Thursday, April 09, 2009

iCapital.Biz Lack Of Disclosure In Their Quarterly Earnings

Posted yesterday evening: A Quick Look At iCapital's Quarterly Earnings

Got some comments that I would like to highlight.

Kin Wing said...



  • Hi Moola, I have gone through ur blog n found u r writing quite alot of informative threads which r very useful for me to understand alot of business n investment terms. Thanks alot! (ps: you are most welcomed Kin Wing)

    Btw, regarding the issue tat icap is reluctant to disclose its current investment holding, i think u mite miss a point tat icap is doing investment for its shareholders, not giving investment advice to its shareholders. And it did disclose its current holding to its shareholders during AGM (in the annual report as well) but at the quarter report.

    I think it is a way of doing investment management business to keep its investment intention as private & confidential as they mite still accumulating shares while reporting quarter result. Otherwise it could turn up to have too many competition to its investment target in case its intention to buy shares leak out, so its expected return could be jeopardised due to higher acquired price n subsequently compromise the return to its shareholders.

    Even the Berkshire's CEO, Warren Buffet did apply exemption from the US Securities Commision not to disclose its intention of accumulating shares of companies while its shareholding exceed 5% of total shareholding up to a certain period. And the Berkshire's oso only disclosed its investment holding once a year.

    Kin Wing

My reply..

  • If it doesn't disclose, how would a potential investor knows WHAT this closed end fund is doing? Is one to invest based on blind faith? Or is one to invest based just on reputation?

    Well, some might and some might not.

    For me, I would want to KNOW MORE. Else, why should I invest in the fund?

    You said: i think u mite miss a point tat icap is doing investment for its shareholders, not giving investment advice to its shareholders.

    Do remember that in iCapital's own words "
    Although the stock market remains depressed, as a value investor, iCapital.Biz Berhad with its Fund Manager and Investment Adviser will continue to seek stocks that are attractively priced".

    So what's this role as 'Investment Adviser'?

    Anyway, let me rephrase. :D

    I am sure that you understand that the current market is extremely tricky, yes?

    Buying the wrong company at the wrong price is extremely hazardous to one's financial health.

    Now say I am a potential investor of this fund.

    What do you think I would like to hear or what do you think I would like to know from this fund manager before I invest in their fund?

    Don't you think I would want to know what the Fund Manager's current perspective about the market? What's the Fund Manager's current market view and opinions?

    Don't you think I would want to know more?

    To just say that the market is depressed is simply insufficient.

    Just not up to standard.

    That is my view.

    And yes I am very aware it does but like I said I am extremely disappointed to see the lack of information in the quarterly earnings.

    Why is this an issue for me?

    Well, if you would see the following posting,
    http://whereiszemoola.blogspot.com/2008/08/more-on-icapital-transparent-issue.html

    Quote from the posting: "The investment advisory reckons that these stocks stocks are worth a buy/hold but the fund management from this very same company reckons that are justifiable reasoning for the fund to dispose some of their stock holding! Don't you think that this is so contradictory?"

    And it's because of issues like these, I would want to see more transparency!

Kris said...

  • oh..they don't need to disclose their stock holdings during their annual report?

My comments.

  • Missed your comments. Sorry.

    Kris, I am well aware that they do disclose during their annual meeting.

    However, the issue here is on the lack of disclosure in its quarterly earnings.

    Well for some 'investors', they can live with the lack of information.

    But for some, this is an issue.

    Here are couple of simple reasoning why disclosure is needed.

    The world markets is highly tricky now, yes?

    Many would argue that the end of the bear market is near. And yet many would simply argue that such a thought is clearly DELUSIONAL.

    How?

    Which camp is iCapital on?

    To wait one year for the annual report is simply too long for some, given the extreme economics of the current market.

    Which is why some wants to see more disclosure.

    Or how about assuming that I am a potential investor of this closed fund.

    How much did I gain from reading this quarterly earnings?

    My blunt view is absolutely nothing.

    All the company mention in their quarterly notes was.."Although the stock market remains depressed, as a value investor, iCapital.Biz Berhad with its Fund Manager and Investment Adviser will continue to seek stocks that are attractively priced".

    That for me is simply lacking, unprofessional and simply not up to the standard.

    If I am a shareholder of this fund, I would be so disappointed. Hey, it's my money they are investing WITH and I would deem that it's only fair that they show the respect to my money by making more disclosure.

    This is my blunt and flawed view.

Boon2008 said...

  • To be fair to icap, i disagree to consider "lack of transparency" due to not disclose their stock holdings quarterly.

    First of all, i think investor buy icap is because they have confidence on Tan Teng Boo base on his previous result, not what share icap holding now. Paying too much attention to what share icap holding now, investor may rather invest direct to those share instead.
    Second, icap is not playing the role of "investment adviser" in it share, because icap fee is very very low as compare to other funds.

    Ofcause, whether the iCapital.Biz is really independence or not... my answer is "not"...but still above average when compare to most fund.

    By the way, their subscribtion fee is very expansive, RM700 per year. Anyone can share some info if did subscribe to iCapital.Biz???

My reply..

  • It's your right to disagree.

    As I said clearly before, if I am a potential investor, the lack of disclosure is shocking.

    So as a potential investor, am I then to invest based on iCapital's reputation alone?
    Now surely this is not logical.

    And as for the role of the investment adviser.

    Please do understand my issue here. Let me repeat what I had written earlier.

    Assume I am a potential investor.

    What do you think I would like to hear or what do you think I would like to know from this fund manager before I invest in their fund?

    Don't you think I would want to know what the Fund Manager's current perspective about the market? What's the Fund Manager's current market view and opinions?


    And I would consider this as seeking and understanding the Fund Manager's market perspective and NOT seeking investment advice. I am sure you can understand this simple point.

    For example, what if this Fund Manager reckons that the bear market could last for another 3 years. And this Fund Manager adopts its strategy based on this perspective

    What if you do NOT agree? What if you reckons that the end of the bear market is near?

    With the Fund Manager having a contrary view with one's own, then how can one expect this investment in this closed end fund to prosper?

    Hope you can see the simple need to want to understand the Fund Manager's perspective because if it differs then the investment into this closed fund makes no sense at all.

MSWG said...

  • 1) If the disclosure is made quarterly for the sake of attracting new shareholders, would it jeopardise the 'old' shareholders or original shareholders since listing back in 2005? Of course it definitely will as pointed out by Kin Wing due to the lost of information competitiveness (well, i'm one of those original shareowner in this stock)

Should lack of competitiveness restrain one from disclosing?

Like I said, if I am a potential investor, I find this lack of disclosure as shocking!

  • 2)Quoted your own saying "The world markets is highly tricky now, yes?" The word 'now' is rather short timeframe. Those invest in this fund are for 'long' term, well, i mean it's really 'long' term i.e. more than 10 years. So for the sake of 'now', does one want to sacrifice the fruits of future return? i'm afraid the answer is no.

Is the word now considered as short time frame? Really?

Anyway, I would rather not discusss MY investment perspective or strategy. Why? I am not a paid investment adviser. Hope you can understand this simple issue.

Now perhaps let me use my earlier reply to Boon2008 and perhaps you can understand what I was trying to say.

For example, what if this Fund Manager reckons that the bear market could last for another 3 years. And this Fund Manager adopts its strategy based on this perspective What if you do NOT agree? What if you reckons that the end of the bear market is near? With the Fund Manager having a contrary view with one's own, then how can one expect this investment in this closed end fund to prosper? Hope you can see the simple need to want to understand the Fund Manager's perspective because if it differs then the investment into this closed fund makes no sense at all.

Little Bear said...

  • Boon, subscribers don't get to know what icap is holding either, they have a few model portfolios available for different styles of investments, but they don't disclose the holdings for icap.

    I asked them about this issue before, and they replied that disclosure only happens in the annual report.

random said...

  • ya i'd like to know wat is their shareholdings frequently if i'm to be an investor in this fund

7 comments:

Boon2008 said...

To be fair to icap, i disagree to consider "lack of transparency" due to not disclose their stock holdings quarterly.
First of all, i think investor buy icap is because they have confidence on Tan Teng Boo base on his previous result, not what share icap holding now. Paying too much attention to what share icap holding now, investor may rather invest direct to those share instead.
Second, icap is not playing the role of "investment adviser" in it share, because icap fee is very very low as compare to other funds.

Ofcause, whether the iCapital.Biz is really independence or not... my answer is "not"...but still above average when compare to most fund.

By the way, their subscribtion fee is very expansive, RM700 per year. Anyone can share some info if did subscribe to iCapital.Biz???

MSWG said...

Hi,

Would like to point out the following for your considerations:-

1) If the disclosure is made quarterly for the sake of attracting new shareholders, would it jeopardise the 'old' shareholders or original shareholders since listing back in 2005? Of course it definitely will as pointed out by Kin Wing due to the lost of information competitiveness (well, i'm one of those original shareowner in this stock)

2)Quoted your own saying "The world markets is highly tricky now, yes?" The word 'now' is rather short timeframe. Those invest in this fund are for 'long' term, well, i mean it's really 'long' term i.e. more than 10 years. So for the sake of 'now', does one want to sacrifice the fruits of future return? i'm afraid the answer is no.

so, i guess one has to have a really long view in terms of perspective of new shareholder, old shareholder in different time horizon.

random said...

ya i'd like to know wat is their shareholdings frequently if i'm to be an investor in this fund

Little Bear said...

Boon, subscribers don't get to know what icap is holding either, they have a few model portfolios available for different styles of investments, but they don't disclose the holdings for icap.

I asked them about this issue before, and they replied that disclosure only happens in the annual report.

Little Bear said...

oh ya btw moola, congrats on the moola boost on topglov! :)

Jasonred79 said...

But, in Icap's defence let me remind you:

Caveat Emptor.

If you don't like it's lack of transparency, no one is forcing you to buy it. At the end of the day, TTB is claims he is a stock market god... so as GOD, you should have FAITH and not question him! hahaha...

EPF on the other hand, you are stuck with it whether you like it or not. They don't allow you to withdraw your money except under special circumstances.

Voyager8 said...

Why no one mention that icap does disclose its NAV value fortnightly in their website as well as in bursa announcement?

This should be the basis for investor to buy or sell a fund. Investor is more concerned on how well the fund is managed, rather than what stock the fund is holding.

Those who are concerned on what stock the fund is holding, is very unlikely to be the fund investor, because they are too bright that they will buy the stocks direct instead of by the fund which manage the stocks.

Give u a good example, remisier know every single detail of his clients' buy/sell activity. If the remisier has a very talented client, do u think that the remisier will give his money to his client to manage, or just quietly follow that client to buy/sell?

If u think that Ze Moola is very good in stock picking, and he disclose every single transaction promptly to you, will u give him ur money, or u just follow him a play by urself?

So, any good reason for icap to disclose the stock holdings frequently?