BT: Weekly sales hit highest levels since 2004 (22 Jan 2007)

It is in times like this that one appreciates the truth in timeless rules of investing such as 'let your winners run'. Steve Sjuggerud, editor of investment website Investment U, has listed 12 such timeless rules. Among them are: 'When a stock hits a new high, it's not time to sell... something is going right', 'A rising tide raises all ships, and vice versa. So assess the tide, not the ships'.

For the latter, he elaborates: 'Fighting the prevailing 'trend' is generally a recipe for disaster.' Which is why, in the current boiling market, punters are constantly scratching their head for the next theme.

But in the midst of the current euphoria, investors should also bear in mind other timeless rules. And they are: 'Bear markets begin in good times. Bull markets begin in bad times', and 'Buy value, and sell hysteria'.

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Business Times - 22 Jan 2007

INSIDE MARKETS
Weekly sales hit highest levels since 2004

By ROBERT HALILI

SELLING was strong for the third straight week as corporate shareholders took advantage of strong gains in their companies' share prices. The sales activity last week was particularly intense as sellers outnumbered buyers in three of the four trading categories, with 32 shareholders of 22 companies that recorded 47 disposals worth $36.8 million, versus 15 insiders of 14 firms that posted 28 acquisitions worth $66.7 million.

The trade figures last week are alarming as buyers historically have outnumbered sellers by two to one, based on filings on the Singapore Exchange since 1994. To show how heavy the selling was last week, the numbers of disposals, companies, and shareholders were the highest weekly totals since 2004.

With the strong sales in the past three weeks, the sentiment so far this month has been negative as the average buy/sell ratio for the four trade categories is 1.0, which is sharply lower than the historical average of 2.0. The ratio so far in January is based on 37 companies, 79 trades, 40 shareholders, and $132 million on the buying side; and 36 firms, 94 transactions, 54 shareholders, and $87 million on the selling side.

The number of trades and shareholders on the sales side is already higher than the previous month's 79 disposals and 51 shareholders, and there are still 11 days of filings that have yet to be reported this month.

The selling was spread among directors and fund managers last week. Among the top sellers was the chairman of Hersing Corp as he sold the shares that he bought from 2005 to 2006 for a hefty gain. On the funds side, Value Partners Ltd lowered its stake in Asia Dekor Holdings to below 5 per cent last week. One institutional shareholder that may be lowering its interest to below 5 per cent in the near term is FMR Corp, as the fund manager resumed selling shares of Advanced Holdings at prices that were sharply lower than its sale prices last year.

Although sellers were dominant last week, there were some significant acquisitions on the local market. One stock investors should watch out for is ArianeCorp, as DB Zwirn Special Opportunities Fund LP acquired more shares at higher than its previous purchase price.


Hersing Corp

Chairman and major shareholder Harry Chua Wah Eng took profits on the 6.7 million shares that he bought of real estate-related services provider Hersing Corp from January 2005 to October 2006 at an average of 15.9 cents each. Mr Chua was a very active buyer during that period with a total of 39 acquisitions.

He sold 6 million shares last Thursday at 31 cents each, which reduced his direct holdings by 5 per cent - to 117.8 million shares or 60.7 per cent of the issued capital. The chairman's gain from the sale was an impressive 95 per cent. Hersing shares have performed strongly since July, rising from 13.5 cents.

The fact that the chairman unloaded nearly all of the shares that he had bought in the past two years indicates strongly that the stock is at fair value at 31 cents each. Investors should note that disposals by the chairman are rare, as he has recorded only one other sale in June 1999 when the share price was at 72 cents. More sales by the chairman could be on the way as the counter closed higher from his sale price to 35.5 cents on Friday.


Asia Dekor Holdings

Value Partners Ltd (VPL) ceased to be a substantial shareholder of mainland laminated floor producer and distributor Asia Dekor Holdings last Monday, following the sale of 9.3 million shares at an estimated price of 15.5 cents each. The trade reduced its deemed holdings by 18 per cent - to 43.9 million shares or 4.9 per cent of the issued capital. The group also sold 252,000 shares on Dec 4, 2006, at around the same price.

Prior to the disposals, VPL acquired 7.4 million shares on June 9, 2006, at an estimated price of 12.5 cents each; and at an initial filing on May 15, 2006, of 2.5 million shares at 17.5 cents each. That initial filing in May 2006 raised its interest to 5.3 per cent.

Asia Dekor announced its interim results in November 2006 with net profit up by 1.6 per cent to 47.25 million yuan (S$9.34 million) for the six months to Sept 30, 2006. The stock closed at 15.5 cents on Friday.

Advanced Holdings

FMR Corp has resumed selling shares of process equipment designer and provider Advanced Holdings at prices that were sharply lower than its sale prices in July last year. The group reported disposal-related filings last Monday and Wednesday totalling 3.6 million shares, which reduced its deemed stake by 19 per cent - to 14.6 million shares or 5.6 per cent of the issued capital. The stock during that period traded at around 29 cents each. FMR previously reported a disposal-related filing in July 2006 of 4.6 million shares at an estimated price of 53 cents each.

Overall, the fund manager's stake has been down by 8.9 million shares or 38 per cent since May 2006. The group only needs to sell 1.7 million shares to lower its stake to below 5 per cent. Prior to the disposals since July 2006, the group acquired 11.2 million shares in May 2006 at estimated prices of 68 cents to 62 cents each. Those trades increased its interest from 4.8 per cent to 9.1 per cent.

Investors should note that Wasatch Advisors Inc also sold shares in November 2006 at below its purchase prices. The group unloaded 790,000 shares on Nov 13 at an estimated price of 33 cents each, which reduced its deemed holdings by 5 per cent - to 14.8 million shares or 5.7 per cent. The group previously acquired 3.1 million shares from Dec 13, 2005, to July 21, 2006, at estimated prices of 89 cents to 52 cents each.

Wasatch became a substantial shareholder on Dec 13, 2005, following the purchase of 340,000 shares at 38 cents each, which raised its interest to 5.1 per cent. The group announced in August 2006 a 43.1 per cent drop in net profit to $1.16 million for the six months to June 30, 2006. The stock closed at 29.5 cents on Friday.

ArianeCorp

DB Zwirn Special Opportunities Fund LP has acquired more shares of ultra high-capacity data networks provider ArianeCorp at higher than its initial filing price in December 2006 of nine cents each. The group bought 19 million shares last Thursday at an estimated price of 12 cents each, which increased its direct stake by 68 per cent - to 47 million shares or 8.5 per cent of the issued capital. The increase in share price was recent, as the counter rose from 8.5 cents on Jan 11 to 12 cents last Thursday.

Prior to that purchase, the fund reported an initial filing on Dec 20, 2006, of 11 million shares at nine cents each, which raised its interest by 65 per cent to 5.06 per cent. The purchases by DB Zwirn Special Opportunities Fund were the first corporate shareholder trades in ArianeCorp since December 2004, when major shareholder Kea Kah Kim acquired 1.05 million shares at 13.5 cents each. The stock closed at 12 cents on Friday.

The writer is managing director, Asia Insider Limited

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