From the posting Do You Want Bumi Armada's IPO?
- ronnie said...
....... AK cannot be faulted for taking Bumi Armada private. The share was grossly undervalued. AK did not do anything illegal & unprincipled.
This huge disparity in price & value will create tremendous opportunities for value investors & private equity funds....
'Cannot' be faulted? Don't fault the owner. It was not the owners fault that the stock is traded so low. It was the market. It was the disparity between value and price that caused this 'tremendous opportunity'.
Think about it for a moment.
What if .... whenever the disparity between value and price occurs in the stock market, all OWNERS decide to grab this 'tremendous opportunity' by profiting via privatisation offers?
And what if .... this is reality?
Stock goes undervalue, owner profits by privatising the stock.
And then ... when times are better, they relist back the stock but at a higher valuation?
Yes, what if this is the trend?
Stocks goes undervalue, privatise. Times are good, relist back at a higher price.
How? Isn't this what's happening in the case of Bumi Armada?
Where then is the integrity of the market place? What's the purpose of even having a market place?
Would the market place have any investors left if all stock owners decides to be like this? Take advantage of the tremendous opportunity. Take the company private. Profit form it. Profit from it again by relisting the company later at a much higher price!
Do you want this to be norm of the market place?
I am very sorry but I strongly reject.
It's appalling and sickening to see owners taking advantage of every single opportunity to profit themselves.
And if it does happens, what's the point of having a stock market anymore?
That's wrong in my opinion. Yes, no matter how flawed my opinions are, this is simply wrong.
And who am I? I am one of the investing public and I know very well which side of the fence I am on. So whatever and whenever I write, it's clear I am very biased to the investing public point of view. I try to put myself in the shoes of the minority shareholders and in the case of privatisation of Bumi Armada or Barmada, I asked myself, are the minority shareholders compensated adequately or are they taken advantage by the owners?
Barmada or Bumi Armada, was grossly undervalued. For its fy 1998, Barmada was earning just some 28 million. By fy 2002, Barmada was earning some 63.4 million. The growth potential was incredible. It was clear. The growth was awesome.
But the company was taken private based on current earnings. Yes, the company was taken private ignoring all facts that the company possessed such an incredible growth potential.
I HAD valued the company to worth at least some rm 30.00 back in 2003.
But the company as taken private at rm 7.00.
Can I call this a fair deal for the minority shareholders?
And can I even use the phrase 'fair deal'?
Or perhaps the word ROB would have been more appropriate.