The weighted basket lost 8.7% since 10th June! If this tendency continues LFB will pay a minimum dividend of 2% at 10th July. We hope for more of course.
I have to admit this drop cannot be neglected. What happened?
If we extend the underlying calculation till the 1st June the drop is even more significative .. -37.6%!
Well, if a stock exchange drops for 37.6% within 17 days we normally speak form a mega crash or a black June would be more appropriate. Should we forget about stocks in SL then?
We think that June was till now a month with quite unusual turmoils. Two stocks in the basket lost both >30% in the last two weeks, HCL and RDX.
The problem with HCL is communication. Monthly reporting and dividends are not adapted to the fast life cycles in SL! Especially not when there is somebody who wants to get the majority in HCL or there are former board members who like to dump shares in huge quantities? Thank you WSE 2.0 very much to give as a tool to follow such development at least form distance. Where is the explanation for this? Seen from the data we have we consider HCL as undervalued, but...Dear Luke, as life cycles in SL are much faster than in RL couldn't you switch to monthly reporting and dividends..? We are convinced that shares would then switch back to bullish again.
RDX. In May shares jumped up to values of 1000 $L and the owner told us that this was because somebody wants to overtake RDX. Well, apparently she owns roughly 96% of all shares (alter ego's not included). What is she speaking about? And even more serious, what happens at the moment - after 90 days - when she can sell their shares which will be soon. Is she dumping and cashing out her 100 million shares and vanishing for never be seen again ( I mean even when she can sell each share for 0.5 $L this is still a 50 million check)...understand me well, I see this more constructive. Anyway, it is up to the owner to secure us naive shareholders. Similar situations we find for ACE and AMS and in both titles the number of outstanding shares is huge... Is RDX therefore a value to invest in or to keep out? Principally we are convinced that the business model of RDX is nice and has potential either we wouldn't have considered is in our basket but more communication wouldn't be bad which would bring some stability and confidence again into the share.
BNT. They communicate and speak about SIM's they want to buy and future technology they want to develop but the shareholder is apparently more seen as a pain in the neck than something to take care of. We are quite reserved at the moment toward this title. We are sure that the owner only want the best for all of us, but well, let's wait and see. BNT is not doing better at AVIX as it did at WSE. By the way, unfortunately BNT is no longer on the WSE so we cannot see how the ownership looks like. BNT has 130 millions shares outstanding...!
AIC: Also lost 20% over the last two weeks. We think that AVIX is a good alternative to WSE and found its niche in SL. But also the other businesses of Allenvest are doing fine so we see AIC undervalued and its future rather bright. However, AVIX could improve. The option of WSE 2.0 which shows the most important shareholders and their share movements is really great. AVIX should include this too in their system to reduce insider business.
AMA: No liquidity in this share and we are not innocent as we control 60% of the public shares. It is to early to say something and we have to wait to the results of the first month
SLM: There is no doubt that marketing is important in SL and that SLM will get a big slice of the cake. Jon is doing a great job and is very helpful, even with shareholders..lol...On the negative side we can add the fast expansion, especially with the second offering which comes too early. But well, it helps at least to keep the share value stable. And we hope for SLM that they succeed.
Conclusion:
We go through a bearish phase right now, but think that this is only temporarily. If the weighted average of the basket will not turn its value into positive a minimum dividend of 2% will be paid on 10th July 2004.
We hope of course that we will touch the 7%. And, well, that we live in the best of all worlds where company owners are not basically thieves- us included of course.
No communication creates rumors and they are bad for the business...
Greetz
Casper Trebuchet
Chairman
Lemur Invest (LEM)
http://lemurinvest.blogspot.com
White Mall Island, Saya Sakai Inc (79, 119, 43)
3 comments:
I think you may be missing a fundamental piece of this puzzle and that is the individual shareholder. I believe there is a lack of understanding about the basic principles behind trading. What I see in most of the stocks I am invested in is what is akin to capitulation in a real stock market when investors see the price of their stock dropping.
Consider that the only driving factor behind stocks in the WSE is supply and demand and this begins to make sense. When any investor begins buying up a stock, the stock price moves up...I can prove this with my own purchases in FED as I now own 17% of the available shares on the market. I singlehandedly drove this stock from $.50 one day to $20.00 simply by buying up the cheap shares. Investors then saw this action and began flooding their shares on the market each undercutting the other until the stock was once again at the levels you now see.
This is a huge problem because there is no other driving force behind the stocks. Without the ability to short stocks, and without large investors like myself, the prices would never move more than a few pennies each way each day.
It's no wonder there are such huge swings in prices from day to day. Anyone can take a chunk of money and decide on any given stock to run it up. It is then a question of how other investors are going to react to that action. So you can see it is the investors themselves that are causing pain in the market in their own stocks!
As for FED, which is my major holding...I actually invested in the company because I like the products being developed and I think as SL moves away from allowing gambling advertisements and other products are created, we are going to see quite a different economy develop.
I invested in LFB because I like the idea of what is essentially an ETF or Mutual Fund. I'd like to see the value of HCL go back to respectable levels as well as RDX.
Hi, sorry for late answer, didn't expect that somebody is answering...lol
Of course, we are quite bit away from mature stock exchange markets.
Also, for quite a bit of people (company owners on the board as well as investors) its the first time that they are trading, setting up an IPO or even owning a company. It's surely not a perfect world - more like a casino.
I think still a lot of communication work will have to be done by WSE and also AVIX.
Furthermore WSE and AVIX are quite open platforms which can easily be manipulated. Fortunately WSE is now listing the five biggest shareholders. Practices like selling 2off share for discount prices, actively manipulate share prices, misinform, use alteregos to undergo buy/sell prohibition for owners etc.. are quite common.
And most shares have ridiculous ownerships structures, like ACE, RDX just to name some with 98% belonging to one single person or they are so small that it is unlikely to have decent trade with those.
But lets see. Things will develop over time and I hope that WIC wll also bring in new customers and money.
By the way, if you like LFB you should also look at LWI my newest derivative which is on the IPO board right now. It is a product with 95% capital protection but where you participate to almost 100% at the increase of a reference index I calculate daily.
Nobody understands this product of course, but we will see. If it works, it will help to bring some further stability into WSE as I will publish this index and then everybody can compare the differences in between the considered 34 shares.
By the whym think RDX will recover and HCL too because of WIC. AIC I put on neutral as I don't trust this AVIX. 80% of the volumina comes from AVIX only..SLM has potential, and AMA I don't know yet, guess that they will go into 2off and try to convince RL people to invest in their shares
Good gambling for us..
Casper
James mentioned being able to singlehandedly drive a stock up from .50 to 20.00 one day; on June 25 one stock on AVIX was driven from 1.36 to 300.00, and then closed at 1.96. That's crazy, and so unfair. What a B.S. exchange.
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