Olam Intl   

OLAM_OLAM

Management is not dumb.  

If they can afford to pay a large dividend, they will.   Determining whether a large dividend can be paid vs. paying down debt is a simple math equation.  

 

 

 

Rosesyrup      ( Date: 06-Nov-2013 23:59) Posted: Nothing much. It is just that Olam has got high debt. Investors would rather olam reduce its debt with cash rather than paying dividends. Especially after MW's attack on olam's debt issue and interest rate is expected to rise. To Olam's management team, payment of small divdends, after the MW incident, is necessary  to secure investors' confident  in the  company's ability to generate cashflow and dispell any rumours about it's liquidity problem. However, if Olam were to continue giving out large dividend rather than  repaying debts:   Reflect badly on management's foresight and capability Olam's claimed that operating cashflow only comes in in 2014. If it is able to pay huge cash dividend now, where did all that cash comes from? Why not reduce debt with that cash or reinvest it? Why is the management is willing to go so far to shore up investor confident? Is it giving invesotrs a false sense of security? It kind of reinforce MW's claim that something fishy is going on. Lets see what happen on AGM. If they announce huge dividend again, I think I have to review my assessment again. beginners      ( Date: 06-Nov-2013 23:33) Posted: Hi Sis, can share with me your view? Thks

 

Nothing much. It is just that Olam has got high debt.

• Investors would rather olam reduce its debt with cash rather than paying dividends. Especially after MW's attack on olam's debt issue and interest rate is expected to rise.
• To Olam's management team, payment of small divdends, after the MW incident, is necessary  to secure investors' confident  in the  company's ability to generate cashflow and dispell any rumours about it's liquidity problem.
• However, if Olam were to continue giving out large dividend rather than  repaying debts:
•   Reflect badly on management's foresight and capability
• Olam's claimed that operating cashflow only comes in in 2014. If it is able to pay huge cash dividend now, where did all that cash comes from? Why not reduce debt with that cash or reinvest it? Why is the management is willing to go so far to shore up investor confident? Is it giving invesotrs a false sense of security? It kind of reinforce MW's claim that something fishy is going on.

Lets see what happen on AGM. If they announce huge dividend again, I think I have to review my assessment again.

beginners      ( Date: 06-Nov-2013 23:33) Posted: Hi Sis, can share with me your view? Thks Rosesyrup      ( Date: 06-Nov-2013 23:01) Posted: You should worry abit  if there is another round of dividend

 

Hi Sis, can share with me your view? Thks

Rosesyrup      ( Date: 06-Nov-2013 23:01) Posted: You should worry abit  if there is another round of dividend. beginners      ( Date: 06-Nov-2013 20:54) Posted: Bro I thought only lah. Wahoo if really got anther round Dvd will be just ah!!:

 

You should worry abit  if there is another round of dividend.

beginners      ( Date: 06-Nov-2013 20:54) Posted: Bro I thought only lah. Wahoo if really got anther round Dvd will be just ah!!:) jj7007      ( Date: 06-Nov-2013 00:41) Posted: Why u think will shit like hell in the first place? Still an underperformer u know, even at 160 last week. Maybe after the 14/11 results, got another round of div lol.

 

Okie sis roses:). Thks man! :)

Rosesyrup      ( Date: 05-Nov-2013 21:33) Posted: Trust no one in this forum. Only look at the reasonableness of  their calls and assess their claims. beginners      ( Date: 05-Nov-2013 20:44) Posted: Strange, I thought it will shit like hell. But seems like someone trying to hold it. Still not bad:

 

Bro I thought only lah. Wahoo if really got anther round Dvd will be just ah!!:)

jj7007      ( Date: 06-Nov-2013 00:41) Posted: Why u think will shit like hell in the first place? Still an underperformer u know, even at 160 last week. Maybe after the 14/11 results, got another round of div lol.

 

I believe you have yet to take into account the following:

1. Short squeeze when shortists are routing panicly. The stage is already set for short squeeze to happen, just need a spark and the fire go wild.
2. Huge funds who have exited Olam after MW's attack. These funds will come back once Olam is off their blacklist.
3. New commodity run in thrid world nations.

With all these factors, $3.20 is not a dream.

nngeeh      ( Date: 06-Nov-2013 12:03) Posted: I'm with you on this (but i thinking more of the TP of 2+). From the recent interview with MW, it seems that they are still holding to the short position, but i think they will be looking for the right time to buy back without the whole Market joining in (which will push it much higher due to short squeeze). Based on the warrant pricing that didn't drop below 0.20, and the fact that  all the  major shareholders didn't offload the warrant (based on the warrant transaction volume for the past 1 year), i believe most of the shareholders are expecting it to go above $2. It's almost 1 year since the MW attack, and i think everyone is just waiting for the right moment to go in, maybe the moment that MW start buying back  (my view). Rosesyrup      ( Date: 06-Nov-2013 11:37) Posted: Who do you think drove the share to the  current price? And that particular entity shall drive it back to 3.20 when the time is ripe.   My new tagline: Demostration without explanatio

 

I'm with you on this (but i thinking more of the TP of 2+). From the recent interview with MW, it seems that they are still holding to the short position, but i think they will be looking for the right time to buy back without the whole Market joining in (which will push it much higher due to short squeeze).

Based on the warrant pricing that didn't drop below 0.20, and the fact that  all the  major shareholders didn't offload the warrant (based on the warrant transaction volume for the past 1 year), i believe most of the shareholders are expecting it to go above $2. It's almost 1 year since the MW attack, and i think everyone is just waiting for the right moment to go in, maybe the moment that MW start buying back  (my view).

Rosesyrup      ( Date: 06-Nov-2013 11:37) Posted: Who do you think drove the share to the  current price? And that particular entity shall drive it back to 3.20 when the time is ripe.   My new tagline: Demostration without explanation Obfuscate      ( Date: 06-Nov-2013 09:57) Posted: Of course it is achievable once the company changes its funding policy from predominantly debt to predominantly equity.  None of  the companies that did well in the last five years  loaded up on debt like the way Olam and  all the poor performing companies  did. Let's put things into perspective: Since Muddy Waters' infamous piece Temasek has increased its stake in Olam from 16 pct to 24 pct today and still Olam's share price is 25 pct lower. So this beg's the question: who will be the big buyer to drive the share price up to $3.20

 

The reality is that Temasek does back Olam.   It is something to factor in when investing long or short in Olam.

nngeeh      ( Date: 06-Nov-2013 10:30) Posted: I agreed that without Temasek, Olam will definitely face difficulty in securing credit to service the loan when they were attached by Muddy Water 1 year back. As their cash was not sufficient, they needs to rely on the line of credit from financial institution. During the attack, the institution might not be able to extend that credit to Olam. However, we need to factor Temasek's involvement in assessing our investment risk for Olam. Even MW acknowledged that they overlook the political aspect of Temasek (which i believe they will not dare to short Olam back then). With Temasek in the picture (which they now own 25%), it'll definitely offer a lot of stability: It'll prevent it from being shorted (Similarly, i don't think anyone dare to short China Minzhong if there strong financial backing). As Temasek owns more than 25% (if i remember correctly), in terms of national pride and face value, Temasek will be fully supporting it from financial perspective. If there is a credit issue, Temasek will definitely extend their help like what they have done in the rights subscription 1 year back). Thirdly, it is still profitable, so, as only as Olam can achieve cash flow, with Temasek in the backdrop, i think there is more upsize than downsize unless Olam is reporting huge losses. Obfuscate      ( Date: 06-Nov-2013 09:57) Posted: Of course it is achievable once the company changes its funding policy from predominantly debt to predominantly equity.  None of  the companies that did well in the last five years  loaded up on debt like the way Olam and  all the poor performing companies  did. Let's put things into perspective: Since Muddy Waters' infamous piece Temasek has increased its stake in Olam from 16 pct to 24 pct today and still Olam's share price is 25 pct lower. So this beg's the question: who will be the big buyer to drive the share price up to $3.20

 

Who do you think drove the share to the  current price? And that particular entity shall drive it back to 3.20 when the time is ripe.

 

My new tagline:

Demostration without explanation

Obfuscate      ( Date: 06-Nov-2013 09:57) Posted: Of course it is achievable once the company changes its funding policy from predominantly debt to predominantly equity.  None of  the companies that did well in the last five years  loaded up on debt like the way Olam and  all the poor performing companies  did. Let's put things into perspective: Since Muddy Waters' infamous piece Temasek has increased its stake in Olam from 16 pct to 24 pct today and still Olam's share price is 25 pct lower. So this beg's the question: who will be the big buyer to drive the share price up to $3.20? Rosesyrup      ( Date: 06-Nov-2013 01:30) Posted: Unlike pennies, blue chip tend to go slow but much more predictable. Currently most blue chip fairly valued already except for a few and- we should pause and thanks MW here- is one of those few. I tell you $3.20 highy achievable, you think I  must be either  joking or trying to lure people in. But nvm you don't buy in first, we shall see about that. I have been arguing with shortists on this forum for months already. Tired and burnt out, so now demostration without explanation.

 

I agreed that without Temasek, Olam will definitely face difficulty in securing credit to service the loan when they were attached by Muddy Water 1 year back. As their cash was not sufficient, they needs to rely on the line of credit from financial institution. During the attack, the institution might not be able to extend that credit to Olam.

However, we need to factor Temasek's involvement in assessing our investment risk for Olam. Even MW acknowledged that they overlook the political aspect of Temasek (which i believe they will not dare to short Olam back then). With Temasek in the picture (which they now own 25%), it'll definitely offer a lot of stability:

It'll prevent it from being shorted (Similarly, i don't think anyone dare to short China Minzhong if there strong financial backing). As Temasek owns more than 25% (if i remember correctly), in terms of national pride and face value, Temasek will be fully supporting it from financial perspective. If there is a credit issue, Temasek will definitely extend their help like what they have done in the rights subscription 1 year back). Thirdly, it is still profitable, so, as only as Olam can achieve cash flow, with Temasek in the backdrop, i think there is more upsize than downsize unless Olam is reporting huge losses.

Obfuscate      ( Date: 06-Nov-2013 09:57) Posted: Of course it is achievable once the company changes its funding policy from predominantly debt to predominantly equity.  None of  the companies that did well in the last five years  loaded up on debt like the way Olam and  all the poor performing companies  did. Let's put things into perspective: Since Muddy Waters' infamous piece Temasek has increased its stake in Olam from 16 pct to 24 pct today and still Olam's share price is 25 pct lower. So this beg's the question: who will be the big buyer to drive the share price up to $3.20? Rosesyrup      ( Date: 06-Nov-2013 01:30) Posted: Unlike pennies, blue chip tend to go slow but much more predictable. Currently most blue chip fairly valued already except for a few and- we should pause and thanks MW here- is one of those few. I tell you $3.20 highy achievable, you think I  must be either  joking or trying to lure people in. But nvm you don't buy in first, we shall see about that. I have been arguing with shortists on this forum for months already. Tired and burnt out, so now demostration without explanation.

 

One thing that puzzle me is that Olam's directors  brought the Olam Warrant on Sep 23 and 27. The amount is not hugely,  but will you invest USD 124K on  a single purchase if you are not expecting it  to go up?

In the first 2 years, you can't exercise the Warrant (Europe's style), but on the subsequent 3 years, you can exercise the warrant at any time (US style). So, there is normally a premium on the first 2 years, but  on the third year, it'll normally  follow the  price of the mother share quite closely.  In another word, the warrant price will be adjusted to follow the mother share's price in  just 12 months.    So, if the mother share price remains or drops below $1.59, the warrant price can go down very badly from it's current price of USD$0.25.

I have noticed that not only the price of warrant didn't go down (the lowest is 0.193), the price has been going up lately even though the mother price stays at it's current value of 1.50. The bond/warrant rights were oversubscribed by 10%, yet, the volume of warrant transaction was very low even though there is a risk that it the warrant price will go down if the mother share didn't go beyond 1.59 in the next 12 months  (or if based on warrant price of 0.25, the mother share needs to be at least 1.90). I recalled that even Jim Roger participated in the rights exercise.

Fundamental aside, the share price is sometimes manipulated by BB to achieve huge gain. Could we be seeing some movement in the next 12 months based on the warrant price behaviour? If you look at Metech, there was a hugh transcation of Warrant purchase before the mother share went up from 0.18 to 3 cents.

 

Of course it is achievable once the company changes its funding policy from predominantly debt to predominantly equity.  None of  the companies that did well in the last five years  loaded up on debt like the way Olam and  all the poor performing companies  did.

Let's put things into perspective: Since Muddy Waters' infamous piece Temasek has increased its stake in Olam from 16 pct to 24 pct today and still Olam's share price is 25 pct lower. So this beg's the question: who will be the big buyer to drive the share price up to $3.20?

Rosesyrup      ( Date: 06-Nov-2013 01:30) Posted: Unlike pennies, blue chip tend to go slow but much more predictable. Currently most blue chip fairly valued already except for a few and- we should pause and thanks MW here- is one of those few. I tell you $3.20 highy achievable, you think I  must be either  joking or trying to lure people in. But nvm you don't buy in first, we shall see about that. I have been arguing with shortists on this forum for months already. Tired and burnt out, so now demostration without explanation.

 

On hindsight yes you may say gearing isn't high, which was their justification.

But that was at a time of crisis, money markets dry up, and they were holding high amounts of debts and many of their stocks were perishables. It was a cause of concern then, and the argument was already long present since then.

My point is this debt level thing is nothing new 

Obfuscate      ( Date: 05-Nov-2013 12:59) Posted: Big difference between debt and leverage. Here are the debt nos: Jun 08 total debt $2.98 bn, mkt cap $4.16 bn. A year earlier Jun 07 total debt $1.92 bn, mkt cap $4.79 bn. Olam by any account was NOT highly geared 5-6 years ago.     jj7007      ( Date: 04-Nov-2013 09:37) Posted: Olam high debt? this is very old news lah, way before the stupid angmorican announced he was shorting it. It has always been very high geared since 5 yrs ago, and paying very high interested on some syndicate loans but hey they are making $. At the price, they are actually still lagging the market.  Me sold at 1.595 and started buying back slowly from 1.51 and below. Was a little excited and went in a little early. Having said that, i'm no big time punter or contra player, so price dips don't kill me. Positioned for a nice year end rally

 

Unlike pennies, blue chip tend to go slow but much more predictable. Currently most blue chip fairly valued already except for a few and- we should pause and thanks MW here- is one of those few. I tell you $3.20 highy achievable, you think I  must be either  joking or trying to lure people in. But nvm you don't buy in first, we shall see about that.

I have been arguing with shortists on this forum for months already. Tired and burnt out, so now demostration without explanation.

 

Why u think will shit like hell in the first place? Still an underperformer u know, even at 160 last week.

Maybe after the 14/11 results, got another round of div lol. 

 

Trust no one in this forum. Only look at the reasonableness of  their calls and assess their claims.

beginners      ( Date: 05-Nov-2013 20:44) Posted: Strange, I thought it will shit like hell. But seems like someone trying to hold it. Still not bad:) jj7007      ( Date: 05-Nov-2013 19:36) Posted: AGREED!! Lightly vested after selling most at 1.59

 

Strange, I thought it will shit like hell. But seems like someone trying to hold it. Still not bad:)

jj7007      ( Date: 05-Nov-2013 19:36) Posted: AGREED!! Lightly vested after selling most at 1.595 Rosesyrup      ( Date: 05-Nov-2013 15:45) Posted: Give 4 cents dividend only fell by half a cent. Not bad.

 

AGREED!!

Lightly vested after selling most at 1.595

Rosesyrup      ( Date: 05-Nov-2013 15:45) Posted: Give 4 cents dividend only fell by half a cent. Not bad.

 

Give 4 cents dividend only fell by half a cent. Not bad.