Wednesday, June 12, 2013
Blog recommendation: The Grumpy Old Accountants
On The Grumpy Old Accountants readers can regularly read about the quality of auditing an accounting, an important if not the most important issue for all investors.
The latest post that i found particularly interesting is about Sam E. Antar, cousin of Crazy Eddie, and the effectiveness of "ethic lessons" for auditors and students.
He argues that the capital markets attracts the 10% "of the public is absolutely unethical and incapable of behavioral change". He is skeptical that auditors with the regular middle-class background will be able to detect the true intentions of such highly educated and ruthless scammers as Sam Antar.
I agree with his conclusions and find this a really interesting argument besides the usual stuff, such as conflict of interest, etc.
I also definitely recommend you to read the articles about Groupon and their accounting.
In my opinion investors can learn a lot by trying to stay up to date with accounting regulations and their consequences. I might be biased since I study a lot of accounting myself however sounds knowledge is necessary in order to evaluate the most important documents (financial statements). This holds especially true in times of ever increasing importance of goodwill, deferred taxes and fair value accounting combined with the management approach favored by standard setters.
The latest post that i found particularly interesting is about Sam E. Antar, cousin of Crazy Eddie, and the effectiveness of "ethic lessons" for auditors and students.
He argues that the capital markets attracts the 10% "of the public is absolutely unethical and incapable of behavioral change". He is skeptical that auditors with the regular middle-class background will be able to detect the true intentions of such highly educated and ruthless scammers as Sam Antar.
I agree with his conclusions and find this a really interesting argument besides the usual stuff, such as conflict of interest, etc.
I also definitely recommend you to read the articles about Groupon and their accounting.
In my opinion investors can learn a lot by trying to stay up to date with accounting regulations and their consequences. I might be biased since I study a lot of accounting myself however sounds knowledge is necessary in order to evaluate the most important documents (financial statements). This holds especially true in times of ever increasing importance of goodwill, deferred taxes and fair value accounting combined with the management approach favored by standard setters.
Sunday, June 9, 2013
Analyst Recommendation and Stock Performance: Performance Mai 2013 (Pt. 09)
Mai 2013 was interestingly a strong month for both the best-basket (+5,2%) and the DAX (+5,5%) index.
I say interestingly because the best-basket mainly constitutes of US companies.
Indeed when running a correlation of the mtm changes correlation seems to be the least btw. best-basket and DJ.
This is the correlation matrix:
Drivers in the best basket was Valeo SA, Gran Tierra and Check Point Software.
I say interestingly because the best-basket mainly constitutes of US companies.
Indeed when running a correlation of the mtm changes correlation seems to be the least btw. best-basket and DJ.
This is the correlation matrix:
| Korrelation | Best 12 | Worst 12 |
| DAX | 0,25 | 0,41 |
| DJ | 0,38 | 0,65 |
Drivers in the best basket was Valeo SA, Gran Tierra and Check Point Software.
This is the monthly track record: Best-Basket recovered a bit but is still way off all other indexes. The development since incarnation:  |
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