THE late disclosures to Bursa Malaysia by savvy investor and philanthropist Koon Yew Yin on the disposal of his shares are now raising questions.
Based on Bursa’s listing requirements, a substantial shareholder needs to give notice on their acquisitions or disposals two weeks from the day they buy or sell the shares. In Koon’s case, he disclosed weeks later. the disposal of his shares in VS Industry Bhd and Latitude Tree Bhd.
Being a substantial shareholder in both companies, his late announcements on the disposals have put him in the spotlight among his followers and the investing community.
The most recent disposal was in relation to VS Industry.
On May 4, the company announced to Bursa that Koon was no longer a substantial shareholder after having disposed in the market a staggering 44.08 million shares between March 18 and April 11.
Prior to the announcement, Koon was the third largest shareholder of VS Industry with an 8.8% stake.
He sold his shares from March 18 onwards and the announcement was made on May 4, which is some seven weeks later.
A second incident involved Koon’s substantial shareholding in Latitude Tree where he was also a substantial shareholder in this integrated household furniture manufacturer company with a 5.23% stake or 5.08 million shares prior to his disposal of shares last November.
Koon started acquiring Latitude shares in October 2014 and emerged as a major shareholder with a 5.01% stake.
While he ceased to be a substantial shareholder in end-November 2015, he only gave notice of his disposals in January, two months later. Based on filings on Jan 11 this year, he acquired, disposed and transferred Latitude shares between Now 16 to 23.
Coincidentally, a day after his announcement, the shares of Latitude Tree started to fall. From its price of RM8.05 on Jan 12, Latitude Tree has been on a downtrend to its current price of RM5.60. On a year to date basis, it is down 24.22%.
To be fair, furniture stocks such as Latitude Tree also came under selling pressure during that period due to the ringgit appreciating against the US dollar.
The same can be said about VS Industry.
The stock has been under tremendous selling pressure over the last few months.
Koon first emerged as a substantial shareholder of VS Industry on June 15, 2015 with a 9.93% stake. He should be sitting on a handsome paper profit considering that VS Industtry has appreciated over 500% over the last eighteen months.
The stock is now down 21.66% on a year to date basis at its current price of RM1.23.
The VS Industry warrant, which was listed on Jan 13 and opened at 30.5 sen, touched a high of 45 sen on Jan 19, and has since been on a steady downward path. The stock closed 26.5 sen yesterday.
VS Industry’s fall over the last few weeks has been even more peculiar, particularly since the company was seeing fund managers and analysts for investment briefings.
There were in fact a few positive reports and internal notes on the company.
UOB Kay Hian for one, gave VS Industry a target price of RM1.60 on a fully diluted basis, on the back of its new customer growth.
Koon is also a substantial shareholder in two other companies – Can-One Bhd and Lii Hen Industries Bhd with a 8.3% and 11% stake respectively.
It will be interesting to see the timeliness of his disclosure for these two companies.
Koon could not be contacted for comments.
Disclosure under scrutiny
Koon, who founded IJM Corp, Gamuda Berhad and Mudajaya Group Bhd, is an 82-year old retired civil engineer who made his money through shrewd investments in stocks.
Late last year he was under the spotlight when he made a RM50mil donation to the Penang state government to build hostels for poor tertiary students.
However among investors, Koon is seen as more articulate who understands the market well. He is constantly invited as a guest speaker for investment talks, while his stock picks are followed closely by most in the investing community.
A retailer who has been following Koon’s writings on his blog said that the savvy investor would have been in a difficult position when it comes to disclosures.
“As a substantial shareholder, it is difficult for him to sell his shares. When Koon discloses to Bursa that he is selling, it could evoke some selling among his followers and cause a further slide in the stock,” says the retail investor.
However, the fact that he does not disclose his disposal of shares in a timely manner also gives rise to issues such as confidence and trust among his followers.
“The question is when he writes about any particular stock that he has substantial shareholding, his followers would not know whether he is selling the counter,” says the retail investor.
Perhaps realising the backlash on his actions, Koon released a note on his blog on Thursday, explaining his actions and emphasising that he did not mislead his followers.
“As you know, I have been posting several articles on VS Industry to encourage investors to buy its shares which went up from 30 sen in July 2015 to RM1.65 in January 2016, a phenomenal gain of 550% in about 18 months.
“The company’s annual report showed that I was a substantial shareholder.
“I am sure many readers would have bought and made huge profit.
“I have started selling my holdings about six months ago and now I am no longer a substantial shareholder.
“Regular readers would know that I have not posted any articles on VS since I started selling.
“I cannot be dishonest to encourage readers to buy when I am selling.
“I wish to inform you that Mr Ooi Teik Bee who is managing some of my funds, has bought one million VS shares at RM1.21 and RM1.22 per shares for me and I have also bought about one million shares at RM1.22 per share yesterday.
“Please be informed that we will be accumulating VS shares slowly,” he said.
“My intention of writing this article is to teach people how to make money from the stock market.”
The remainder of the article are reasons on why Koon is buying into VS again.
On April 30, which was before Koon made the disclosure that he sold the 44 million VS shares, he wrote that it was a good buying opportunity to buy VS Industry.
“Since I started buying 18 months ago, I have been buying continuously with margin finance.
“As the price went up, I could borrow more money to buy.
“As a result, I am a substantial shareholder.
“Eventually VS went up more than 500% within 18 months,”
“Unfortunately it dropped too rapidly in the last 3 months due to the strengthening of our ringgit.
“Investors always overreact on good or bad news.
“In this case, they think VS will not make profit which cannot be true.
“You can see from the chart that the price has dropped 25% in the last three months which is unreasonable.
“ . . . I think it is a good buying opportunity.”
He posted again on May 4, Koon saying: “I am obliged to tell you that I have sold a large amount of my VS shares and now I am buying back.”
It will be interesting to see how Koon makes disclosures for Can-One and Lii Hen when he decides to reduce his interest in both companies.