All in a day's work

Brace yourself for this historic moment of your life! Dow Jones dropped almost 770+ points in one day, that a whopping 7-8% drop!

I wonder when will we ever see this again.

Honestly, being logical people, sit back and think.
Think from a business prospective.

1. You are presented a plan that requires you to fork out a HUGE sum of $.
2. This plan is not complete, there are loopholes/ questions.
3. It is YOUR money and there are people hounding you for it, with a lousy plan
4. It MAY NOT be the final solution.
5. It's not your problem in the first place.

Would you give up your huge reserves? Still hopeful?
Oh well, just a thought.

If some of you still do not know, there has been some major share buyback programs that has been declared recently.

1. Microsoft - US$ 40b
2. HP - US$ 8b
3. Nike - US$ 5b
4. Vodaphone - US$ 2b
5. Anheuser Busch - US$ 1b

These are the biggest companies in the world that has been declaring their Shares Buyback program.

So what exactly is Shares Buyback?
In this post, I'll only address Shares Buyback and not other FA theories or Formulas

First and foremost, please understand that cash used for the buyback can always be used alternatively on new investments, new products or marketing, which MIGHT increase the revenue of the company.

Investor Point of View

1. When the fund buys its shares at a discount, the net-asset value for the remaining shareholders rises.

Imagine a company has $100 in assets and 10 shares issued, making each share be worth $10.

If the Share Price is trading at $9 and the company buys back 1 shares at $9, what is left is assets of $91 and 9 shares.

This buyback increases the NAV per share to $10.11, or 1.1%

2. Buying back of shares creates an impression that the management is confident of the prospects of the company and feels that at current traded price, the company is undervalued.

3. A Buyback reduces the number of shares available, thus increasing the company's earnings-per-share and makes it appear more attractive.

Company's Point of View

Before we go into this area, 2 points to note:

Shareholders and Management are 2 different class of personnel in the Company.

Has it occured to you the fact that instead of a buyback, why not increase the Dividends paid out?

1. The Management of the company might have a clause to receive compensation in relation to the company stock price. This simply means that with the higher the stock price, the more it benefits the mangement, be in stock options or bonus.

2. Stock buyback has the immediate impact on the share price. Short Termist Management will deem this strtegy as the most effective as compared to Divided Payout.

So Now What ?

Look for Cash Flow and Dividends Payout.

Dividend Payout Ratio - With a lower dividend payout ratio, Company A will have more Cash to reinvest in the business. However, do note is the business is worth the investing.

I mailed MIIF my queries during the recent major selldown and I was pleasantly surprised by the warm response by their VP with regards to my queries.

Just for sharing purposes with what I can still remember.

Macquarie bank bas 11% shareholding in MIIF and the directors in MIIF are all on contractual basis. Even if Macquarie Bank in Australia does collapse, MIIF is still independent on itself.

Last year, when the Script Option was announced, only about 20% of the shareholders took up script. That, being said, means that even with script offered, the dilution of current shareholders is not strong, rather, it is not much of a concern.

MIIF takes pride in distributing 100% of its net profit to shareholders and as the CP terms it, is to prevent laziness. With regards to not keeping profits for asset purchases. he gave the explanation that there is sufficient debt facility which MIIF has access to and the returns from the investments will more than enough repay the interests generated. Not forgetting the fact that MIIF has assets that has been set aside ready for sale to generate cashflow, if need be.

With regards to its last div payout, MIIF is generally in a good financial position, although it seems that they have declared above what profits that had been reported in 1H2008, which is not the case. From Jul to Aug, MIIF did received another cash inflow from its operations. As reported in 1H2008, revenue from its new acquistions will be reflected in the 3Q report.

Recent movements in share price could be due to speculations and hedge funds movements. Fundamentally, MIIF is still there same.

This is what I can remember of the conversation I had over the phone. I've have yet verified the statements nor am I going to do so. I've already lowered my average cost and looking forward to the 3Q report and the 2H2008, which will reflect their major movements this year.

Looking at the chart last Dec, it was still a $2.00 counter. Within the 9 months, it lost close to 80% in value. Is that something serious to be concerned about.

In TA, VALUE is not a concern. Fundamentally, it is not one counter I'll put my $ in for long term, time horizon 3 years and more. Not because it is a lousy company but I've not done any analysis fundamentally about it yet.

I'm personally vested last Friday and my opinions MIGHT be biased.

1. Not a strong cause to state when I say that there is a b/o but still it's near the gap price @ 0.67.

2. Check the trades done intra day on Friday and you have a reason to believe that there is accumulation on this counter, although there is strong selling. This is the same to GAR on Wednesday and Thursday when in 1 trade, 6m shares is done, sold down but the market absorbed it. When the selling is done and the accumulation is in process, it could mean some upward strength.

3. Not a frequent user of indicators, but MACD looks to converge and MFI looks good.

Unless I missed out something OR I am wrong in my analysis, do drop me a comment !! Thanks people.

After so many days and weeks of going down, STI and in fact global markets finally "see" some light. In fact, this rally that'd happen took me by surprise.

1. It happens just after America decides to bail out AIG.
2. 2 of the top Investment Banks in the world liquidated.
3. Top banks are still looking for solutions to prevent liquidation due to their credit issues.

The million dollar question, is this sustainable and will this spark another bull run. Personally, No.


The fundamental issues are still lingering and out world's financial big boss is really in some sort of debt concerns. Printing $ and absorbing bad debts is definitely not the long term solution, or am I missing some important knowledge here, if so please enlighten me.
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Technically, as seen, we finally saw HUGE buying up. It's a positive sign, finally but still we need to watch for the resistance level at about 2770, the small gap formed about a month ago.

From the RSI, STI has been in long oversold, but then again, this is no reason to assume that a rebound is at hand, then again, it's is just another indicator that a rally, big or small, COULD be here, it's just when.

Any other technical information can be intepreted from the chart posted.