AirAsia privatisation?

Budget carrier Air Asia turned in a net third quarter loss of RM465.5 million.

Air Asia said the losses were largely because of provisions for an exceptional item of RM215 million due to what the company called "unwinding its derivative structures."

According to its filing with Bursa Malaysia, Air Asia said "the exceptional amount of RM215 million relates to the costs of the unwinding of our fuel derivative contracts and also the likely non-recovery of margin held by Lehman Brothers Commodity Services Inc., a subsidiary of Lehman Brothers Holdings Inc. which filed for bankruptcy on 15 September 2008.

As was reported earlier, AirAsia is seeking funds to fund for its privatisation exercise and will cost RM2.2 billion given the price of RM1.30. As the news were out, the share prices were hovering at 1.2. It had been there for 2 months though. As the report was out earlier in the week that the company made losses on Lehman Brother's derivatives, I was wondering that whether the privatisation news was purposefully leaked out to make it easier for its directors to sell off its stocks given that they had prior information on the losses. Anyway, as the company is expanding into other regions on its cheap flight, lets hope thay would be able to recoup the losses and have its share prices rise again. As its net assets lie around 0.70 per share currently, I would think the best price to go in is anything below 0.90. 

Losses Losses Losses

Many companies like Telekom, Maybank and Genting in Malaysia were thought to be in good hands and have strong management until recently they were reporting losses from investment overseas. Well, I do believe that in business there are no sure profit and risks have to be considered. Therefore, there is also no one rule of making money in the stock market. Even company that Buffett holds his trust so strongly to still loses money. Coke for instance. 

Strong companies like AIG, Citigroup and Lehman were once thought to be mighty and resilient to any storm. Now, they are filing for protection and begging government for money. Will there be hope for long term holding of stocks and wait for it to bear fruit and pay for our houses? I still think it is a good idea to buy low and sell high but it is very difficult if not impossible to correctly identify the lowest and the highest of a price the stock can go, given that the stock will still be here. Therefore, I still think it to be unwise to hold stocks. I would rather for long term, hold gold, silver, copper and other commodities that will not rot and diminish in value. Buy only stocks when there is a good sentiment. Sell when it is bad. I personally would prefer to trade rather than hold. At least losses can be minimised and I can be ready to ride the trend when it is in good time. With this, I would not be caught when any company goes bust. I would also be happily sitting to wait for a big sell down to be able to pick up the pieces when it is ready for rebounds. Certainly I won't be as rich as Buffett but I think I'll be able to do better than average people with this.       

MISC aborts bid for Ramunia

Takeover scrapped due to unsatisfactory due diligence findings ( http://biz.thestar.com.my/news/story.asp?file=/2008/11/26/business/2644571&sec=business )

This is what can happen in a market without free flow of information. On one hand, they were saying that they have secured 70 over percent of ramunia stocks and is on course to take the company private. after the news was announced on January 2008, ( UPDATE 1-Malaysia's Ramunia jumps on MISC takeover

Thu Jan 24, 2008 8:53am IST http://in.reuters.com/article/asiaCompanyAndMarkets/idINKLR1178720080124 ) During the announcement, Ramunia went up to an all time high of 1.90 from around RM1 before the announcement. If i understand it correctly, they would have purchase the stocks at lower price and make the announcement before selling ti at 1.9 or averaging at 1.5 making it a clean 50% profit. The volume also surged to 60 million transactions during these period too. It was hanging around 1.7 to 1.4 up until today's announcement that it will not longer be taking over the company. So, what has all the 70% shares MISC has been holding all these while gone to? Even in october, there were news that Ramunia's privatisation is still on track and MISC is holding 70% of its shares. ( Ramunia agrees to MISC takeover terms http://www.upstreamonline.com/live/article164165.ece ) 

It is really clear to see how those in position manipulate the news to take advantage of the situation. I hope I am wrong on this. :)

From Victor Niederhoffer

At x pm every day, an announcement is made. The market moves to a level. The move is attributed to the announcement. The question is whether the move would have occurred regardless of the announcement. Also, whether the announcement was planned to make the move. For example, at 3:02 on 11/21, an announcement that the new Treasury Secretary was appointed occurred and the market moved up 6% in 59 minutes. Similarly at 3:10 last Friday, the announcement from the current Secretary that he believed everything was under control. The market set a new high and then dropped 6% in 50 minutes. We know that the news follows the price. Also, that the news is often now as "new" as we believe. The proverb comes to mind "the ____ will do what he can do." Also, the ephemeral nature of the news and those who know about it in advance. Is it fate or chance when such moves occur? And does the market do what it's going to do regardless? How would one approach this question and its tests and what insights can be drawn from such a traverse?

As far as I can understand, I would have also applied the same theory that the market moves before a major announcement is made either positively or otherwise. From what I know, either major players in the market are related to the party that made the announcement or people close to them that is holding to a large amount of the stock will have been informed earlier about the news that will be announced. Therefore, they would have made the first move in the right direction first before anybody else in the market. Subsequently, it will snowball into a larger move in the direction of the news and up until the news is announced, it will have already been discounted and it will be left with those uninformed people who received the news last to make the final move if any.