Update on NextNation

First blogged on Nextnation on 31st May 2007. here

Two points mentioned then..

1. Net margins show some weakness but the growth is impressive!
2. The biggest concern for me is that NextNation has an issue with its receivables and because of this, one do not really see wealth being generated in the company's cash flows despite its very impressive earnings.

Nextnation announced its next earnings on June 29th. Quarterly rpt on consolidated results for the financial period ended 30/4/2007

1. Sales dropped on a q-q to 21.533 million.
2. Earnings dropped to a mere 480k.
3. Receivables is at 67.092 million
4. There goes the GROWTH stock status!

I wrote a simple posting. http://everything27.blogspot.com/2007/06/nextnation-ii.html

• Well, from an investing perspective, it's pretty ugly.

Nextnation announced its next earnings on Sept 2007. Quarterly rpt on consolidated results for the financial period ended 31/7/2007

1. Sales dropped on a q-q to 17.797 million
2. Earnings improved slightly to 611k.
3. Receivables is at 61.702 million

Nextnation announced its earnings last night. Quarterly rpt on consolidated results for the financial period ended 31/10/2007

1. Sales were flat at 17.868 million.
2. Earnings dropped to a mere 145k!!!
3. Receivables is at 56.702 million.

How?

Here is how Nextnation has performed as a stock!

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PMI's rescue package

I found the following article from the Edge Weekly extremely interesting: 17 Dec 2007: Corporate: Khoo forks out RM150 mil to save PMI. My comments will be in purple fonts.

17 Dec 2007: Corporate: Khoo forks out RM150 mil to save PMI
By Risen Jayaseelan

Pan Malaysian Industries Bhd (PMI) is inching closer to extricating itself from dire straits. The plan that Tan Sri Khoo Kay Peng has put in place for the PN17 status company involves him injecting more than RM150 million of his cash into it.

The money will be used to reduce PMI's debts and acquire properties that will give the company a stable income.

"Khoo is putting his money where his mouth is. PMI's restructuring is unlike others where asset injections or paper shuffling are involved. This is hard cash that is being injected in and indicates the seriousness of the owner to make things better for his company," notes an investment banker.

Last week, PMI submitted a revised restructuring plan.

"This, together with the fact that Khoo — the ultimate shareholder of the MUI group, which PMI is part of — is underwriting a share sale exercise by PMI means the restructuring plan has a high chance of being accepted by the authorities," another banker says.

The exercise involves PMI selling shares it owns in Malayan United Industries Bhd (MUI) to its (PMI's) shareholders. PMI currently has a 46.56% stake in MUI. It intends to reduce that to 20% by selling 26.56% of its stake.

( Ok... PMI is selling its stake in MUI back to PMI shareholders. This is why I find it so strange, cos PMI as stated, currently holds a 46.56% stake in MUI. Why sell it back to PMI? Why can't MUI sell it to other parties? Does PMI shareholders even want MUI shares? )

Khoo's portion alone is RM50 million, but since he is underwriting the offer, he could potentially end up spending RM154.6 million on the MUI shares.

Khoo controls 32.4% of PMI and only has a 2% direct stake in MUI. With his stake in PMI, Khoo is entitled to purchase 8.3% of MUI under the share sale agreement. If Khoo only takes up his portion, his direct stake in MUI will increase to 10.3%, and with PMI's remaining stake in MUI, he will be deemed to control about 30% of MUI.

Khoo's deemed stake in MUI could rise further and perhaps even trigger a mandatory general offer for MUI shares if PMI shareholders do not take up the offer. (This is because Khoo is underwriting PMI's offer for the sale of the shares.)

Two weeks ago, PMI announced it had secured the High Court's order for a par value and share premium reduction. Getting the court order for this is a necessary step before other aspects of PMI's restructuring can kick in.

Here's what PMI is essentially planning to do: It wants to shrink its share capital by 90% and reduce its share premium account of RM265.6 million. The next and more substantial step is to make a restricted and renounceable offer for sale of 515.4 million shares in MUI to its (PMI's) shareholders. This will be done at an indicative price of 30 sen, although it may be higher if MUI's share price appreciates closer to the fruition of the proposed sale.

Of the RM154.6 million that will be raised from the share sale, RM84 million will be used to reduce PMI's borrowings from RM207.7 million currently to RM123.7 million. If the shares are sold at a higher price, more money will be raised and more of PMI's debts will be settled.

The proposal states that RM50 million from the proceeds will be used to buy properties that will become "a new area of activity for PMI". These new properties are to generate rental income and positive returns for the group.

The first property is Menara PMI, a 15-storey building in Jalan Changkat Ceylon. Ten storeys of this building are occupied by offices while the first five storeys comprise a retail podium and two basement car parks. The building has a net lettable area of 104,011 sq ft and 87 parking bays. Almost 96% of the building has been tenanted to various companies within the MUI group. It recorded an approximate rental income of RM4 million per annum last year. The vendor of the property, another MUI group company, Pan Malaysian Holdings Bhd, acquired the building in 1994 for RM35 million. The property had a net book value of RM28.9 million as at Dec 31, 2006.

PMI is forking out another RM10 million to pay MUI Properties Bhd for 1,478 sq m of land located along Jalan Mayang, near Jalan Ampang, Kuala Lumpur. The plot lies between two high-end condominiums, Mayang Court Kondominium and D'Mayang Kondominium. MUI Properties bought the land in 1995 for RM1.9 million and the net book value of the property is RM2.4 million. Both properties have been valued by credible valuers.

However, the question is, why is PMI buying properties from within the MUI group? Could PMI not buy other land with the money it is raising?

( Again, I find it so complicating. One on hand, PMI is selling its stake in MUI to its PMI shareholders. And then, PMI is buying properties from MUI Prop. ????? Errr.... say what? I am lost here!)

A banker familiar with the proposal says as far as PMI is concerned, the properties have a lot of potential. "Hence, the source of the land shouldn't matter. What matters is Menara PMI will provide stable rental income while the land provides growth potential," he says. It is understood that the land will be used by PMI to put up a high-end condominium project, considering its strategic location. If done successfully, PMI could reap the necessary earnings to breathe life back into the company.

>>>>>>>>>>>>>>

Anyway.... the first line, PMI is inching closer to extricating itself from dire straits.

I decided to have a peep at what PMI has done as a stock

May 2000. PMI had a Rights Issue

• Renounceable rights issue of 978,421,500 new ordinary shares of RM0.50 each with 978,421,500 warrants attached at an issue price of RM0.55 per share, payable in full upon acceptance, on the basis of one (1) new ordinary share with one (1) warrant attached for every one (1) existing ordinary share held in Pan Malaysian Industries Berhad at 5.00 p.m. on 23 June 2000

Let's look at the quarterly earnings posted at Bursa. (links are clickable)

30th May 2000: Quarterly rpt on consolidated results for the financial period ended 31/3/2000

PMI reported a loss of 8.596 million for its fy 2000. (previous year, it lost 222.790 million)

30th May 2001: Quarterly rpt on consolidated results for the financial period ended 31/3/2001

PMI reported a loss of of 96.548 million.

23rd May 2002: Quarterly rpt on consolidated results for the financial period ended 31/3/2002

PMI reported a loss of of 384.254 million.

29th May 2003: Quarterly rpt on consolidated results for the financial period ended 31/3/2003

PMI reported a loss of of 510.411 million.

4th June 2003: Another rights issue: Rights Issue

• The ratio of the Rights Issue of two (2) Rights Shares for every five (5) existing ordinary shares of RM0.50 each in PMI held on the Entitlement Date as stated above is based on Scenario I (as defined below) for illustrative purposes only. The final basis of the Rights Issue will be determined immediately after the Entitlement Date depending on the number of Warrants exercised on or prior to the Entitlement Date under Scenarios I, II or III (as set out below).

21st May 2004. Quarterly rpt on consolidated results for the financial period ended 31/3/2004

PMI reported a loss of of 83.878 million.

20th May 2005. Quarterly rpt on consolidated results for the financial period ended 31/3/2005

PMI reported a profit of 102 million.

9th March 2006. PMIND-Classification as a new PN17 Company

31st May 2006. Quarterly rpt on consolidated results for the financial period ended 31/3/2006

PMI reported a loss of of 172 million.

30th May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007

PMI reported a loss of of 123 million.

Not an impressive track record, yes? And if not mistaken, PMI had a rights issue back in 1998 too!

My...

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Team www.Sahamas.net finished 2nd in BursaPursuit

Many congratulations to team Sahamas (www.Sahamas.net ) who finished 2nd in the first ever Bursa Pursuit investment challenge.

Team members:

1. TheChargingBull
2. JLMouse
3. Random
4. Faruq
5. LEEYA2004

* ps. due to some technical hitches, the team finished second. In my opinion, they should have finished first!!!

Well done guys!

Here's their proud trophy!

The Star Biz had a write-up: Bursa’s online game ends with a bang

• Monday December 17, 2007
  
  
  Bursa’s online game ends with a bang
  
  By Fintan Ng
  
  BURSA Pursuit, the online investment challenge game organised by Bursa Malaysia Bhd, ended on a festive note recently at a prize-giving night entertained by local artistes.
  
  Contestants, their family members and friends attended it, which was held at a leading hotel's artificial beach.
  
  The game, which attracted over 55,000 virtual investors, ran from Oct 1 to Nov 30 and was divided into three leagues - main, sub and pro with a young investors category added due to the overwhelming response from younger contestants, of which 72% were below 30 and 62% had not traded before.
  
  Each individual or team was given a virtual capital of RM250,000.
  
  Bursa Malaysia worked with four broking partners, Hong Leong e-broking, RHB Invest, OSK 1888 and CIMB i-trade, to develop the game, which was based on real market conditions of the game period.
  
  The game's aim was to attract and educate a younger set of retail investors, especially those in the 20 to 29 age bracket.
  
  Prizes were given to each of the three leagues as well as to the top 10 male and female investors grouped by age in the young investors category.
  
  Prizes worth up to RM560,000 were given away in the form of trading limits and cash.
  
  The first, second and third prize winners of the three leagues were each given RM100,000, RM30,000 and RM20,000 in trading limit where they would designate a broker to manage their funds.
  
  Those in the young investors category were each given RM1,000 cash.
  
  Bursa Malaysia equities marketing head Azalina Adham said told StarBiz on the sidelines of the event that the exchange organised the game because it wanted to grow the retail market, which was hard hit by the Asian financial crisis 10 years ago and suffered from a dearth of younger investors.
  
  “Most of the retail investors and dealers today are older, certainly above 35, so when we first came up with the idea of an investment game, we were apprehensive because we were not sure if the targeted group would be interested,” she said.
  
  She added that Bursa Malaysia's chief executive officer Datuk Yusli Mohamed Yusoff was pleasantly surprised that there was such an overwhelming response.
  
  “We know it takes time but this is the first step, we decided that in order to get younger people interested we had to interact with them via channels they were comfortable with such as the internet and through the hitz.fm Hitz Cruisers,” Azalina said, adding that there were a few hiccups at the start due to bandwidth access since there were many people who entered the game.
  
  She said market information as well as the trading was done via the electronic trading platform and several trading tools were made available to the contestants in order that they would be able to get the information for their trading.
  
  “The other objective was to make them comfortable in the equities market environment through educating them about what various corporate movements were,” Azalina added.
  
  “The exchange does not want people to go in blindly, what we want is for people who hear about any market movements or tips to go find out through the trading tools.”
  
  The trading tools available during the game period were NextView, Bursa Station and Integra Stock.
  
  “In all likelihood there would probably be another game next year,” Azalina said.
  
  Meanwhile, in the main league's individual investor category, first prize winner Chong Chen Keng, who attended the prize-giving ceremony with partner Edmund Ngui, was still in a state of euphoria.
  
  “I came to know of the game through friends from OSK Investment Bank's Seremban branch,” she said.
  
  “I am new to trading and seldom checked the business pages of newspapers or even go online for business and economic news until now.
  
  “The trading tools and tips really helped me, I caught up really fast and build up a strategic portfolio,” she added.
  
  For Ching Hong Tat, who led the team “Glorious Winners” consisting of family members, the game was an opportunity to educate the younger family members of the team on how to make their investment decisions and how to grow their wealth wisely.
  
  The team took the top prize in the sub league for non-professionals.
  
  Because the game was based on the real market, Ching felt that it was a good way to learn.
  
  “The underlying principle is that you have to know what you are investing in, understand your stocks before you invest in them,” he said.
  

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Regardings Mems Again..

Here is a follow-up on the blog posting on Mems: More on Mems Restating of Its Earnings.

Read the following article posted on the Edge. 14-12-2007: Major MEMS Tech shareholder disposes of 1.8m shares

• AKN Equity Ventures Sdn Bhd, a substantial shareholder of MEMS Technology Bhd which is being investigated by the Securities Commission for possible irregularities in its financial statements, has reduced its direct shareholding by selling 1.8 million shares or a 0.27% stake in the open market.
  
  A filing with Bursa Malaysia on Dec 12 showed that after the disposals on Dec 7, 10 and 11, AKN Equity’s direct interest in the Mesdaq company was reduced to 126.9 million shares or 19.35%. The share price closed at 21, 20.5 and 20 sen respectively on the three days.
  MEMS share price tumbled 16 sen or almost 45% on Nov 28 after the company told Bursa Malaysia it could not issue the audited accounts due to concerns over certain transactions.
  
  Subsequently, the counter has been hovering between 19.5 sen and 21.5 sen with an average of 5.64 million shares traded daily.
  
  On Nov 30, the company said it was not able to issue its audited financial statements for the financial year ended July 31, 2007 for public release, within the four months from close of the financial year, which falls on Nov 30.
  
  ”The board of directors of MEMS wishes to announce that the company is not able to issue its audited financial statements by Nov 30, 2007, as the company’s external auditors have expressed concerns over certain transactions relating to revenue and property plant and equipment.
  
  ”In light of the above, and after due deliberation, the board has resolved not to recognise revenue of RM19.72 million. As a result of this, the unaudited consolidated revenue for the financial year ended July 31, 2007 will be revised to RM53.7 million.
  
  This will consequently result in the unaudited profit after tax for the financial year ended July 31, 2007 to be reduced from RM21.47 million as announced on Sept 27, 2007 to RM13.45 million,” it said.
  
  Bursa Malaysia Securities on Dec 4 rejected the company’s application for an extension of 45 days from Nov 30, 2007 to submit its audited financial statements for the financial year ended July 31, 2007 (FY07).
  
  Late last month, a SC spokesperson confirmed that the company was being investigated for possible irregularities in its financial statements.

Do you like what you see in this company?

Company restates its earnings, company major shareholders dispose their shares, company not able to submit its earnings in time. Rather terrible, isn't it?

Wrote the following on Sahamas back on Nov 28th 2007.

• All this is giving us (our stock market) such a bad name.
  
  In Mems case, yes it was not as drastic as say Megan or Transmile but over stating earnings is simply unacceptable.
  
  Consider the following...
  
  If Mems did not over-state their earnings, there would be no growth for 3 years!
  
  Without the growth, MEMS would have been rather unattractive and most of all, it would never had commanded such a rosy stock price.
  
  Just in July 2007, MEMS traded at a high of 81 sen, giving it a market valuation of 531 million.
  
  Now based on an actual earnings of 13 million, surely this 81 sen would have been an insane stock price for Mems!
  
  Now consider this. Let me flip it around.
  
  Mems is now trading at 25 sen. Its market valuation is only some 163 million.
  
  So if the market valuation now is about fair for a company making only 13 million, then Mems is worth only some 163 million.
  
  However, due to the overstated earnings, MEMS was valued as much as some 531 million!!!
  
  How?

Just for the record, Mems closed yesterday at 19 sen.

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Give The World A Helping Hand

My Dearest Readers,

I have received a petition regarding OUR Earth's climate changes. I am a firm believer. Hence, I am passing on this urgent call for help!

Do sign the petition!

• I just signed an emergency petition trying to save the crucial climate change talks in Bali, Indonesia right now by telling the US, Canada and Japan to stop blocking an agreement. You can sign it here:
  
  http://www.avaaz.org/en/bali_emergency/98.php?CLICK_TF_TRACK
  
  Almost all countries have agreed to cut rich country carbon emissions by 2020--which scientists say is crucial to stop catastrophic global warming, and will also help bring China and the developing world onboard. But with just 24 hours left in the conference, the US and its close allies Canada and Japan have rejected any mention of such cuts.
  
  We can't let three governments hold the world hostage and block agreement on this desperate issue.
  
  There's still 24 hours left to turn this around - click below to sign the petition - it will be delivered direct to summit delegates, through stunts and in media advertisements, so our voices will actually be heard. But we need a lot of us, fast, to join in if we're going to make a difference. Just click on the link to add your name:
  
  http://www.avaaz.org/en/bali_emergency/98.php?CLICK_TF_TRACK
  
  
  

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Do you Trust What You Read?

This blog was mentioned on the Weekly Edge: 10 Dec 2007: Corporate: Trusting 'educated' thoughts and rumblings

• 10 Dec 2007: Corporate: Trusting 'educated' thoughts and rumblings
  By Cindy Yeap
  
  Investors today have a new source to turn to when seeking information or a prognosis on, say, how much Warren Buffett's recent comments on China and South Korea have affected regional market sentiment — weblogs.
  
  More commonly known as blogs, these have evolved into something much more than an online diary in recent times.
  
  Even leading news publications like the Wall Street Journal are paying attention to weblogs, recognising their increasing appeal to an online audience. Many online news sites, including the WSJ's, have begun to tag news articles with links to related blog postings alongside associated write-ups. BusinessWeek, for instance, has an entire section dedicated to blogs on its website, where its editors post investing insights into the latest on Wall Street. The publication also invites experts from other fields to offer their perspective of subjects ranging from automotive to management trends and even the effects of climate change on business.
  But for every blog backed by a named organisation or individual, there are countless others put up by anonymous ones. The situation is probably similar in Malaysia. There is a growing group of individuals here which is well ahead of most, if not all, local news organisations when it comes to capturing an online audience via blogs.
  
  And among them are people who post discussions on the Malaysian stock market — everything from newsbytes and stock rumours to why an entire team of analysts are quitting en masse. Some of these blogs are merely opinions on business news articles and analyst reports, while others take things a step further by offering their own prognosis on the direction of the stock market and making stock picks.
  
  Some of these stock market-related blogs do have some following, going by the feedbacks posted on them. This may be because some of the stock market-related content is contributed by people who claim to be experienced in the capital market.
  
  Also, it is not just retail investors who are paying attention to these blogs. An article by a blogger who goes by the pseudonym S Dali was last week published in a widely circulated local business daily. This anonymous blogger at "Malaysia-Finance" (Malaysiafinance.blogspot.com) describes himself as an ex-analyst and ex-fund manager, with a background in accounting. His more recent blog postings include rumblings on the Chinese government's sovereign wealth fund China Investment Corp, his take on Chinese coal-mining company China Shenhua and his view on the tussle for control at Kian Joo Can Factory Bhd. There are also postings from other blogs, including "Where Is Ze Moolah?" (everything27h.blogspot.com), which Dali credits as among the earliest to highlight the fact that analyst recommendations on MEMS Technology Bhd were overly optimistic.
  
  As it happened, MEMS Tech last month said it could not come up in time with its audited results for the year ended July 31, 2007, because external auditors had raised questions about certain transactions.
  
  Now, is it a good thing that more people are taking blog content seriously, especially the kind that promotes certain stocks? More importantly, should they?
  
  "I don't think it's necessarily bad to read blogs. Blogs can be good as they can be a good forum for discussions, a place for idea generation, but definitely not a place to find out which stocks to buy. Like any other piece of information, blog postings should be read with some measure of scepticism. After all, a blog is someone's opinion. Just like any other type of blog, there will be some that stand out and gain more following with time," says investment director Wong Shou Ning, who helps manage RM500 million in funds at Amara Investment Management Sdn Bhd.
  
  What's important, Wong adds, is how a reader treats the information found on these stock market-related blogs and not so much if people are paying attention.
  
  "Reading blogs is not unlike reading an analyst report from a broker. It's just that the amount of scepticism increases for a blog because you can assume that the broking house is willing to back up its report. It puts its name on the report whereas in the case of most blogs, people have no idea who is behind them. There is no assurance that the blogger has met the management of the company mentioned, or if he has done spreadsheets to analyse the necessary numbers.
  
  "When it comes to investments, you cannot take everything you read or hear at face value. It's up to you to do your own research and investigation. For fund managers, it's critical to have that kind of discipline," Wong says.
  
  An analyst with a local brokerage agrees.
  
  "I think not many licensed people will own up to reading these blogs, but there are definitely people in the industry who read them. Some postings have in the past been circulated in emails, not unlike how one would forward an interesting write-up or joke," he says.
  
  Like any other channel, there will be people who will misuse blogs to spread rumours with the intention of ramping up a stock.
  
  "Yes, some people do buy on talk (speculation) and sell on news, but it is essentially up to the reader to decide whether he can trust any information he gets. It's like the talk you hear on the street, newspaper articles quoting anonymous sources or overly bullish statements made to reporters by the management (of a company). It's just that they're now posted on someone's blog. Investors should know the distinction between fact and rumour. If they put money into a stock after reading a blog and lose money, they well deserve it. That's the consequence of not doing their homework," the analyst adds.
  
  When asked for its comments, the Securities Commission (SC) reminds investors that they should only seek investment advice and services from investment professionals who are qualified and licensed. The full list of people licensed to give investment advice is available on the SC's website, its spokesperson says.
  
  "The SC continuously conducts surveillance, monitoring and enforcement of the capital market to ensure appropriate conduct by market participants and the highest standards of investor protection. The SC takes action where there is evidence of wrongdoing," the spokesperson adds.
  
  So, essentially, there will be no shortage of information and prognosis on the Internet. The commentaries posted on the anonymous stock-market or financial blogs could well offer good insights, on top of being an entertaining read. But when it comes to putting good money into stocks, investors should always first check the facts.

Back in Jan 14th 2006, there was an article posted on Star Biz.

• Blogging about Bursa
  
  ACCOMPANYING the proliferation of online financial and investment portals is the steady accumulation of blogs and online forums that discuss the same subject, namely counters traded on Bursa Malaysia.
  
  Short for web log, a blog is essentially a website on which journal entries are posted. Both blogs and forums allow swift, unfettered discussion on a variety of subjects. Undoubtedly, the anonymity afforded by the Internet is part of its appeal, but this anonymity can easily become a two-edged sword.
  
  Perhaps the single greatest obstacle preventing many blogs or online forums from achieving credibility is the fact that their administrators conceal their identity from the public. Many observers feel that even on the odd occasion they make a point, the use of a pseudonym counts against them.
  
  “For most blogs and forums, I think the sophistication in terms of depth is lacking. I've come across many instances in which investors recommend buying certain stocks for highly personal reasons – to them it's not so much of a forum, but more of an opportunity to promote a vested interest,” says Yeoh Keat Seng, CIMB Bhd's head of private client services.
  
  He isn’t alone. The overwhelming majority of those polled by BizWeek were either unaware or dismissive of the local blogging community’s discussions about the stock market.
  
  “How reliable are they?” asks Tan Teng Boo, iCapital.biz’s managing director. It’s a good question, and is probably the one that’s on everyone’s lips.
  
  A sampling of some blogs on offer reveals that many bloggers go about their business in an orderly manner, with many collating and making available research reports from a variety of local and international research houses.
  
  However, there are a number that throw their weight behind certain stocks, either relating a personal experience or a closely-held belief that the counter’s price trend will soon see an upswing.
  
  But do they truly reflect investors’ mentality in Malaysia?
  
  “Many Malaysians are inherently suspicious of anything that comes for free,” comes one dissenting voice. “There is no harm in being aware of the information provided by such sites. I feel that most investors may use it as one of the factors in choosing to buy or sell a stock, but probably not the sole reason.”
  
  Just like so many other things, it looks like the Bursa Malaysia-related blogosphere needs to be regarded with discretion by the potential investor. Look at it as caveat emptor for the digital age.
  
  Illegal advice
  
  People may often be suspicious of freebies, but the old get-rich-quick schemes seem to be as popular as ever amongst Malaysians. Slapped with a fresh coat of paint for their Internet incarnation, these schemes run the gamut from high-return, low-risk plans, to an invitation to invest in an exotic commodity or currency.
  
  In collaboration with agencies such as the Malaysian Communication and Multimedia Commission (MCMC), the Securities Commission (SC) has also stepped up its surveillance and enforcement activities with regards to online capital markets.
  
  Last year, the SC shut down four websites that were illegally offering investment advice, following which it issued a press statement warning the public to be extremely careful when seeking investment advice and services on the Internet, as such services may be illegal and unlicensed.
  
  In a press release, the SC provided a number of warnings, including the fact that some websites may be professionally designed to resemble a legitimate business, and may even be equipped with real-time stock prices, market commentary, news, and links to other financial websites.
  
  All investment advisers require a license to operate. This point is doubly important, for despite the protection afforded by the SC with regards to securities-related laws, this protection is only available when dealing with licensed parties.

How now my dearest Brown Cow? How do you rate our local financial weblogs?

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No Sell Sign?

I was just reading this Bloomberg News article posted on Dec 3rd 2007.

• Dec. 3 (Bloomberg) -- Anybody who followed the advice of Wall Street's top-ranked analysts, none of whom would say ``sell'' for a single company in the securities industry this year, is reckoning with subprime-like losses.
  
  Merrill Lynch & Co.'s Guy Moszkowski, UBS AG's Glenn Schorr and Sanford C. Bernstein & Co.'s Brad Hintz maintained either buy or hold recommendations on Bear Stearns Cos. as it fell 39 percent in 2007, the most since the firm went public in 1985. Moszkowski and Hintz had buy ratings on Morgan Stanley while the stock shed 22 percent in New York trading. Moszkowski and Schorr advised holding on to Citigroup Inc. as it dropped 40 percent.

WOW! No SELL recommendation?! And accordingly, here is why!

• ``An analyst cannot issue a sell rating because he doesn't want to lose access,'' said Tom Larsen, a former Credit Suisse Group analyst who now runs research and helps oversee $6 billion at Somerville, New Jersey-based Harding Loevner Management LP. ``It's logistically cumbersome for the buy-side to arrange its own meetings with company management, so this concierge service is very useful.''
• Instead of saying ``sell,'' analysts have stuck with ``hold'' ratings that are less likely to antagonize the senior executives they're monitoring, Larsen said. The ratio of hold recommendations has climbed to 48 percent this year from 40 percent in 2003, Bloomberg data show.
  While a ``hold'' might be enough to signal to institutional investors that a company is in decline, retail investors follow analyst recommendations literally, according to a study published in the Journal of Financial Economics in August.

And the article then highlights the recommendation made recently on Citigroup..

• `Dead Wrong'
  
  Citigroup, the biggest U.S. bank by assets, was down more than 13 percent for the year when Deutsche Bank AG's Michael Mayo cut it to ``sell'' on Oct. 12. It fell 25 percent before Nov. 1, when Meredith Whitney at CIBC World Markets issued a sell rating that drove the stock down another 8 percent. Neither Mayo nor Whitney, both based in New York, responded to requests for interviews for this story.
  
  Goldman analyst William Tanona waited until Nov. 19 to downgrade Citigroup to ``sell.'' The stock has slipped 2 percent since the note was published. Tanona, based in New York, didn't respond to an interview request.
  
  The reductions by Whitney and Tanona probably were too late, said Harlow of Harlow Capital.
  
  ``I think if you look back in 18 months, these guys are going to be dead wrong,'' he said. ``They're going to have downgraded these stocks at almost the bottom of the cycle.''
  

Click here for the rest of the newsarticle: http://www.bloomberg.com/apps/news?pid=20601109&sid=aaQDUAN2hm5Q&refer=home

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