I always do not like it when the CEO comes broadcasting on the local media suggesting that their shares are cheap and so on and that they (the CEO) would most likely to buy/invest more into the company.
Of course, the stock gets some boost from such an endorsement but after some time, perhaps some market players would have already forgotten about it, the talk appears more than empty promises.
And this is where I would like to raise the question.
In such incidents, are these CEO promises nothing but empty promises or perhaps our local stock market gatekeepers should ask the simple question.
Are those promises nothing but cheap marketing gimmick to boost their share price and a misleading statement to seduce the investing public to buy more of their shares?
Well, I do hope nobody would ask me what's wrong with issuing misleading statements to the investing public.
For it makes an utter mockery of the stock exchange and imagine the ensuing chaos whereby CEOs are granted the freedom to mislead the investing public with whatever statements they wish to make.
Yes, I find it strange and sad that we do not see censorship on CEO making such wild statements.
Let's examine this posting made on May 2011: How Now Masterskill?
Let me reproduce the entire article here:
So we have the Green Packet boss and management who had contiuned talking about being EBITDA positive since Feb 2008. ( refer And Green Packet Says The Magic Word Once More )
And then we have the KNM boss and his MBO. (refer KNM: Are you IN it to win IT? Or are you IN it to LOSE IT??? )
Today I noted one of the big loser is MEGB. It's currently down some 4.1%.
The chart is coloured specially for a reason.
It represents the period since MEGB's boss gave an interview with Star biz: Masterskill CEO may raise his stake in company.
Friday February 18, 2011
Masterskill CEO may raise his stake in companyBy LEONG HUNG YEE
KUALA LUMPUR: Masterskill Education Group Bhd group chief executive officer Datuk Seri Edmund Santhara is considering to up his stake in the group.
In a filing with Bursa Malaysia on Wednesday, the education-based Masterskill said Edmund, who owns some 90.6 million shares, or 22.1% stake in the company had announced his intention to deal in his securities in Masterskill.
“(I'm) looking at purchasing at this price,” Edmund said when contacted by StarBiz yesterday.
However, he said he could only buy the shares today as per Bursa Malaysia rules.
“Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.
Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually.He said that the company was fundamentally sound and that its Kuching campus was already in operation.
“The current share price weakness presents a great buying opportunity for Edmund to accumulate its shares,” an analyst said, adding that Edmund's move to purchase more shares may be a practical thing to do.
The analyst said most companies undertake share buybacks if they believe their shares are undervalued, or to send a signal of confidence in the company.
Masterskill, which raised RM771.3mil from its initial public offer (IPO) in May 2010, has succumbed to selling pressure yesterday.
The counter fell to a record low since its listing after Fidelity Management and Research (FMR) LLC, the parent of Fidelity Investment, sold 280,000 shares in the former.
The counter fell 8 sen, or 4.32%, to RM1.77, its lowest since its listing on May 18, 2010.
However, Edmund remains unperturbed by the divestment by FMR.
“It's a simple portfolio investment, so it's normal. The company fundamentals remain strong,” he said.
Edmund was confident its share price would stabilise soon. “As the company is good, the price will soon stabilise after the seller is gone, mainly Fidelity Investments,” he said.
FMR, one of Masterskill's substantial shareholders, has been trimming its stake in the education group since October. Following the disposal of 280,000 shares, FMR held a direct stake of 20.6 million shares, or 5.02% in Masterskill.
Dealers attributed the price slide the stock has fallen some 30 sen from its one-month high of RM2.34 on Jan 13 mainly to the recent selling pressure. However, they believed the selling might not be done as yet.
As at Sept 30, the nursing and allied health sciences education provider has 17,613 students. It posted a net profit of RM26.2mil for the third quarter ended Sept 30 on revenue of RM80.7mil.
The education group is due to announce its fourth quarter ending Dec 31, 2010 financial performance tentatively next Wednesday. Bloomberg's consensus estimates expect Masterskill to post RM104.6mil in net profit for the full financial year ended Dec 31, 2010.
Let's look at that chart again.
The coloured area showed roughly the preiod when MEGB had been trading below 2.22 - remember 'Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually' and then on Feb 2011, he said 'anything below RM2 doesn't justify keeping the company listed,”
MEGB now trades at 1.85.
And if I am not mistaken, there's isn't a SINGLE buy transaction done by the boss.
Doesn't it makes you wonder?
Why did he on Feb 2011 tell out loud to the local investing public that he intends to purchase shares in MEGB?
Where are the share purchases since?
Is talk really so cheap?
So let me ask a simple question. Since Feb 2011, there was ZERO purchase of shares in MEGB announced by Masterskill CEO.
How could he make that promise on the local media and fail to keep it?
Is it a question of empty promise? Or is there an intend to mislead?
Think about it...
- “Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.
If an investor trusted Edmund and purchase shares of Masterskill back on Feb 2011, how now?
Masterskill last traded at 1.18 today!
My one naive wish?
I wish that CEOs shows MORE RESPONSIBILITY when they make statements about their shares when making a press interview.
I feel it's not right if any CEO makes any misleading statements to the press.
I understand that as an CEO they are probably rich enough but there are some of the investing public who are trust what they read in the press. I do hope the CEOs don't make a fool out of these folks and their precious hard earned money. Money which required some serious blood, sweat and tears to accumulate.