Blumont

oldman,

Not many people (including the borrowers) know the dire consequences of Toxic Convertible Bond; some mistaken it as conventional Convertible Bond.

Toxic Convertible Bond page 12, para 48

Good comments from Kevin Scully: www.nracapital.com/Research/KevinBlog/757

His previous comments on Blumont is found here: www.nracapital.com/research/kevinblog/751

However, I cannot find the answer to my question.... what investments did Blumont do in between 25th Sept and 12th Nov whence its cost of investments went up from $27.1 mil to $81.17 mil.

I had a quick look at all the Aussie stocks that they invested in and these did not fall that significantly to account for the collapse of the market value of its investments from $118.69 mil to $21.58 mil. 

Hi oldman,

For fundamental investors, they will take a quick glance at the financials of Blumont and never take a second look anymore. However, for chartists, Blumont was a great opportunity. The fundamental side of me made me throw Blumont into the rubbish almost instantly in late 2012. However, the chartist side of me tells me Blumont was the greatest wasted opportunity as a momentum tikam play since I started investing. 

Blumont caught my attention based on its price-volume action in the last quarter of 2012. It had strong momentum. On hindsight, what is so special about its uptrend from Oct 2012 to Oct2013 before the fallout was that there was hardly any pullback. In other words, trend followers who jumped in during late 2012 will hardly be forced to jump out of the trend because the uptrend was so steady and strong. Throughout this period, the only time when momentum players would be shaken out is 17Dec2012 when it dropped 9% but it rebounded 16% the next day. For the rest of the time, trend followers who place a trailing stop(even a tight one) will not be stopped out until 3Oct13 which is almost the top.

As usual, several retail investors have blamed the BBs (Big boys) syndicates for manipulating the Blumont share price and made big money at their expense. However, from Blumont's price-volume action, I think the syndicates lost lots of money this time. There were no signs of major dumping by the syndicates from Oct 2012 to Oct2013. If there were dumping or offloading to the retail investors, we should be able to see some price pullback during this period. When the syndicates started the real dumping in early Oct 2013, they were caught by the surprise action of SGX who halted Blumont in the first hour of trading on 3Oct and made it a designated stock. The price collapsed more than 80% when it was allowed to trade on 7Oct13. It can be argued that because of SGX designation action, the syndicates did not have the opportunity to dump their overpriced holdings to innocent retail investors, thereby saving some retail investors who might have bought on the decline as they regretted missing out the early action. The best form of punishment for the price manipulators is to make them lose money. The real winners may be the small-time tikam investors who assumed a tiny liquid position and was able to get out in time when the price decline started. Not me of course.
 

Since tikam stocks have poorer fundamentals, only small bets can be made with them for proper risk management. So, one can end up monitoring too many tikam stocks in the portfolio. I guess tikam stocks are no longer worth your time as a few big fundamental bets takes up lesser monitoring time (maybe even lesser stress) than several small tikam bets. Still, a diversified portfolio of tikam stocks has its use. They keep one in tune with Mr Market's mood swings better than fundamental stocks which move more in tune to specific companies' conditions.

I actually pity the traders who played this counter. They can have all their cut loss strategies in place but when the share price falls so rapidly, I don't think anyone can respond so quickly unless they have placed prior stop loss positions into their broker's system. Perhaps this is one of the few circumstances where a trader really has no control over his risks. 

I have zero interest in this stock or any of the other related stocks. They are just of academic interest to me. 

LionGold's Independent Director Lynne Ng Su Ling is also an independent director of Blumont.

What prompted independent director to sell, just before the dramatic sell-off? — 8 Oct 2013

Blumont non-executive independent director quits — 18 Nov 2013