8 people like this.

41 comment(s). Last comment by ruby20 2021-01-14 19:20

emsvsi

3,513 posts

Posted by emsvsi > 2021-01-06 00:29 | Report Abuse

Not very sharp argument, since you've obviously never heard of Margin Call (which is also a movie, clever eh) :)

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 07:42 | Report Abuse

emsvsi, thank you for your comment.

Margin Call was indeed a good movie, I particularly liked Jeremy Irons' play.

There are indeed many leveraged investors. However, the post's purpose was not to focus on the wide variety of scenarios one could find themselves in, especially if they have taken on a significant amount of risk to begin with. That is why in the disclaimer it is mentioned that one should always "make any decisions based on your personal situation."

For the average retail investor who has taken a standard amount of risk by purchasing stock with their existing liquidity (the vast majority), the situation remains unchanged.

dawchok

490 posts

Posted by dawchok > 2021-01-06 08:10 | Report Abuse

Ben : thks for the sharing. Very informative and helpful by knowing the major incident taking place on the counters. Keep it up.
Regarding margin, my view is that those big players with margin financing will not stretch themselves to the limit that cannot absorb the 10% drop in collateral as what happened on Monday.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 08:17 | Report Abuse

dawchok, thank you very much for your comment.

I agree that the big boys would generally have no problem absorbing the temporary damage, even if leveraged. I doubt that they were the ones with the knee-jerk reaction, which caused the plunge in price (the RSS was responsible only for the initial drop, thereafter it was knee-jerk reaction from the broader market).

bpsiah

146 posts

Posted by bpsiah > 2021-01-06 10:06 | Report Abuse

Thanks Ben Tan. Very good write up and info.

Posted by dumbdumb123 > 2021-01-06 10:50 | Report Abuse

Damn good article. To all retail investors, it is a good time to buy and keep the shares. Better than fixed deposits.

Andre Kua

420 posts

Posted by Andre Kua > 2021-01-06 11:01 | Report Abuse

If it is so simple then you would have become billionaires.

Those foreign funds has money to play with you all year round. So what if you knew if it is cheap? Are you gonna sell your kidney and all in? Just trade with rationale, not emotions.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 11:08 | Report Abuse

bpsiah, dumbdumb123, and Andre Kua, thank you for your comments.

Andre, the underlying logic is surprisingly simple in some cases, like this one. You don't need to sell your kidney, you just need to think rationally about the actual economic impact any action (or inaction) has. In this particular case, inaction might be more beneficial than action to most.

calvintaneng

54,219 posts

Posted by calvintaneng > 2021-01-06 11:20 | Report Abuse

Gloves now at tail ebd of bull run

Palm oil just beginning

Fcpo jan 2021 now Rm3980

Only Rm20 more to all time historic high of Rm4000

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 11:45 | Report Abuse

calvintaneng, thank you for your comment.

Thank you for the suggestion, although this might be a topic for another discussion.

paperplane

21,611 posts

Posted by paperplane > 2021-01-06 12:20 | Report Abuse

when price down, ppl can talk all lkind of rubbish

Goldberg

2,789 posts

Posted by Goldberg > 2021-01-06 12:48 | Report Abuse

Thanks for your brilliant writeup.

Just ignore the clowns, they will always be clowns.

Looking forward to more write-ups from you.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 12:57 | Report Abuse

paperplane and Goldberg, thank you for your comments.

paperplane, I enjoyed your post on game theory and the effects of oligopoly in the glove manufacturing space (saw it for the first time now). I wrote a post on a similar topic just a few days ago on another platform, from a different angle (from economies of scale point of view), with the same conclusion.

LaoTzeAhSir

1,304 posts

Posted by LaoTzeAhSir > 2021-01-06 12:57 | Report Abuse

calvintaneng is the joke. fake Christian and a big hoax

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 12:59 | Report Abuse

LaoTzeAhSir, thank you for your comment, but let's not call each other names here. It's not beneficial.

BuLLRam

1,104 posts

Posted by BuLLRam > 2021-01-06 15:13 | Report Abuse

Short sellers have various costs to bear, the longer the price does not go down as hoped,with time depreciation, they will feel the heat.Once the facts and fundamentals of the stock reassert itself positively, it will be a scramble for them to unwind safely and quickly without incurring massive losses....

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 16:43 | Report Abuse

BuLLRam, thank you for your comment. Indeed that is the case, and how the story ends (or rather how quickly it ends) depends on the existing investors.

ckkhen

193 posts

Posted by ckkhen > 2021-01-06 16:55 | Report Abuse

Thank you, Ben. I definitely will hold ship and not influenced by selling on emotion.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 17:17 | Report Abuse

ckkhen, thank you for your comment. I believe your decision will pay off eventually.

CharlesT

14,600 posts

Posted by CharlesT > 2021-01-06 17:33 | Report Abuse

Scare die me .....i thought CPTeh is back

CharlesT

14,600 posts

Posted by CharlesT > 2021-01-06 17:34 | Report Abuse

Dont simply put this kind of retarded title

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 17:45 | Report Abuse

CharlesT, sorry to have scared you! I am not familiar with CPTeh though.

vvcb

27 posts

Posted by vvcb > 2021-01-06 18:11 | Report Abuse

Thanks for the article. It's a good one and as commented by Goldberg clowns will be always be clowns and so just ignore the noise they made. Please keep up the good work.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-06 18:28 | Report Abuse

vvcb, thank you for your comment. I believe everyone has a right to express their opinion, although it is of course always best for that opinion to be supported by solid data and logical arguments. If that is the case, I am always up for discussions :)

Mat Cendana

2,331 posts

Posted by Mat Cendana > 2021-01-06 18:32 | Report Abuse

@CharlesT CPTeh... Haven't heard this name for so long.

arv18

2,645 posts

Posted by arv18 > 2021-01-06 19:32 | Report Abuse

Thanks for the insight Ben.

Felicity

98 posts

Posted by Felicity > 2021-01-06 22:09 | Report Abuse

good review. i guess the gloves big 4 had come back to its real indicative valuation in the past 2 months, but the short selling creates an attractive situation

michaelwong

3,068 posts

Posted by michaelwong > 2021-01-06 22:10 | Report Abuse

Hold tight not to give way to long term shorties to take advantage to reap ill gotten profits dampening gloves shares price.

calvintaneng

54,219 posts

Posted by calvintaneng > 2021-01-07 05:45 | Report Abuse

Time for you to write

The "long" palm oil bull has arrived!!!

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-07 10:46 | Report Abuse

arv18, Felicity, michaelwong, and calvintaneng thank you for your comments.

Felicity, the glove manufacturers' stock has not been moving in tandem, although it might seem so if you don't zoom in closer. Top Glove's price has run furthest away from its fair value, followed by Supermax earlier, and then Kossan over the last couple of weeks of December. Hartalega's price has stayed close to its fair value (or, dare I say, a little bit higher than that). However, the current market prices are off by a significant margin in my humble opinion.

calvintaneng, as mentioned above, this is a topic for another discussion. Good luck with the CPO trades.

Posted by Philip ( buy what you understand) > 2021-01-07 14:20 | Report Abuse

are you holding gloves ben and what price did you enter sir?

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-07 15:21 | Report Abuse

Philip, yes I am. I started entering Top Glove at 6.80 with more significant volume buying at around 6.60; and Supermax at 7.80, with most of my purchases below 7.30. At the current valuations I have considered entering Kossan recently, but TG and Supermax are attractive enough.

treasurehunt

1,809 posts

Posted by treasurehunt > 2021-01-07 18:01 | Report Abuse

Palm oil bull is not different with gloves enjoying windfall profit. Nothing to be proud of.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-07 18:04 | Report Abuse

treasurehunt, thank you for your comment. There are significant structural differences between the extranormal profits experienced by glove manufacturers and the peak profits expected to be experienced by palm oil producers. I will probably write a more detailed article on that a little bit later this year.

witan

774 posts

Posted by witan > 2021-01-07 18:13 | Report Abuse

Thanks for the detailed article. You are the rare breed in this forum. Someone who is posting facts instead of personal opinion n rumours.

Keep up the good work!!

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-07 18:20 | Report Abuse

witan, thank you for your comment. I hope the information is at least a little bit useful.

Morpheus61

2,144 posts

Posted by Morpheus61 > 2021-01-07 18:46 | Report Abuse

Ben, there has to be a reason for the Short Selling. When the fundamentals of all the companies in the segment are so strong, there has to be a compelling reason.

From my assessment, it's the CFD's. The structured warrants.

No sense in empathy for the mistake in setting exercise values because I sincerely think that CFD's are a curse on the financial system. Designed to Destroy value & wealth. Refer back to the historical data and you will see the Billions these IB's have made from them and also see that 99% of the time Only the issuer makes money.

For those of you who are unaware, a CFD is 'Contract For Difference'. That's what this instrument is. It is called Structured Warrants to make it sound like Company issued Warrants. Basically making a fool of all of us.

Ben Tan

456 posts

Posted by Ben Tan > 2021-01-07 19:33 | Report Abuse

Morpheus61, thank you for your comment.

As we have discussed in the past, my personal opinion is that short selling on relatively small, local stock markets should be allowed only when necessary, and only with good reasons, especially when it comes in high volumes.

Regarding the structured warrants, unfortunately there the situation might be one of supply and demand. As long as there is demand for these products, someone will come around and supply them. I have little hope for them being disallowed straightaway any time soon.

1901

532 posts

Posted by 1901 > 2021-01-10 19:47 | Report Abuse

thank you for the insights. The RSS vol/data is also available via eforce portal, get it before the day end, Mon2Thu.

ruby20

308 posts

Posted by ruby20 > 2021-01-14 19:19 | Report Abuse

From another forum...

@Nyago here attached, is the full JPMorgan report.

Few comments from first read:
- His fair value is based on 18x PE of FY2022 profit estimate
- While everyone is entitled to their opinion, FY2022 NP estimate for Topglove of RM1.6b is extremely bearish. The most bearish analyst of 23 analysts. Consensus has it at RM3.9b.
- I find his comments on correlation between share price of gloves vs number of COVID19 testing and how it's positively correlated an odd and inaccurate study. Global daily cases (related to global testing) are at record high but we are definitely not seeing all time high in glove share prices.
- Dividend yield of 12.6% in FY2021 is inconsistent with this own profit calculation for the same period at 70% payout.
- Having a blanket 18x PE of FY2022 on all glove within his coverage (KOSSAN TOPGLOV & HARTA) shows a lack of familiarity of the subject matter. HARTA from historical facts and figures, never trade at such valuation nor it had been categorized within same valuation bracket as the other glove makers.

Lastly @CRUSADER888 I don't think many glove bulls - other than KYY - uses "glove is needed to administer vaccine" as a strong case in point for their thesis. Glove usage on Vaccine administration helps to increase demand for glove, but it's not signifcant in the grand scheme of things. What's significant is more towards perception of hygiene. Afterall, assuming the entire world population requires a pair of glove for them to get vaccine done, that's merely 14b gloves. That's only about 4% of current glove demand.

ruby20

308 posts

Posted by ruby20 > 2021-01-14 19:20 |

Post removed.Why?

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