Billabong Posts A$860 Million Loss as Brand Deemed Worthless

Billabong Posts A$860 Million Loss as Brand Deemed Worthless

Billabong International Ltd. (BBG), the Australian surfwear company whose shares fell by more than half over the past year, posted a loss more than three times its market value and said its core brand was worthless. The loss was A$860 million ($776 million) in the year ended June, compared with a loss of A$276 million in the previous 12 months, the Gold Coast, Australia-based company said in a statement today. Billabong was expected to lose A$547 million, according to the average of four analyst estimates compiled by Bloomberg. Read more of this post

Hot Potato: Momentum As An Investment Strategy; momentum’s strength has eroded over the past decade. Factor-based investing requires strong conviction and a steady hand

Hot Potato: Momentum As An Investment Strategy

August 2013 | Ryan Larson

Momentum investing has important features in common with other factor-based Smart Beta strategies. For example, it has straightforward index or portfolio construction rules that are easily explained and implemented. And, although momentum investing is emphatically not a contrarian strategy, neither is it necessarily inconsistent with the Smart Beta thesis that prices are noisy and mean-reverting. In this interpretation, momentum investing is a lively game of hot potato—buying rapidly appreciating stocks, holding them for a relatively short period, and selling them before their price trends reverse direction. And in favorable conditions it works very well. Read more of this post

Happy Meal Convertible Offerings Make People Angry

20 Aug 2013 at 11:40 AM

Happy Meal Convertible Offerings Make People Angry

By Matt Levine

It is not every day that the Wall Street Journal has afront-page article about “happy meal” convertible offerings with registered stock borrow facilities so I’m going to tell you about them. Here is what they are:¹ A company sells a convertible bond to convertible arbitrageurs. At the same time, it lends shares of its own stock to the arbs so they can establish their hedge for the convertible. As the Journal points out, these deals go pear-shaped with horrific frequency – a third of them go bankrupt within five years, versus 7% of all convertible issuers.²And now people are all mad and suing and stuff, and there are insinuations that evil hedge funds made lots of evil money on these evil deals. All of this is very confused so let’s talk about it in excruciating detail shall we? Read more of this post

Oceanus suspends trading over ‘abnormal deaths’ of abalones; Oceanus operates the Ah Yat Tian Xia chain of restaurants, with outlets in mainland China, Hong Kong, Taiwan and Singapore

Oceanus suspends trading over ‘abnormal deaths’ of abalones

Thursday, Aug 15, 2013

Jonathan Kwok

The Straits Times

CHINA – Abalone producer Oceanus Group has suspended trading of its shares after it received a report of unnatural deaths of its abalones in China. An announcement by the firm on Sunday evening also made reference to an executive director who was recently forced to step down from the board but remains as a key manager. The statement did not link the reports of abalone deaths with the executive director’s departure except to say they had happened at around the same time. Mr Wu Yong Shou had stood for re-election at the Oceanus annual general meeting on July 31. But the motion was defeated by a 95.51 per cent majority of the shareholders present and voting – so he had to step down as an executive director. Read more of this post

The fraudulent actions of Taiwanese family business Rebar Group has landed five next-gens with prison sentences, while their father remains on the run

REBAR GROUP NEXT-GENS SENTENCED TO PRISON

ARTICLE | 15 AUGUST, 2013 11:20 AM | BY JESSICA TASMAN-JONES

The fraudulent actions of Taiwanese family business Rebar Group has landed five next-gens with prison sentences, while their father remains on the run. On Wednesday, Taiwan’s Supreme Court upheld the verdicts of a lower court, which handed out sentences between five and a half and 30 years to the children of Wang You-theng for violations of the Securities and Exchange Act. According to court findings, the Wang family members, who had held senior positions in various companies controlled by Rebar Group, defrauded investors and banks of billions of dollars by means of false accounting and other fraudulent actions over a number of years. The children include Gary Wang, Wang Lin I, Wang Lin-tai, Wang Lin-mei and Wang Lin-chiao. Wang You-theng, 86, who founded Rebar Group in 1959, fled Taiwan in late 2006, days before prosecutors began their investigation into the group. He is listed as one of Taiwan’s 10 most wanted economic criminals. Rebar Group began in the steel industry, but later expanded into textiles, hotels, real estate, insurance, banking and telecommunications.

SPAC: A Thriving Financial Product, Despite a Record of Failure; Promoters of SPAC often make bad choices, earning almost no returns for investors

AUGUST 13, 2013, 4:38 PM

A Thriving Financial Product, Despite a Record of Failure

By STEVEN M. DAVIDOFF

On Wall Street, strange financial products sometimes exist not because they are good for investors or companies, but because they offer their promoters a way to profit. One of those products may be the Silver Eagle Acquisition Company, which just completed a $325 million initial public offering. Silver Eagle is a special purpose acquisition company, or SPAC, which raises money through an I.P.O. and then casts a wide net in search of a private company to buy. Silver Eagle’s I.P.O. is the largest in the past seven years for a SPAC and sure to earn its promoters millions, but the outcome is not so clear for its investors or even the company itself. Read more of this post

China Metal Recycling chairman Jacky Chun Chi-wai was held by police yesterday for alleged false accounting; China’s “Lady Buffett” Liu Yang and Norway’s central bank are all shareholders of China Metal Recycling

Metal firm chief held on fraud rap
Grace Cao
Tuesday, August 13, 2013

China Metal Recycling (0773) chairman Jacky Chun Chi-wai was held by police yesterday for alleged false accounting, sources said. Police said that a 47-year-old man surnamed Chun was arrested yesterday afternoon for false accounting and had been detained for further inquiries. Sources confirmed that the person cited was Jacky Chun. Chun is the the fourth senior executive of China Metal Recycling to be taken in by police. Chun’s wife Lai Wun-yin and Leung Chong-shun, both non-executive directors, plus chief financial officer and company secretary Kenneth Greg Lam Po-kei were arrested earlier by the Commercial Crime Bureau. Last July 29, the Securities and Futures Commission moved to liquidate the firm for overstating its financial position . China Metal Recycling has sued Chun, his wife and 10 metal recycling firms for fraudulent breach of trust and causing the firm huge losses. The firm is also seeking payment of debts, losses and damages or other relief relating to false or misleading information on the firm’s financial position, the deployment of a scheme with the intention to deceive, dividends paid out on inflated profits, and purported sales and payments for fictitious transactions. It was reported that the firm took out a huge loan and land, along with warehouse receipts, were used as fake collateral. The Guangzhou-based firm’s shares have been suspended since January 28 after US shortseller Glaucus Research made allegations against it. Atlantis Investment Management chairwoman Liu Yang, Norway’s central bank and state-owned enterprise China Energy Conservation and Environmental Protection Group are all shareholders of China Metal Recycling. Read more of this post

Warren Buffett has invested $27.9 million in YG-1 to acquire a 10% stake in cutting tool maker; Buffett believed that it is better to become a major shareholder of YG-1 and receive stable supply of its products than compete with YG-1

S Korea-based YG-1 sets model of “creative economy”

Chung Soon-woo

2013.08.12

The world’s renowned investment guru Warren Buffett has invested 31.2 billion won ($27.9 million) in a small and mid-sized business (SMB) in Incheon, South Korea to acquire a 10 percent stake. The company that caught his attention was YG-1, Korea-based cutting tool manufacturer. Mr Buffet, who is also a stakeholder of ISCAR, another global leader in the field, believed that it is better to become a major shareholder of YG-1 and receive stable supply of its products than compete with YG-1. YG-1’s flagship product, which made Buffett intimidated, is an endmill. An endmill is an ultra-precision cutting tool, which is mainly used to shape autos, trains and aircrafts, or their components. It is also a must-item for manufacturing such high tech products as smartphones and robots. YG-1 has remained top dog in the global endmill market.  The company has recently gained attention again as it has demonstrated the way to take the path toward the “creative economy” initiative proclaimed by President Park Geun-hye. YG-1, established in 1981, has led the world with its end mills alone and the story of its founder Song Ho-geun (aged 61) is an example of a creative economy textbook. Unlike other SMBs, which do whatever it takes to make money, YG-1 has been dedicated only to endmills.

How promoters of Dabur, Marico and Jyothy Laboratories forged long lasting bonds with key professionals

How promoters of Dabur, Marico and Jyothy Laboratories forged long lasting bonds with key professionals

Kala Vijayraghavan, ET Bureau Jul 19, 2013, 03.46AM IST

A popular story on the empowerment of professionals at Dabur is to do with Hajmola candy. A manager offered the yet-to-be launched, mint-flavoured Hajmola to Anand Burman, who promptly spat it out and said consumers will never eat it. Unfazed by the promoter’s view, CEO Sunil Duggal launched it because the market research was favourable. He was right — Hajmola has been one of Dabur’s most successful new brands. There are promoters who like to hold on but there are also promoters like the Burmans who let go, letting professionals run the show, stepping in only when they need to or when they want to. “After a period of time, the relationship between promoters and professionals tend to become like spouses.” says K Sudarshan, managing partner with EMA Partners International, a consultancy. “They fight, argue and yet stay together.” Read more of this post

Korean chaebol Woongjin chief, executives indicted for embezzlement by fraudulently issuing commercial papers (CPs) and illegally providing financial support to its units

2013-08-07 16:08

Woongjin chief, executives indicted for embezzlement

By Kang Hyun-kyung

The prosecution indicted Woongjin Group Chairman Yoon Seok-keum and six other executives for inflicting losses to the company by fraudulently issuing commercial papers (CPs) and illegally providing financial support to its units. The Seoul Central District Prosecutors’ Office said Wednesday that they issued 100 billion won worth of CPs in July and August of 2012, although they knew that the company was unable to pay back the debt due to its junk-level credit ratings. It said the company issued the securities under the name of Woongjin Holdings without disclosing that the group’s decision to file for court protection after giving up its plan to sell another key unit Woongjin Coway. In September last year, the company also sold CPs worth 19.8 billion won. Chairman Yoon and the other executives are also accused of embezzlement and breach of trust. In March 2009, they withdrew 1.25 billion won of corporate funds from Rexfield Country Club, a Woongjin Group’s affiliate firm, on the presumption of using it as consulting fees to buy real estate, but gave it to founding members of the group in severance payments. The prosecution also said that the executives committed breach of trust by directing other units to provide 96.8 billion won in illegal financial support to Woongjin Capital, owned by group Chairman Yoon.

Hedge funds profit from return of M&A

August 7, 2013 5:17 pm

Hedge funds profit from return of M&A

By Sam Jones

As developed world stock markets have surged this year, the corporate world has likewise seen a revival of deal-making, capital raisings and restructurings. And hedge funds – in particular, so-called event arbitrageurs – are looking for rich pickings from that trend. Event arbitrage is a catch-all term for the strategies by which hedge funds look to capitalise on corporate announcements. In a merger, a simplistic event arbitrageur bet would entail wagering on the price of the acquisition target rising, while shorting the acquirer in expectation of its price falling. Such strategies have outperformed all other hedge fund trading styles so far this year. Proof positive, say event arb traders, that their strategy is bearing fruit. According to HFR, the average event arbitrageur is up 5.7 per cent, compared with an industry-wide average of 3.6 per cent. Many individual managers have fared better. Read more of this post