Blogged previously, What Do You Think of ICap's Recent Disposal Of Shares Held?
The main issue in the posting was that in the quarterly earnings report ended Feb 29th 2008, ICapital had disposed some 50 million worth of shares.
Some find it truly amazing because it was just in Jan 2008, ICapital's Mr.Tan Teng Boo had been quoted on the daily news paper that he had been bullish on the Malaysian equities.
See Jan 5th 2008 article Corridors of catalysts and Jan 19th 2008 article Analysts and fund managers weigh in on scope of Dow’s impact and as mentioned by Mr.Tan.
- The KLCI is resilient as it is not over-valued with sectors such as palm oil, which is doing well. The KLCI would continue to perform despite a slowdown in the US.
And my point was rather simple. I have nothing against his selling or whatever.
My point is why he is telling everyone he is BULLISH on the market when deep underneath it all, he is a huge seller?
Now, I had received some interesting feedbacks that I thought deserves to be highlighted. One reader, madcap had said that I had simply been insinuating someone to be deceitful with flimsy assumptions is wrong.
Here are his comments:
- Moolah, you have always pride yourself in looking beyond the obvious. In the quarter ending Feb 2008, when do you think ICap sold? Don't you think it is naive to assume that ICap was a consistent net seller in a month from the fact that it was a net seller in a quarter? The first article says he is a net buyer at that time. Was that an outright lie? Fact is, you assumed from the fact that ICap sold in that quarter, that he must be a net seller in January. Could he have sold in February? Honestly, I don't know that.
Was TTB advising on long term trend or was he giving advice on short term market timing? Look at his reasoning and tell me if he is implying that markets will go up in the next month. If TTB is bullish long term, does this mean that he should not trade in the short term? Is he implying that people who listen to his advice should not trade?
The insinuation here is that the man is deceitful, not that he gave bad advice - that he was selling when he gave bullish comments - and I think that it is unsubstantiated.
Finally, you quoted March 8. Take a look at KLCI from March 8. If I took his advice, I would probably be making money. So, do you think he continued to sell in March?
His long term call has yet to be proven right. You can challenge him on that. But to insinuate someone to be deceitful with flimsy assumptions is wrong.
Madcap, many thanks for your feedback. I am not here to degrade Mr.Tan's ICapital capabilities and performance and neither do I want to challenge his long term calls. And let me repeat again, I have absolutely nothing against his selling of shares. What amazes me is what has happened while he was selling the shares!
So, in this reported quarter ending Feb 29th, he could have sold in December, January or February.
Looks like the issue is now focused on when exactly he sold.
If he had sold in December or January, then how would one interpret his two massive comments on January stating that the KLCI is not over-valued and that the KLCI would continue to perform? Now, that wouldn't have been nice and it would NOT make sense, would it? Well sell when he thinks the market is not over-valued?
Yes, he could have changed his mind and decided to sell in February.
Possible. However, to suddenly sell 50 million worth of shares alone in one month, in February would have been incredible.
I am wondering, did something happen in February to spook him?
Can it be the US economy or the US market? Well it can't be because in early March, March 8th, the day of our elections, Mr.Tan had another lengthy interview in the Star Biz, stating that he was still bullish in the US Market, Dare to be contrarian .
And in our local market, the one and notable market event was Gamuda's market led selldown.
And mind you, he did make a commentary on this issue in February 2008!
Feb 23rd 2008, published on BizWeek, Market expected to recover with bargain-hunting.
- While most people are gripped by fear over US taking a one-way street to Recessionville, i Capital.biz managing director Tan Teng Boo maintains an extremely bullish view on the US economy while he holds on to the view that the world economy has decoupled from the US economy.
Tan says that without the strong US export growth in 2007, especially in the China market, the US economy would have been in a recession 6 to 9 months ago. The export-oriented Asian economies have all seen their currencies appreciate.
Tan welcomes the present panic-selling as it allows many equity markets to undergo meaningful corrections. He sees the current fall as a panic attack, based partly on an eagerly waited, long anticipated correction. He expects market volatility to eventually subside.
Still bullish and he publicly said he welcomed the panic selling in February 2008.
Now I am confused, if Mr.Tan welcomes this panic selling in February, did he also sell some 50 million shares during this period too?
Well, madcap, like you, I honestly do not know if ICapital shares were sold during this February time frame but if it did happen during this period, I find it incredible, really.
And more so, early March 2008, Mr.Tan was quoted to say the following,
- If there is a contrarian view currently playing out in Malaysia in relation to the prognosis of the US economy, it’ll have to come from and not surprisingly, the frank and candid Tan Teng Boo – a man with a wealth of experience on equities who currently heads Capital Dynamics Asset Management Sdn Bhd.
And it is for that reason that while many market pundits have written off Asian equities for the time being, he remains unabashedly bullish.
His take is largely premised on the fact that the US is not faced with a doomsday scenario but a slow-paced softening in economic conditions that is easier to stomach for the rest of the world.
“Firstly, the subprime problem remains just that – subprime. Secondly, while many large financial institutions have been badly hit, the central banks have successfully averted a credit or liquidity crunch scenario. Thirdly, the US economy is certainly slowing down but a recession is only a possibility, and not certain.” (do read rest of the lengthy article here )
Anyway, blogger Seng, from Fusioninvestor, had this to say.
- I would like to add my 2 sen worth here, since this topic was discussed at length in my chatbox.
madcap, as john mentions here, "(TTB) has always been bullish". There are many times where he publicly declares that he is bullish. Usually made in a very confident, sometimes, arrogant manner, almost always with no qualification that he has always been bullish.
Now, we must remember that TTB has a wide following. He is looked at as a leader in the local investing world. His words carry significant influence. Many people will take that with confidence and act on it.
At the same time as he is making bullish pronoucements in an almost arrogant fashion, he silently sells. $50 million. This selling is only reported a few days ago from the QE Feb 2008 Quarterly Report.
The amount of selling is not small. Nearly 20%. It is his largest selling yet.
Of course you can try to confuse the issue by saying he is a trader and we don't know exactly the exact timing, he has the right to silently change his minds, etc.. But that's not the impression he gives to the world when managing ICAP. The impression is that he is a Buy and Hold Value Investor. Most people would assume that.
So, it is this inconsistency - almost lack of integrity - that when he maintains his bullishness repeatedly, he sells behind the scene. That is what Moo is trying to point out here. Not other things.
Now, why can't he tell the world that he is "generally" bullish, but will consider/not hesitate to take profits when he feels it's over-priced? Or tone down the arrogance to allow for exceptional cases when some pockets might be overpriced (and thus justify selling)? Wouldn't this be a better and more accurate approach to make? I for one would prefer to see him tell it realistically, rather than maintaining his almost arrogant bullish stance but selling significantly and silently.
Don't get me wrong - one behaviour doesn't make the man. I still have high respects for Uncle Tan especially his investing skills. But my concern is if this gets repeated, that behaviour might become habitual, and one day, you could see a man with a totally different character than the old TTB we thought we knew before.
And of course, if you are the owner of ICAP, then, you would be pleased that he practices sound and prudent money management. But this is NOT the issue here. The issue is the discrepancy between Talk and Action. Some people calls it lack of integrity.
In which madcap replied,
- I must say I am quite disappointed to read your response, Seng. If you tell people that you believe Parkson to be fundamentally sound and you are bullish on Parkson's prospects ("TTB has always been bullish"), but you continue to trade Parkson based on your read of market trends and charts (TTB net seller in last quarter, buying back in this quarter), are you being deceitful?
You have claimed "fusion" investment strategies. And TTB cannot do the same?
TTB gives the impression that ICap will be buy and hold? People assume so? Now they see that he also sells. And he is deceitful? Note your words - "gives the impression", "assume". I remember reading somewhere someone being surprised at the amount of buy and sell he found in TTB's portfolios in the past. As you have pointed out, ICap investors will probably be happier to discover that he applies trading techniques to enhance their fund (like Seng discovering the power of trading).
If TTB says in January that he believes KL markets is still sound. Sells in February. Buys back in March. He is deceitful? I don't know if this is what he actually did. But neither do you know that he sold in January and February. Right? So don't say I am trying to confuse the matter if I say so.
I think TTB is arrogant. I also think that he has a hard time acknowledging his bad calls. Perhaps that is the quality of an adviser of trends and analysis. (I am not even interested in defending him. I am just pointing out bad analysis and judgement here.) You may even say that you think he is a bad advisor. But arrogance is not deceit.
But I don't see evidence of deceit. And I think it is wrong to pressure BB (in your chatbox) to come to this conclusion when the evidence is flawed by a time frame mismatch.
How? What say you?
I do invite more feedbacks on this topic.
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Updated: 29th April 2008.
The Wanderer, posted a screenshot of what ICapital said in its January 25th write up!
Quote: ..
ICapital and its CEO have been singing a very different BULLISH song....
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