Thursday, July 5, 2007

Economy up - Index up?

The WSE Index we calculate rose for more than 10% in the last two weeks! Can we do better? of course we can...

A problem in the WSE is that listing criteria exists but that they are not necessarily restrictive. A direct result is the poor overall performance of the WSE if we consider the total number of listed companies.

www.slquotes.com is the best example to prove this as they calculate their index over all listed shares. It’s negative…

However, the economy in SL is growing and therefore indexes which consider all shares are not sufficient indicators.

Our index only considers 34 companies which is already a lot. We also realized that we probably have to reduce its number down to 25. The end of our IPO in view we started our company reviewing process put 10 companies so far on the watch list (SBL, DSE, RDX, XAN, AMS, FED, FDP, SML, BPV, CGI). That these companies are on the watch list doesn't exclude them necessarily!

If we strictly apply our selection criteria, as growth, business idea, management experience, market capitalization, free float, communication and dividend strategy we honestly fill more comfortable with 25 companies. As a matter of fact we can use the ongoing review process to reduce the actual number of 34 down to 25.

This change is in favor of the investor, as these 25 companies showed a performance of more than 24% in the same period!

Unfortunately market capitalization and free float cannot be included in the index calculations as free floats are not available. However, we tried to prove our theory and estimated free floats. The performance we get over the 25 companies in the same period is about 4.5% which is much closer to the effective growth rate of the economy in SL. We think this is the way to go. We even learned that companies like THI start to publish their own free float, we can only motivate other companies to do the same…

For the time being, however, dear investor, enjoy >10% performance with LWI so far. It may even have been >24% with an index composed of only 25 titles. We will decide about this together with you when we fix the final spot price when the IPO is sold off. In the next two weeks till the end of our IPO we will publish both values on our blog

http://lemurinvest.blogspot.com

LWI is a derivative NOT a company and NOT a mutual fund. It is the easiest way in SL to profit from the growth of the Linden economy and limit your risk. Either you loose 5% or you participate between 95-100% on the increase of the index where dividends are included.

And how do we find a living? The index is a product we develop and is therefore already something which is useful for us. We see this mainly as an investment we do for ourselves in order to facilitate the management of our portfolio and offer services to third parties. If things run normal we earn up to 5% commissions and if things outperform nothing. However, our portfolio will outperform too and the index is still ours …..

IM me for further questions

Greetz
Casper Trebuchet

3 comments:

Ket said...

The market is strange, its a very strange beast...

Lets look at CGI for a second. They dump a 1m dividend onto shareholders posting .10 this is a very strong dividend. The stock rose to 4-5ish but in two weeks was down under IPO price.

Ive seen similar with THI although now with the new rebalancing of shares in THI we are a bit more stable.

Strange... There's also a lot of pump and dump going on... SLM pumping the divs to sell secondary shares and then saying no div.

LLL's posts don't add up either.

Strangeness abound... :)

LEM Invest said...

Hi, thanks for comment. it is not really strange just a sign that the market is not mature and this is why an Index like LWI can help to stabilize the market. it is a tool to observe the market and also to educate the companies to do "clean" business.

A company owner recently suggested to me to make a "deal" as he called it. He would have bought off the remaining bids (only a few at this moment) and then dropped a huge amount of his shares (the ones of this alter ego of course) on the market but with discount of 80%. We then would have agreed that I would buy them off as soon as he is dropping them. Later on the owner would pay a high dividend in order to let values climb again... These titles are not in LWI.


Imagine what will happen when companies like ACE, RDX, AMS which have a huge amount of outstanding shares and almost no free float pass the 90 days and start to drop their shares in order to cash them out...

If you take ACE, they have 100 millins share. If they sell 50 millions with 0.2 it is still 10 millions cash, not bad isn't it. Ok, I hope that they start o communicate a bit about future development what they haven't done till now.

With LWI I believe to have an instrument to detect and "punish" such misleading strategies or I motivate the companies to become more transparent. At least I hope so. Ok, LWI is small I agree but I think that the idea counts here and the effects it creates.

By the way, CGI is also under survey. LEM made quite a bit trading profit during the last days with it, but in terms of the index this is surely not a good sign.

For SLM it is difficult to come to a conclusion as in our eyes the SPO came to early and is watering any analysis. LLL is in the index but we will rethink each position till July 17th.

Ket said...

Hey Casp...
Obviously This is Chao...

Well not obviously but hey whatever.
Had my blogger account longer than my SL account.

I think there was some serious serious foul play with SLM cutting the div after pumping it. That was bad business to say the least. While I may agree that while they are raising capital they should not post a div, pumping and them cutting was not good.

CGI is a solid company. I think Jasp has close to 17m on the exchange in other companies. There expansion rate is solid. I do not understand why there shares are playing out like they are.

That completely sucks about that CEO trying to cut a deal with you. My suggestion is to discuss it with luke, it smacks of insider trading.

As far as the CEO float. We are restricted now past 90 days. (Thank god, cause ACE and RDX could level the market), we need lukes approval to sell shares and from what I understand he would rather see you secondary then sell shares.

The mega float companies. Wow who valued this? I just say a FUND with 9 million in CEO shares.....

Why does Redux have 100m shares when i was prevented from having more than 5, when my financial's have out preformed him. Does the market realize a 1m dividend from redux means 50k to the public.

What do you think the effect on the market of a very high perpetual bond where talking 13% perpetual.
Will people realize some of these dividends are pennies.

What also concerns me is the practice of an under subscribed ipo getting there full CEO share amount. That would effect companies like GUN...

None the less the WSE still stands as a great tool, and i agree its in its infancy.