atans1

Hyflux: Don’t cry for the investors

In Financial competency on 02/04/2019 at 11:59 am

Perpetuals buyers were warned, while pref share investors made money in the 2011 pref shares issue.

Tan Kin Lian in Hong Leong Park on Saturday

shared that he was aware how some of them became Hyflux perpetual securities and preference shareholders despite not being financially “savvy”.

“They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk. If they wanted to take risk, they would have bought shares,” said Mr Tan, who donated funds to organise the protest event.

Read more at https://www.channelnewsasia.com/news/singapore/we-have-not-lost-faith-hundreds-of-hyflux-investors-gather-to-11395566
He couldn’t be more wrong (as is usual) about “They were just ordinary investors wanting to have a reasonable rate of interest without taking too much risk.” But then he’s the talk cock, sing song king who (together with his partner in that crime, Goh Meng Seng) deprived us of President Tan Cheng Bock, allowing the PAP’s preferred candidate to win.

Well it seems he never bothered to read document offering the perpetual securities to the public. Pg 37 of the perpetual securities issue document had this warning (Emphasis mine) which the investors ignored

RISKS ASSOCIATED WITH AN INVESTMENT IN THE SECURITIES
The Securities may not be a suitable investment for all investors.
The purchase of the Securities involves certain risks including market risk, interest rate risk,
foreign exchange risk, credit risk and liquidity risk. Investors should ensure that they fully
understand the nature of all these risks before making a decision to invest in the Securities. Each potential investor in the Securities must also determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:
• have sufficient knowledge and experience to make a meaningful evaluation of the Securities,
the merits and risks of investing in the Securities and the information contained or
incorporated by reference in this Offer Information Statement and the Product Highlights
Sheet;
• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of
its particular financial situation, an investment in the Securities and the impact such
investment will have on its overall investment portfolio;
• have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Securities;
• understand thoroughly the terms of the Securities; and
• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios
for economic and other factors that may affect its investment and its ability to bear the
applicable risks.
The Securities are complex financial instruments. Sophisticated institutional investors generally
do not purchase complex financial instruments as stand-alone investments. They purchase
complex financial instruments as a way to reduce risk or enhance yield with an understood,
measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Securities which are complex financial instruments unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Securities will perform underchanging conditions, the resulting effects on the value of such Securities and the impact this investment will have on the potential investor’s overall investment portfolio.
This Offer Information Statement and the Product Highlights Sheet are not and do not purport to
be investment advice. Investors should conduct such independent investigation and analysis
regarding the Securities as they deem appropriate. Investors should also consult their own legal,
tax, accounting, financial and other professional advisers to assist them in determining the
suitability of the Securities for them as an investment. Investors should make an investment only
after they have determined that such investment is suitable for their financial investment
objectives. Investors should consider carefully whether the Securities are suitable for them in light
of their experience, objectives, financial position and other relevant circumstances.

Pretty comprehensive and in reasonably simple English. So either the perpetuals investors ignored the warning or never bothered to read: just buy.

Kee chiu if you still sympathise with them? After all they must be PAP voters, Will Oliver Lum and other Hyflux investors still vote for the PAP?, because we know the cybernuts don’t have money to even fund their favourite alt media sites.

Interestingly (I stand corrected because I may have missed it because I was getting tired), I can’t find such a provision in the offer document of the Cumulative Non-voting Non-convertible Perpetual Class A Preference Shares .

Wonder why? An honest mistake? No, most likely because Hyflux pref shares had been issued before (Hyflux: Qns to ask?) to the public, and nothing went wrong: in fact investors made money. And preference shares are shares (“You die, yr problem”) while the Perpetual Securities could according to Chris K be mistaken for bonds, hence the warnings. Don’t anyhow say PAP govt don’t care?

Still, if I were a pref share holder, I’d ask SIAS to KPKB about the lack of warning: nothing to lose further, since lost everything except underwear. Anyway, Morocco Mole (Secret Squirrel’s side kick) tells me that his second cousin removed working in DBS’s investment bank tells him that most of the 2016 buyers had made money in the 2011 issue: issue traded above par. They were hoping for a repeat killing. Kee Chiu if you think they deserve sympathy.

Btw, an interesting read: http://thefinance.sg/2019/03/11/when-exactly-did-tuasprings-operational-problems-start-hyflux/

The is the kind of stuff TOC and other anti-PAP alt media publications should be publishing instead of the rants of anti-PAP types like Goh Meng Seng and his wind bag kaki. I did forward the piece to TOC: no pix, no sound. Sad.

Related posts:

Hyflux directors, mgt & auditors kooning from 2016 onwards?

Hyflux on investor losses: “Not our fault, banksters at work”

Hyflux fiasco shows why “book value” is BS

A really curious incident

========================

*Did TKL read the other offer document? And did Meng Seng, other anti-PAP cybernuts, and other alt media experts read the 2016 securities issue documents? Or even Hyflux’s recent reply to SIAS. Somehow I don’t think so going by their comments. Sad.

 

  1. The offer document for the Pref Shares

    The risks specific to the above securities are spelled out in Pgs. 51-53 under the Risk Factors section, part (b) “Risks Relating to the Class A Cumulative Preference Shares”.

    Then again, all securities / debentures will include similar boiler-plate warnings, even Bao Jiak ones direct from Temasek or GIC. Even if PAPies personally confirmed, stamped, chopped — if SG kena invaded or ruled by ghost of Hugo Chavez or Mugabe — then all bets are off.

    At the end of the day, this is a lesson in diversification & position sizing.

    And / or smart trailing stop …. E.g. judicious use of a dumb, long & slow 300-day moving average will get Pref holders out with a 3%-4% capital gains, while Perp holders get to limit their capital losses to around 7% (reduced to 1% loss due to 1 full round of 6% dividends collected).

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