atans1

Time to chk out Olam

In Commodities, Temasek on 05/11/2013 at 4:30 am

When Muddy Waters ends up saying: “My view is that if Temasek decides tomorrow that it wanted out of this investment, it would be game over within months for them, without Temasek’s backstop,” its research director Carson Block told BT late  last week.(http://www.businesstimes.com.sg/premium/top-stories/muddy-waters-game-over-olam-if-temasek-pulls-out-20131101), its time to think it’s repenting its decision, a yr ago, to short Olam.

It’s stating the obvious. Any highly leveraged smallish stock where Temasek  exits from being a major shareholder would suffer. Temasek 1, MW 0.

Temasek has also since then progressively increased its ownership of Olam, from an initial 16.3 per cent before the Muddy Waters attack to 24.07 per cent now. Temasek 2, MW 0

In Mr Block’s view, Temasek had stepped in because of the wider implications that an Olam collapse would have posed to the commodity-trading industry in Singapore.

“If Olam had failed, what would the banks have done with the other commodity houses that are borrowing in Singapore?” he said. “It’s reasonable to assume that if the banks had to write off losses to Olam, you could have a real funding freeze for the commodity trading industry in Singapore.”

This is again stating the obvious. Temasek 3, MW 0

Funny, he didn’t bitch that BT continues to act as a chher leader for Olam. (http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid={904134059-19528-1412927508}) Temasek 4, MW 0

Maybe the narrative that Olam is changing doesn’t fit his bearish thesis. Olam is building a packaged foods business. In countries such as Nigeria, Ghana and Mali,, where it now generates sales of US$350 million, and aims to be the Unilever or Nestle of Africa. Might be interesting. Have to chk out waz this as % of total revenue and net profits. Sadly the article doesn’t give this which makes me suspicious that it’s a tiny share. Still will chk, and anyway Africa is a hot market. Temasek 5, MW 0

Final bull point, Olam did stop doing some things that Muddy waters was rightly bitching about. It shows mgt is pragmatic and flexible (Temasek 6, MW 0) , unlike the PAP govt on the FT policy (Remember the White Paper?).

Interestingly, Olam is one of the cos having an open day: a great idea.

MORE listed companies with large numbers of retail shareholders are setting aside time for the management to meet investors.

In a new trend, these companies are holding a “retail investor day” as well as the mandatory annual general meeting (AGM).

Usually, retail investors get to meet and question senior management only at the AGM.

Companies which have already held “investor day” events include Olam International, Aims AMP Capital Industrial real estate investment trust and bourse operator, the Singapore Exchange (SGX).

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid=904134059-19479-584331750

Oh and from the first BT report, it seems Muddy is still shorting Olam, Temasek 7, MW 0.

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  1. Do you have a source for Temasek now owing 24.07% of Olam? I disagree by the way that OLAM is a smallish stock – it is one of the largest 30 on the SGX and as a component of the flagship STI index, is arguably into “blue chip” territory…

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