This
is the hottest news since yesterday and today and this news has sent KLCI into
the red and causing uncertainty in the local market that was on uptrend
recently. Many comments and write up on it, I am not going to elaborate, the
purpose of me writing a simple comment is meant for record purposes, so that
when I do my review in the future - I will always remind myself that even agreement
signed with government may be terminated,
hence, do not place 100% certainty to contract secured by companies.
Termination
of contract seems nothing unusual in commercial world, the big difference here
is - it involves Government. Even under
normal commercial arrangement, there must be due diligence done or some support
provided by the buyer whether it has the financial power to complete the deal.
In this case, It appears to me the consortium has the financial strength (may
not be what it appears sometimes) . If it is money issue, did we not do a
proper due diligence? If it is not money issue, what is the reason or probably
the truth will never be revealed.
I
recalled many years ago, many companies like to secure timber/coal/etc
concessions from less developed countries and share price jumped many folds.
After that, God knows what happened to the contracts or did they make any profit
from the operations. Obviously there were people who made tons of money and
those who lost lots of money – it is a
zero sum game because most of these companies have disappeared. The lesson from
all these news is never assume it is 100% secured or guaranteed the company
will reap the benefits and shareholders get the rewards later. Yes, if we have
benefited from the share price gain but if we enter after the news is out, then
we may end up being the greatest fool.
Lets have a look
at IWC share price over the last 3 months, who do not wish and even “pray” to
have bought a stock like this - more
than 200% return (2 baggers) in less than 3 months. The saddest part is if we
have bought it only after it has gone up 200%, what are we going to do when the
bad news come out?? Being a small retail investor, there is nothing we can do
and most of the time, we are at the mercy of those insiders who have 1st
hand info and long exited.
Being prudent and conservative will put us at a less risky
position, though we may not make the most but at least we will not lose big too. Always
bear in mind, nothing is guaranteed when come to investment.
If you have
entered before or beginning of Mar 17 and have sold, congratulations....you have made your profit.
Otherwise, lets see what will happen next.
