Friday, June 20, 2014

Super Group - Very Peculiar

Super Group's price increased from the 52 weeks low of $1.34 on 18 June 2014 to close at $1.50 on 20 June 2014 on the back of higher  than average volume. This represents a price increase of about 11.9% within 2 days. (19 and 20 June). This large increase may be attributed to short sellers closing their positions or some buying from a big fish.

A look at the short selling volume these two days ( 19 and 20 June) is however utterly surprising to me.
20 June - 595,000 shorted
19 June - 593,000 shorted
18 June - 234,000 shorted
17 June - 193,000 shorted
16 June - 131,000 shorted
13 June - 120,000 shorted
12 June -120,000 shorted
The volume of Super Group shares shorted is increased more than two folds BUT instead of the the price decreasing, the price shoots up instead. Now this is peculiar. 

1)How accurate are these short selling figures? Short sellers are to declare that they short sell when they input the order. Anyone who declares that they short sell but doesn't is also guilty of wrong doing, but how does SGX enforce these? I wonder.

2) Assuming these figures are accurate, does this mean that the price will still continue to shoot up because those short sellers have to scramble to cover their positions(a.k.a buy back) as the tide seems to be going against them? 

3) Super Group has a share buy back mandate. Is the price increase attributed to company buy back? Or some existing substantial shareholders are buying back?We should know soon as they have 2 days to announce.

Now all this is very interesting and the worst thing for me is i have not accumulated enough. Anyway, did you know that Super Group actually sponsors a popular basketball group in the Philippines ( through the JV with San Miguel Purefoods) called San Mig Super Coffee Mixers.
It was a good feeling that during my due diligence in the supermarkets of Philippines that i saw people buying this. 

Wednesday, May 28, 2014

The Interesting fact behind the shorting of Super Group

In order to short a share in Singapore, one has to borrow from SGX CDP or their brokers first, before selling the shares. This is called 'covered' short. He will then have to pay a borrowing fee ranging from a low of about 1% pa to as high as 10% pa on the average daily market value of the share. This borrowing fee is split between the owner of the share and the broker or CDP.(Due to the lack of transparency on the percentage split of the fees, i really do think i have been short changed by my broker but im digressing. Will complain another day.)

Another way is to do a 'naked' short. What this means is you do not borrow a share, but just sell the shares in the open market. This is stupid as you MUST buy the shares back within the same day or be slapped with a fine of at least $1000 or 5% of the trade, whichever is higher. 

Super Group went ex-bonus on 26 may 2014. Let us look at the volume of shares shorted (vertical) VS dates (horizontal). Do note that volumes on 26 May and 27 May has been adjusted to take into account the XB. As can be seen from the trend, volume of shares shorted is on the decline. 
So how much more can these "Shortists" continue to sell the shares? I do not know for certain.

However, if i  were to take into account the available public information, it seems they have not much fire power left. Looking at the available lending pool of CDP for Super, there is 0 Super Group shares left to be borrowed.

Looking at the available lending pool of shares from POEMs below, there are only 9000 shares available for borrowing. There are many other brokers out there who can lend shares and i do not know their available pool. So if CDP and POEMS is any indication, the fervent short selling could come to an end and the buy back process to return back the borrowed shares could be underway now. This is probably reflected by the increase in share price (albeit small) and a noticeable large buy queue at the bid price.
It's interesting to see how the share price play out the next few days. Buyers beware as there are large sharks around. Your loss is their gain!

Tuesday, May 27, 2014

Total Debt Servicing Ratio (TDSR) for Property Loans - a very pleasant surprise

I haven't been looking at properties for some time but i had a pleasant surprise when a friend told me that I could actually use my equity portfolio to 'increase' my gross monthly income so that i can borrow more for a property loan based on Total Debt Servicing Ratio (TDSR)

Examples of some eligible financial assets to 'increase' ones gross monthly income
Gold, unit trusts, structured deposits, stocks, debentures

If i pledge these financial assets to the bank, i could use 70% of its value to 'increase' my gross monthly income. However, if these are not pledged, i could only use 30% of its value.

Gross monthly income from eligible financial assets = (70% or 30% X eligible financial assets) divided by 48

Say for example, SGdividends happens to have $1 million worth of eligible financial assets.

Pledge to the bank
70% X $1 million = $700,000
'Increased' gross monthly income = $700,000/48 = $14,583.33

Do not pledge to the bank
30% X $1 million = $300,000
'Increased' gross monthly income = $300,000/48 = $6,250

Now, that's a lot of 'additional' gross monthly income. However, this is what the MAS guideline (MAS notice 645) allows and i have not verified how much more stringent the banks will be. 

Saturday, May 17, 2014

Super Group - No SGX announcement over the weekend

No alerts from my mobile phone app about any SGX announcement about Super Group. Went to SGX website to confirm, nope, no new announcements. Now this is a good thing, as usually,i believe a company would post 'earth shattering' news after friday closing or during the weekends so that the market can take the time to absorb the news and reduce their 'emo' actions. But this is just an "act smart" theory.
Most importantly, the ultra indiscriminate selling occurred about  2-3 business days ago, and based on the Securities and Futures Act, Substantial Shareholders or Directors are required to disclose publicly any change in shareholding within 2 business days.
These further strengthens the hypothesis that the selling was not done by Substantial Shareholders or Directors but instead  by short sellers or retail investors who probably panicked after buying at a Super (pun intended) high price.(52 weeks high was $5.05)
Substantial Share holders: (Annual Report 2013)
Yeo Hiap Seng,Far East Organisation (11.68%)
The Capital Group of Companies (9.05%)
Tee Yih Jia Food Manufacturing ( Sam Goi a.k.a Popiah King related)(4.72%)

Anyway, was at Bedok Point on 17 May 2014 , 9pm,Saturday and Owl Cafe does seem to have a good packed crowd at night. This is much much better than Pastamania, Kungfu Paradise,Ajisen Ramen but comparable to Starbucks Coffee.

It is also a good thing that NTUC(Bedok Mall) places Owl and Super Group brands of coffee at the best location, eye level (2nd,3rd,4th) row. Old Town is placed right at the bottom, so is Ah Huat. Nescafe is placed at the top stack, not exactly at eyelevel. What i can infer is that Super Group has a relatively high bargaining power with Supermarkets(NTUC at least) compared with the others coffee brands
Owl Cafe

Ajisen Ramen


Kungfu Paradise


NTUC( Notice 3-4 row all Super Group)
 NTUC(Notice 2-4 row all Owl Coffee)

Friday, May 16, 2014

Old Town Berhad and Super Group - different state of affairs

Super Group dropped another 3-4% on 15 May 2015. So i shout with GLEE, YES! Having bought at $2.95, why am i happy when it closed at $2.84 the next day? Shouldn't i be a bit affected  if not emotional? Actually, i exaggerate and i am not happy but i am definitely not emotional and i stand ready to buy. 
Firstly, looking at the number of short sellers,
15 May 2015 - Volume of  transacted shorts 630,685
14 May 2015 - Volume of transacted shorts 421,000
12 May 2015 - Volume of transacted shorts 90,000
09 May 2015 - Volume of transacted shorts 70,000
08 May 2015 - Volume of transacted shorts 173,000
It is obvious that this price plunge is due to people playing the market and not due to the long term fundamentals of the company.

Secondly, my partner- in -crime alerted me to a somewhat opposite state of affairs across the Straits of Malacca in our friendly neighbourhood of Malaysia, Truly Asia. Old Town Berhad's shares has been acquired by Artisan International Small Cap Fund ,Matthew International Capital Management and Mawer Investment management pretty aggressively since March 2014. And Old Town Berhad is a direct competitor of Super Group especially after Super Group ventured into the cafe business under the brand of Owl Cafe (link.).( The other one is VizBranz but it has been taken private some years ago and it doesn't have cafes).
Old Town doesn't have better ratios , more of comparable ratios to Super, if not lousier than Super Group slightly.(Bloomberg Mobile) So, why are funds buying into Old Town? A logical answers would be there must be some value in this FMCG space.
Super Group
P/E - 16.55
P/B - 3.29
P/S - 2.88
Div yield-3.17%

Old Town Berhad
P/E - 19.29
Div yield - 1.44%

I am taking a risk, yes. Let's wait to see if there is any announcement over the weekend of any news.Not too long ago (Jan 2014), Bloomberg ran an article of possible acquisition of Super by Suntory or Kirin. , with many analysts reports placing target prices of $4-6. Now, they are reversing their target prices, after the FACT. Really lame. Maria, get me a cup of Nanyang White Coffee. You give me more value than these analysts!