Stocks market watch
Follow blindly when prominent investor buy. What will happen to Focus Lumber on monday?
Its quite sad to see that many people still like to follow blindly without doing much research when a prominent investor make a move. I don't blame the newbies if they are attracted into buying these shares based on the reasoning by this prominent investor. That's why the rich will become richer while poor will become poorer. Lets take a look what has happened recently to Focus Lumber.
The share has been on downtrending from the high of RM3.00. It drop to almost RM2.05 then up to RM2.60 when this prominent investor promoting Focus Lumber using margin financing. Its trading flat and begin to shot up to RM2.45 when the prominent investor emerge as substantial share holder announcement on 10th May 2016. Little that everyone know that the company didn't do well on 1st quarter of 2016. This stock is not for holding for long time as the prominent investor may dump any time when the price is right. Based on what I have seen from his previous recommendation such as Geshen & Johore Tin, Focus Lumber has a very high potential of gap down on monday based on what happened to Taann (similar timber industry). This stock has a strong support on RM2.00. If break, it may go to RM1.70 and RM1.60. If it go to RM1.70 or RM1.60 then it will have same fate as Geshen and Johore Tin.
We can't sure whether the falling stock will rise again to the level that we brought but during that period of time our money will be locked and we lost the opportunity of investing in other more profitable stocks. Do take note that when Focus Lumber has an EPS of 3.2, its share price is only RM1.60 on April 2015. Do think twice before follow this prominent investor move as you are just enriching him and his advise on using margin financing is the most misleading of all. Also you never know if Focus Lumber will have rising profit in the next quarter. So, lets manage our risk well and be careful especially end of May 2016 as so far we have many companies missed their earning expectation and created bull traps.
What? You encourage people to use margin to buy your recommended shares? Its a trap to just enriching this prominent investor. Becareful newbies of this trap.
Wah, he brought 6 million shares. So everyone follow. But we don't know when he will dump as he can delay the announcement of up to 2 months (Latitude example). How do we sure that he is always right and we don't buy rotten log?
Focus Lumber has a rising profit and from June 2015 to Dec 2015. But earning for first quarter of 2016 drop almost 60% compared to the previous quarter.
This prominent investor keep pushing Johore Tin until price of RM2.20. When earning not within expectation, it gap down from RM2.05 to RM1.85 in just a day. Then continue to drop to RM1.70. This stock although seems to be on increasing trend now, but your money will be locked for at least 6 months and we don't know whether it will hit RM2.00 again.
Johore Tin did very well on second quarter of 2015 but the earning drop by half on third quarter of 2015.
Geshen: Missed earning expectation. So gap down from RM2.60 to RM1.90 during 1 day period.
See the quarter 3 of 2015. Earning of RM7.3 million but drop to RM1.8 million during last quarter of 2015. So huge drop on stock price.
Taann: This stock is not recommended by this prominent investor. I show this as Taann is same industry with Focus Lumber. But as you can see that the stock has a huge drop two days before the first quarter of 2016 financial result announcement. It drop more than 10% within a few days. It could be the big boys already know the result ahead of time.
Taann made RM57 million during the fourth quarter of 2015 but first quarter of 2016 only made RM12 million. So there is huge drop example. When earning missed estimate, the share price will follow as well.
This post is continuous from my previous post that we need to becareful when someone recommending their stocks.
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Discussions
3 people like this. Showing 50 of 50 comments
Preventing this old man of giving non-sense tips such as encourage people to take margin financing just to enrich him more. Beware newbies.
2016-05-21 23:25
As what I wrote over the weekend, if you never include the forex gain previously, the result is satisfactory. I dont know what is going to happen tomorrow. But that's just the sentiment of the herd that swing left and right following MYR. The company still producing plywood, and it will continue to export plywood.
2016-05-22 06:53
Taking out forex gains and losses only takes out a portion of the fluctuations.......it is an attempt at smoothening the curves.........
They call it core earnings.
What people don't know is that it is not the whole story......that is why people are surprised at the recent results.
Even the so called core earnings are greatly distorted by fluctuations in exchange rates.
2016-05-22 07:11
Ricky is right, would you sell FLBHD knowing full well next quarter will see a forex boost since ringgit has weakened 5% against USD since 31/3/16? If forex is your thing, then maybe playing forex directly is better than jumping in and out of stocks and paying brokerage everytime you do so. Excluding forex, core eps is around 6.7 cents, not great, not terrible either.
2016-05-22 07:24
I know cash and other investment grow from 60+ mil to 88 mil in 3 months hehe
2016-05-22 07:33
ah_boon, keep it up !!!... it is better to know now than not knowing anything…. Your articles will greatly help a lot of peoples….even those experienced investor like us. Your articles will help prevent another disaster waiting to happen causes by our very own famous prominent tycoon.
2016-05-22 10:13
should fall below RM2.00 in the medium term.not worth so much. just that ah koon cannot dispose off cos he got a lot and keep supporting. he been selling 20 lots buy 10 lots tactic to support.if he sold off all,fl will be like geshen
2016-05-22 12:16
agree
Posted by Apollo Ang > May 22, 2016 12:16 PM | Report Abuse
sell before it's too late
2016-05-22 12:31
you don't expect prominent investor to tell you when he sells....do you?
why so childish one, you all.
everyone same same.
You tell everyone after you buy some thing
you keep quiet while you are selling some thing.
2016-05-22 13:06
I believe i need to say something as well.
Shareholders with large holdings CAN unduly influnce share price when they buy or sell. This is a known fact.
To sell big amount of shares u need high liquidity. U need many ppl buying n selling hence a bigger volume to better dispose of shares.
If u can promote your stocks n ask ppl to buy, wats wrong with telling ppl to sell? Since u ask ppl to buy firsthand u have a moral obligation to tell them vice versa
Even Investment anaylsts issue buy n sell calls.
2016-05-22 13:40
So far i see evidence n posts by others ALL points to the other side of integrity.
2016-05-22 13:42
USD-RM
31 Dec 2015 = 4.29
31 Mar 2016 = 3.89
22 May 2016 = 4.07
Expect forex gain for 2nd quarter if exchange rate is higher than 3.89
FL Has no debt . NeT cash increased from 75m to 88m or 85c per share.
Strong free cash flow. The forex gain or loss is due to trade receivables and cash in foreign currency.
My 2c opinion. Plz dont scold.
2016-05-22 13:49
actually hor... FLBHD got good dividend mar... even you stuck at rm2.40, you still have 5% yield if they give 12 sen this year...
2016-05-22 17:32
Pls go and sue all the research and stockbroking companies. They recommend stocks to buy everyday. Why you don't scold them. Hypocrite.
2016-05-22 21:51
Also please scold all the i3 bloggers who everyday say buy this buy that. Why just pick on one. Did anyone point a gun to your head and force you to buy. Please grow up.
2016-05-22 21:57
Taan is different
Other than timber, it also have oil palm plantation and others
Focus lumber is just on timber furniture
2016-05-22 22:06
As a substantial shareholder, better to keep quiet and don't try to influence market on the share price.
2016-05-22 22:28
Since this investor promote heavily, so he is trying to bring more benefits for himself. And he has a reputation, so newbies especially will be more convinced to follow his advice which not all is correct. Its different with stock brokering companies as they have licence and have full report on why they recommend buy or sell and they may and may not have holding of those shares. Stock brokering are many but not many prominent investor come out openly to disclose which shares they are buying. Guess which one able to convince newbies more.
2016-05-22 22:28
Please refer to page 6 of quarter report as at 31 March 2016, B2, you can see that on last sentences. "This was because the double tax deduction benefit granted on freight charges had been revoked effectively from 1 January 2016"
It mean the company profit margin will not ever go back as high as last year as the double tax deduction had gone.
It is the main reason why the profit drop. If you ignore the forex effect, flbhd only earning 6sen for this quarter.
Yes it might be good in next quarter due to forex gain. But the main point is profit margin go down so much due to the remove of double tax deduction. Hence in my opinion it is not a good investment anymore.
Using simple PE10 test, 6sen x 4quarter x PE10 = RM2.40. Currently RM2.34. Good? Nope. Fully valued already.
RAIDER COMMENT: THE DOUBLE DEDUCTION ON FREIGHT IS JUST A SMALL COMPONENT OF THE OVERALL PROFIT.
WITHOUT IT WOULD NOT IMPACT MUCH ON THE OVERALL PROFIT MARGIN MAH....!!
2016-05-22 23:39
RAIDER SAY SHOULD THERE BE A SELLDOWN....JUMP IN & BUY LOH...!!
WHY ?
FOCUS LUMBER IS A WELL MANAGE COMPANY.
THERE WILL BE STRONG EARNING RECOVERY IN JUNE 2016.
THE CURRENT CASHFLOW IS STRONG GENERATING CASHFLOW EXCEEDING RM 0.06 FOR THE QUARTER.
DIVIDEND YIELD IS MORE THAN 6% PA A HAVEN FOR YIELD INVESTOR LOH....!!
SHOULD ACCUMULATE LOH....!!
2016-05-22 23:44
Many still catching falling knife. Until now about 4.5 million shares changing hand. Still have another estimated 5-6 millions shares not traded today yet. Lets see whether RM2.00 will hold in the afternoon session.
2016-05-23 11:46
Reasonable post and assessments by @ah_boon here. He is only telling things as they are. The call to be cautious is all the more relevant given the developments over the past few months. Especially in newbies and me-too investors who hero-worship some prominent big guns too much, only to see their capital depreciating significantly when they weren't aware the latter were cashing out. So, ah_boon has very pertinent points here and it is childish and immature to attack the messenger.
And that's the main lesson - yes, read what prominent investors and analysts say. But do our own research and evaluation too, because it will be our money at risk.
2016-05-23 12:02
kudos for remarkably precise prediction. last year was the best for export furniture counter. this year is different
2016-05-23 12:07
Prominent tycoon aka prominent investor…..will be very happy with the performance result today....History repeats itself and that's just how it goes….
ah_boon, your articles greatly help us gain some knowledge on market manipulation… thanks….
2016-05-23 12:31
Another share that people should watch out is Canone. If you noticed, it's dropping during the last few days and broke the RM4.00 level. Financial result announcement anytime soon. It may not be good as seen from lower than expected Kian Joo contribution.
2016-05-23 13:25
My comment, by the way, doesn't mean that I'm saying "Don't buy FLB". In fact, at the support level, I'm thinking of a punt. But with a stop loss set. The thing is, make our own decisions. Not blindly follow anyone.
2016-05-23 14:10
Buying at reasonable price is always a good strategy. Buying when already being push up so high is a disaster.
2016-05-23 14:23
Be careful of Harryt30 too...he is link to KYY...can refer back how he promote FLB
2016-05-23 18:13
i dont think kyy can foresee better than those fund manager, a lot of fund manager get the insider news about the forex , the next quarter report, thats why they dump once the kyy buy, although the chart is quite good and the fundamental is good, they will never win those fund manager
2016-05-23 22:42
Ah boon hope you can give good advice for us as a newbie. I like your comment.
2016-10-14 09:48
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