Gamuda stock plunge indicator for volative ahead?

Posted On 26/02/2008

Filed under Food for thoughts

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Right before 1996 Asia economy crisis, when Asia stock market went frenzy, few KLSE listed properties company owner sold their stock in exchange of cash. Many fund managers curious about their move. To them, those properties stock are “dirt cheap” compare to other counter in KLSE. some fund managers even make harsh conclusion of “old China businessman that over prudent”.

Because during peak of KLSE frenzy in 1996-1997, a listed biscuit company, reach a crazy level RM200 per shares. This is before KLSE shrink the lot unit from 1,000 shares to 100 shares. Theoretically, that means selling 1 unit of such stock will land RM200,000 into your pocket. Alas, it is impossible to do it, because the stock circulation are so low, it is easy to own the stock but impossible to sell the stock.

The rest are history after 1997 Asian economy crisis. The “stupid” owner that cash out the company has the last laugh.

Recently , Gamuda Managing Director, Lin Yun Ling, has cash out RM 350Millions and reduce his stake on the company from 5.23% to 1.73%. Due to the subprime loan crisis, many offshore fund manager has take his move as indicator for trouble ahead.

As many learn that, company directory are always the first to reduce their stake in the company before a stormy announcement are made. If one failed to learn the lesson from Enron and Worldcomm, they should blame no one but themselves.

Despite Malaysia “good outlook” on properties development and market sentiment of various “economy corridor” project, Lin Yun Ling seems peculiar but obvious.

As Warren Buffet always say he is waiting for the elephant (A golden opportunities to own a good return company) , are Lin Yun Ling saving bullet for the elephant?

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