Posted by goldenluck16 > 2021-02-25 14:16 | Report Abuse

Tomorrow can buy after 4 p.m..

Posted by BeLikeBuffett > 2021-02-25 14:16 | Report Abuse

Most of these call warrants expiring this wee kwere issued after Jun-2020; which coincided with the superbull run of TopGlove price from RM5 to RM10; and right smack at halfway point of 6mth (warrant tenor), Sept-2020, TopGlove price started the long downtrend.

Call warrants is just a call option, obviously issuers wont be selling a naked option when issued. They will have to delta hedge, which mean they will need to buy mothershares to hedge the warrant they sold to retailers. As the price go up, more ppl buying warrant, and more mothershares issuers need to buy to hedge. Hence the vicious cycle of TopGlove price of up and up.

And JPM obviously has spotted this, and started the RM3.5 price target and the big short on 4-Jan.

Nonetheless, it still surprise me, how fierce the sell down has been this week.

Posted by Ben Tan > 2021-02-25 14:21 | Report Abuse

arv18, herein lies the difference between our understanding of what investments represent. My goal when buying part of a business is not to find a bigger fool who would pay more for the same piece of the business. This is what traders/speculators try to do.

While I appreciate your well thoughts, "hoping" and "an uncle said something last week" are not, and must never be, a part of the process of investing. They are usually what you would do when you play mahjong over CNY or when you try your luck in Genting.

Posted by arv18 > 2021-02-25 14:22 | Report Abuse

You remind me of a fresh-faced wide eyed (innocent) investor that has just turned 18, made a few bucks in the stock market last year and is here to preach.

Go for it young man!

Posted by Ben Tan > 2021-02-25 14:25 | Report Abuse

goldenluck16, BeLikeBuffett, thank you for your comments.

BeLikeBuffett, indeed it appears that this is what JPM (or whoever else the short seller is) have been looking at. Interestingly though, they started covering their shorts quite urgently the last couple of weeks at a significant loss. It is possible they might have gotten some of the shares recalled by the borrowers, it is also possible that they have not been expecting this deep sell-off either.

Posted by Ben Tan > 2021-02-25 14:26 | Report Abuse

arv18, I am glad to hear you have an image of myself built in your mind. I hope it helps.

Posted by arv18 > 2021-02-25 14:39 | Report Abuse

One more thing Ben, as a "fundamental" investor, not a "speculator that plays mahjong", why are your blog posts ONLY about glove stocks?

As a long-term investor, why aren't you covering the topic of risk management and portfolio diverification?

Aren't there other stocks like Public Bank, Inari, MPI, Uchitec, etc to broaden one's horizons?

Too much glove and no others makes Ben Tan a bore. Also highly suspect!

Posted by Ben Tan > 2021-02-25 14:44 | Report Abuse

arv18, I am happy to see your interest in myself runs deep, but my portfolio management runs a bit too far from the topic of this blog post.

Posted by mujihero > 2021-02-25 14:46 | Report Abuse

Malaysian retail players, do a short squeeze la. otherwise, just let IBs make all the money.

Posted by Zachzach > 2021-02-25 15:00 | Report Abuse

Ben, glove still got future?

Posted by arv18 > 2021-02-25 15:07 | Report Abuse

I have a sad feeling Ben the "long-term" investor is margin'd up to his eyeballs like Fool You 'Margin Call' Yin.

Medical professionals have yet to name it but non-stop articles about gloves are a symptom of the stress caused by drastically declining portfolio value due to the use of margin (and a lack of diversification).

Usually the articles are written when the stocks begin declining, NOT before (Ben's first blog post being Dec 11 2020).

Posted by Jonathan Keung > 2021-02-25 15:10 | Report Abuse

Yup - agreed margin call. one of the contributing reason for big investor cutting position

Posted by Zachzach > 2021-02-25 15:28 | Report Abuse

arv18 - glove future ?

Posted by Zachzach > 2021-02-25 15:28 | Report Abuse

jonathan - glove future?

Posted by Ben Tan > 2021-02-25 15:31 | Report Abuse

Zachzach, thank you for your comment. I don't see glove companies declaring bankruptcy, so I believe the answer is clear.

arv18, this sort of baseless insinuation is an ugly display of a low and sad individual. I will be disengaging hereafter.

Posted by CCCL > 2021-02-25 15:38 | Report Abuse

This big gloves created too many free floted shares around. Like MRT trains, all passengers standing in out at every train stations stop. Not like a cruise ship where the passengers can enjoy long term stays. Lack of interest from long term local and foreign big players ...

Posted by kelvin5349 > 2021-02-25 15:38 | Report Abuse

TA & FA comes hand in hand...a wise investor uses TA first then FA...people can say anything they want, but chart will never lie...an example of wise investor i would say is OTB who has 23++ years experience in stock market has given a bearish remark for gloves since Dec 2020 and has confirmed that with his subscribers...get someone who can advice you accordingly and teach one two about risk management and diversification with STOP LOSS rule, that being the most basic thing a wise investor should keep in mind..

Posted by Ben Tan > 2021-02-25 16:33 | Report Abuse

CCCL, kelvin5349, thank you for your comments.

CCCL, I would say the problem is a lot more basic. The Malaysian market by design encourages short-term gambling-like behaviour due to small number of market participants, imperfect information availability, low public financial literacy, and lack of any tax on capital gains or dividends. The difference between now and the situation at other times is that since last year liquidity has been available more readily to a larger number of retailers due to cash handouts, low interest rates, and a limited number of options on disposable income allocation (for instance, people couldn't go on holiday abroad).

kelvin5349, we are running quite off-topic here, but thank you for letting me know about the basics of investment. I am yet to read about Warren Buffett using charts, let alone chartists' advice.

Posted by Zachzach > 2021-02-25 16:43 | Report Abuse

Ben, so future is bright yaa ;)

Posted by CCCL > 2021-02-25 17:00 | Report Abuse

Hi Ben, look at BAT or Carlsberg with small free float more stable. Of course good dividen payout.

Posted by Ben Tan > 2021-02-25 17:04 | Report Abuse

CCCL, oh sorry I might have misunderstood your comment. Yes, free float certainly results in higher volatility. This might be one of the reasons why Bursa is considering lowering the public shareholding requirement: https://www.theedgemarkets.com/article/bursa-consider-application-lower-public-shareholding-spread-15

Posted by CHONG Kong Hui > 2021-02-25 17:19 | Report Abuse

Base on these data and the assumed logic, price will rebound next week.

Posted by Ben Tan > 2021-02-25 20:02 | Report Abuse

CHONG Kong Hui, thank you for your comment.

That's not necessarily going to be the case, although the downward pressure is likely to subside.

Posted by katsul51 > 2021-02-25 22:11 | Report Abuse

Thanks Ben for the article and you tireless research on the glove industry as well as the shareholding movement. One of the few who has great passion for the glove industry

Posted by Rational_Investor > 2021-02-25 23:02 | Report Abuse

Hi Ben, why top glove and not harta? Share your thoughts. From my understanding, as an investor there are several traits that would put harta as a standout glove company compared to the others.
1. Higher lever of automation resulting in a highest profit margin among the glove company
2. Always ahead of their competitor, you can read up on how they beat their competitor to reclaim the position of lightest nitril glove producer. Bcs the product was always in their warchest.
They are also heading in the right direction with regards to R&D with their antimicrobial gloves
3. Building a lasting relationship with their customer by not hiking up the ASP. This will benefit them in the long run.
4. More focused on business then share price. No bonus issue or SBB. I believe they are investing in areas where it would give then competitive edge once ASP reduces.

Posted by arv18 > 2021-02-26 09:43 | Report Abuse

Thank you Rational_Investor, you raise some very salient points. In addition, I would like to add, Harta has an established track record of rewarding investors with dividends, in stark contrast to Supermax (which failed to pay a cash dividend last year).

Posted by Ben Tan > 2021-02-26 10:15 | Report Abuse

katsul51, Rational_Investor, thank you for your comments.

Rational_Investor, this is off-topic, so just a quick note. Harta has an incredible business and a great manager.

Posted by mikeazk > 2021-02-26 13:23 | Report Abuse

Can someone clarify.. based on Supermx-C92, assuming exercise price is RM5. Hence the cash upon maturity is (5-4.82)/3.4 = RM0.61 only. If investor bought the call warrant above RM1, by right investor is still losing $ and IB making money right? THanks

Posted by Ben Tan > 2021-02-26 13:31 | Report Abuse

mikeazk, thank you for your comment.

Yes, it is highly likely that investors holding the CWs until maturity have lost money, but so has the IB. The only person who would have earned is the one who would have bought early, and then sold.

Posted by arv18 > 2021-02-26 13:58 | Report Abuse

Another thing is any long term investor will tell you is there is a time to take profits.

Even Warren Buffet sells positions. Long suffering Supermax investors that bought shares 2003-2008 between 9 sen and 25 sen (post split) will be selling shares slowly to pay for kids college, buy a new car, and travel to NYC once Covid is over. Even at today's share price they are sitting on huge profits.

There isn't some IB structured warrant conspiracy. After the 2009 H1N1 pandemic we saw a 66% pull-back in price. A conservative estimate such as this pegs the price @RM3.67.

Back in 2010, it took 14 months for the wash-out to occur. It's happening much faster this time, which is not bullish for this stock.

Posted by CuriousGuy > 2021-02-26 14:07 | Report Abuse

i believe its a concerted effort n gang up to press down the gloves stocks.

for whatever reasons we will never truly know.

however its too much of a coincidence lots of cw are expiring in these period.
but i also think outside forces are doing it too...
its smacks like a major gang up to short the prices down.

i suspect something big is coming. but this is just me speculating.

funny thing is
1. big 4 bosses didnt do anything. no news, just tg buyback in small amounts. maybe they already know this?
2. supermax boss bought a condo in usa
3. big shorter jp morgan is a USA company.

the big 4 now in the eyes of the world are dying nonstop...this is too weird.

btw vol is also very high. collecting?

my 2 cents speculation. i tell u something is brewing

Posted by Stockisnotfun > 2021-02-26 15:06 | Report Abuse

I still think the glove frenzy is not over yet because i saw a lot of people still buying. That's the reason i not going to buy now because like epf is buying topglove again.

I will rather wait after covid ended giving after 2 or 3 years. When no news or people talking about gloves that time. They always say in stock market u figure the last person who are selling then you win.

Posted by Ben Tan > 2021-02-26 15:20 | Report Abuse

CuriousGuy, Stockisnotfun, thank you for your comments.

CuriousGuy, factors for the fall in glove stock certainly go beyond CWs. However, I had been asked by people recently why there was such a sudden massive sell-off over the last couple of weeks, and CWs + local IBs selling is the only significant correlation (foreign IBs are buying, as seen from the graph). In terms of news, TG has resumed SBB, and company's CEO has restarted buying shares + Harta's CEO has restarted buying shares, there have been open market purchases by BoD members of Kossan. EPF has been buying shares of all 3 companies. It has certainly been disappointing that less action has been observed with Supermax, and that's another likely reason for the weakness in share price. Guidance on expected revenue and profits has been provided with the quarterly results by all the glove manufacturers, including most recently by Riverstone, Rubberex, and Care Plus.

Stockisnotfun, this might prove to be a good strategy, especially if you dislike volatility.

Posted by CuriousGuy > 2021-02-26 15:23 | Report Abuse

thx ben tan for the info.

Posted by arv18 > 2021-02-26 17:05 | Report Abuse

Hmmmm . 5.01pm

Let's see. Began the month @ RM7.03 and in 18 trading days has dropped RM2.19 (minus -31%).

An investment bank conspiracy! No Capital Gains tax! Lack of financial literacy! Mah Jong! The Dog Ate My Homework (TM)...

You would be fired from an investment house by now, Ben.

Posted by Seek > 2021-02-26 20:47 | Report Abuse

Ben, TG coming listing of 1,495m shares in HK is expected to bring in 7.77 b rgt. That works out to 5.20rgt a share. Today price is around this price! What’s your opinion as regard to the fall of TG share these few months. This hk listing has wiped off more than the 7.77b that TG is expected to raise.

Posted by Seek > 2021-02-26 20:48 | Report Abuse

Wealth transfer from here to there?

Posted by IamBoth > 2021-02-26 22:28 | Report Abuse

it is ok ben disregard personality defamation. it is easy stone.

Posted by IamBoth > 2021-02-26 22:37 | Report Abuse

this arv18 had a long fight with KYY. not you

Posted by mikeazk > 2021-02-26 22:51 | Report Abuse

Hi Ben Tan, How could IB lose money if investor bought Supermx-C92 above RM1? IB just need to pay cash upon maturity of (5-4.82)/3.4 = RM0.61 only. So nett IB still earn RM0.39 (RM1-0.61)... Or my calculation is wrong?

Posted by EatCoconutCanWin > 2021-02-28 07:55 | Report Abuse

Nice article. Heng ong huat arh!!!!

Posted by Ben Tan > 2021-02-28 14:41 | Report Abuse

CuriosGuy, Seek, IamBoth, mikeazk, EatCoconutCanWin, thank you for your comments.

Seek, I am still going through the draft application proof for HKEX (it is over 700 pages). I will likely write a separate article on this matter once I have the chance. However, just a note - RM5.20 is not the IPO price.

IamBoth, thank you and I agree.

mikeazk, the question in the example is - did the investor buy the warrant via the open market, or at issuance from the IB?

Posted by see2sea > 2021-03-01 13:13 | Report Abuse

Ben Tan,

Im once a glove believer.

if u had wrote these back in early 2020, i will strongly agree with u.

Today is March 2021, it will rebound but not as strong as back in 2020

Thanks for your article.

Posted by see2sea > 2021-03-01 13:15 | Report Abuse

TG SBB is only to calm the retail investors..if not i will plunge sooner

Posted by mikeazk > 2021-03-01 16:21 | Report Abuse

Ben Tan, for that example Supermx C92 issuance price is 0.15. So if IB paid cash upon maturity of RM0.61 ((5-4.82)/3.4), and investor bought the call warrant above RM0.61, then you are right, both IB and investor are losing money.

Posted by kayap1 > 2021-03-03 00:04 | Report Abuse

Hi Ben,

Do you keep tracking these:"2. Net buyers and net sellers of Supermax stock for the week of 15-19 February" for subsequent week?

Posted by Ben Tan > 2021-03-03 11:44 | Report Abuse

see2seas, mikeazk, kayap1, thank you for your comments.

kayap1, yes, for last week, the top two net sells of local IBs are, expectedly, TG and Supermax:

TOPGLOV: -RM204.9 million
SUPERMX: -RM197.1 million

Posted by PeterPan1979 > 2021-03-03 21:25 | Report Abuse

Hi ben, may i know where to obtain the info on net buy or net sell by local IBs and foreign IBs. thanks

Posted by Ben Tan > 2021-03-04 16:45 | Report Abuse

PeterPan1979, thank you for your comment.

CIMB release weekly reports, called "Strategy" that contain this data.

Posted by DickyMe > 2021-03-04 16:49 | Report Abuse

Data reflects past event which in all high probability will never repeat.

That is why fund managers have microscopic disclaimer clause saying,

"Past result are not guaranteed to happen in the future. The risk is yours completely."

Don't overthink and have wild imagination. Be grounded and open your eyes and observe the people instead of the numbers.