Local listed companies dabbling in the share market: II

I found this nice little comment on the issue of local listed companies dabbling in the share market!

• Who care ? It is the other people money & must be fully maximised 2 obtain max. profit. 4 own benefit ????

Well I do care. Other people money? If and when one buys a share of a listed company, they are deemed as shareholders of the company. As a shareholder of the listed company, whose money is it? Is it still OPM (other people's money)??

And for whose benefit? Of course one could argue that the management is doing this for the benefit of the company and the shareholders. But then others could also argue that such practices has no transparency and it leaves the managment the possibility of abusing the company's funds to buy shares in another listed company for personal vested interests or reasoning.

Perhaps let's look at just one company, Pintaras Jaya, who has 'marketable securities' in their balance sheet.

This is a screenshot of Pintaras earnings notes reported on Feb 2006.



And this is a screenshot of their balance sheet then.



How?

1. Total 'cash' company has = 18.869 + 30.408 + 1.291 = 50.568 mil.
Amount invested in marketable securities = 18.869 mil or 37.3%.

2. Result? Market value = 18.869. Cost of securities = 22.205 million! Ahem!

Pintaras Jaya just announced its latest earnings on 11th May 2006.

This is a screenshot of Pintaras earnings notes.



And this is a screenshot of their balance sheet.

How?

1. Total 'cash' company has = 20.628 + 26.813 + 1.589 = 49.03 mil.
Amount invested in marketable securities = 20.628 mil or 42%!! (hmm.. increased a lot, eh? ).

2. Result? Market value = 20.183. Cost of securities = 22.435 million! Ahem!

How? How does one evaluate Pintaras Jaya's dabbling in the share market? Does Pintaras Jaya's current 'investment result' justify their dabbling in the share market?

And what's the alternative? Hmm.. here's a suggestion. Why couldn't Pintaras Jaya make an effort to return more cash to its shareholders?

Consider this. Pintaras Jaya has been paying a 5% less tax dividends per year, which works to some 2.88 million. Now considering the amount of excess cash utilised by the company in the share market, the dividend payout pales in comparison. So for a minority shareholder in Pintaras Jaya, does the minority shareholder has any grounds of displeasure? Why can't the company pay them more in dividends instead of the company losing money in marketable securities? And worse still, does the minority shareholder know how the money is exactly lost?

Isn't this a justification against listed company dabbling in the share market?

Oh yeah, I forgot. Who cares!

Yeah nothing wrong against your view and opinion since you do not care but for those who does care and wishes not to see their invested money used by these listed company as per their whimps and fancy, perhaps it would not hurt the investors to be very prudent if they see the listed company dabbling in the share market.