Post by oldman on Oct 19, 2013 7:30:49 GMT 7
With the recent 90+ percentage plunge in the share prices of Asiasons, Blumont and LionGold, it is only natural for fundamental investors to try to look for bargains in these counters.
For Asiasons Capital, as at 31st Dec 2012, one of its key assets is the $87.66 mil worth of current financial assets. As the company did not state what these financial assets are, one can only guess by taking a look at the shareholding structures in the annual reports of the other related companies. From the annual report of LionGold, it appears that Asiasons Capital has a deemed interest of 82.097 mil of these shares (8.90%) and Asiasons Investment Ltd has a direct interest of 77.5 mil shares (8.41%) as at 25th of June 2013.
It is difficult for an outsider to know how the business is structured and which companies invest directly for the holding company and which company invests on behalf of its fund managers. LionGold's factsheet stated that Asiasons Capital Ltd owns 8.9% ( liongoldcorp.listedcompany.com/misc/LGCFactsheet130906.pdf) though I think it is more likely that Asiasons Capital has a direct stake of 8.41% through Asiasons Investment Ltd.
All one can state with certainty is that the share price of LionGold was $1.095 at 31st Dec 2012 and assuming the current share price of 15.5cts, this means a loss of 94cts per share. If the share price remains at this level by the end of this year, its Net Asset Value as well as its Profit & Loss are likely to be significantly impacted when they announce the full year 2013 results. At current values, the loss can be between $72.8 mil and $77 mil depending on its exact stake in LionGold. Fundamental investors should have done their sums way before then, bearing in mind that the impact will be even greater if the share price falls further.
Another key asset that Asiasons Capital owns is the $37.4 mil of non current, available for sale financial assets which I assume are its stakes in its own investment funds. Information on the investments made by these funds can be found in their website: asiasons.com/portfolios/ . However, it does not state how much money was invested in each of these investments though it stated that one of its funds also invested in LionGold.
One can do a similar exercise with all the other related stocks and one can then understand the power of cross shareholdings when the share prices are climbing. However, one can also then appreciate the negative effect of this when the share prices are falling. The key to realising the true value of companies with cross shareholdings is to realise that cross shareholdings can create relative valuations which are more man-made than real.
The real valuation can only be found when one has identified the one company within the group of related companies that has solid assets and then value this company correctly and apply the relative valuation using this yardstick. Of course, even more ideal is to have more than one company within the group that has real solid assets. On the other hand, if one cannot find even one company with solid assets within the group, it is better to remain a spectator than an investor.
At the end of the day, investors have to do their own homework to know what to invest in and what not to touch.
For Asiasons Capital, as at 31st Dec 2012, one of its key assets is the $87.66 mil worth of current financial assets. As the company did not state what these financial assets are, one can only guess by taking a look at the shareholding structures in the annual reports of the other related companies. From the annual report of LionGold, it appears that Asiasons Capital has a deemed interest of 82.097 mil of these shares (8.90%) and Asiasons Investment Ltd has a direct interest of 77.5 mil shares (8.41%) as at 25th of June 2013.
It is difficult for an outsider to know how the business is structured and which companies invest directly for the holding company and which company invests on behalf of its fund managers. LionGold's factsheet stated that Asiasons Capital Ltd owns 8.9% ( liongoldcorp.listedcompany.com/misc/LGCFactsheet130906.pdf) though I think it is more likely that Asiasons Capital has a direct stake of 8.41% through Asiasons Investment Ltd.
All one can state with certainty is that the share price of LionGold was $1.095 at 31st Dec 2012 and assuming the current share price of 15.5cts, this means a loss of 94cts per share. If the share price remains at this level by the end of this year, its Net Asset Value as well as its Profit & Loss are likely to be significantly impacted when they announce the full year 2013 results. At current values, the loss can be between $72.8 mil and $77 mil depending on its exact stake in LionGold. Fundamental investors should have done their sums way before then, bearing in mind that the impact will be even greater if the share price falls further.
Another key asset that Asiasons Capital owns is the $37.4 mil of non current, available for sale financial assets which I assume are its stakes in its own investment funds. Information on the investments made by these funds can be found in their website: asiasons.com/portfolios/ . However, it does not state how much money was invested in each of these investments though it stated that one of its funds also invested in LionGold.
One can do a similar exercise with all the other related stocks and one can then understand the power of cross shareholdings when the share prices are climbing. However, one can also then appreciate the negative effect of this when the share prices are falling. The key to realising the true value of companies with cross shareholdings is to realise that cross shareholdings can create relative valuations which are more man-made than real.
The real valuation can only be found when one has identified the one company within the group of related companies that has solid assets and then value this company correctly and apply the relative valuation using this yardstick. Of course, even more ideal is to have more than one company within the group that has real solid assets. On the other hand, if one cannot find even one company with solid assets within the group, it is better to remain a spectator than an investor.
At the end of the day, investors have to do their own homework to know what to invest in and what not to touch.