The Cayman Connection
June 2, 2011 at 8:54 am Leave a comment Edit
Subject: Metro Pacific Investments Corp – MPI
Pic1
On March 8, 2011 I mentioned caymans presence in the sell side. Following broker’s activity has
been a passion of mine since the 90′s. Caymans are both friend and a foe. Once identified, you
need to be on their side. One fierce battle ive seen was on AGI which i posted some time ago.
Pic2 Here traders knows exactly who i am referring to.
Pic3 Here traders talked about the special block (see pic 1, i mentioned about cross). Cross sales
or special blocks are very important aspect of broker’s activity.
Flashback: Last March 21, 2001. Block sale of 68M shares at 3.21 was executed. On March 24,
2001 MPI registered an intraday low of 3.11. It surge 27% to an intraday high of 3.95 last April
25, 2011. Then again, heavy selling of what i suspect are caymans, send the stock back to 3.37
last May 27, 2011.
The kiss of 50MA Weekly was first published last March 17 and a follow thru update last March
22, 2011.
On March 28, 2011. The low of 3.11 was tag as based for the bounce play.
On April 27, 2011. Divergence sets in for MPI, plus sporadic cayman selling. I tag 3.20 – 3.30
level as the next stop
Latest Disclosure
SEC approval of increase in authorized capital stock; issuance of shares to Metro Pacific
Holdings, Inc.
The Securities and Exchange Commission (“SEC”) approved on 31 May 2011 the increase in the
authorized capital stock of Metro Pacific Investments Corporation (“MPI”) from Twenty Four
Billion Two Hundred Thirty Eight Million Five Hundred Eighteen Thousand Three Hundred
Thirty Six Pesos (P24,238,518,336.00), divided into Twenty Two Billion Six Hundred Eighty
Eight Million Five Hundred Eighteen Thousand Three Hundred Thirty-Six (22,688,518,336)
common shares with a par value of One Peso (P1.00) per share, Five Billion (5,000,000,000)
Class A Preferred Shares with a par value of One Centavo (P0.01) per share and One Billion
Five Hundred Million (1,500,000,000) Class B Preferred Shares with a par value of One Peso
(P1.00) per share, to Thirty Billion Fifty Million Pesos (P30,050,000,000.00), divided into
Twenty Eight Billion Five Hundred Million (28,500,000,000) common shares with a par value of
One Peso (P1.00) per share, Five Billion (5,000,000,000) Class A Preferred Shares with a par
value of One Centavo (P0.01) per share and One Billion Five Hundred Million (1,500,000,000)
Class B Preferred Shares with a par value of One Peso (P1.00) per share.
In connection with such SEC approval, MPI likewise issued to Metro Pacific Holdings, Inc.
(“MPHI”) a total of Two Billion Thirty Million Seven Hundred Sixty Nine Thousand Two
Hundred Thirty (2,030,769,230) common shares out of the increase in MPI’s authorized capital
stock. These shares are issued to MPHI as a result of the conversion by MPHI of the Php6.6
Billion Convertible Bonds issued by MPI to MPHI on 30 March 2010.
source: http://www.pse.com.ph/html/disclosure/pdf/2011/pdf/dc2011-4230_MPI.pdf
Simple math: 6.6B pesos / 2,030,769,230 shares = 3.25 pesos/share
My Reaction: Kaya pala, hanep ah .
Personal Note: The caymans are done selling.
—There’s a cayman connection with AGI too but its too time consuming. Just follow the cayman
trail and disclosures.
—These are all broker’s analysis. Caveat.
Source: Ollie’s Journal
Personality
RSA ( Ramon S. Ang)
MVP ( Manuel V. Pangilinan)
Lopezes
Roberto P. Ongpin
Ayalas
Aboitizes
Gokongwei’s
Consunji”s
Henry Sy
Affiliations
SMC, LIB, CYBR, MER, GSMI,
PCOR, PF, PSE, SMB
MPI, MER, TEL, PX, LC, MA
FPH, FGEN, MER, EDC, ABS, LPZ
WEB, ISM, AB, ALPHA
AC, ALI, BPI, GLO, IMI, MWC
AEV, AP , UBP
Yuchengco
Andrew Tan
JGS, URC, CEB, DGTL, RLC
DMC, SCC
SM, SMDC, SMPH, BDO, CHIB,
ALHI, MWIDE
ICT, BLOOM
UPM, APO, AT, SHANG, OV
GEO, NI, ORE, SLI, VLL, PO, DIZ,
AGP
RCB, EEI, HI
MEG, ELI, AGI, SUN
Lucio Tan
Gotianun’s
Tancaktiong
Felipe Yap
Willy Ocier
Conception’s
Gatchalian
Chucky Arellano
PAL, ETON, PNB
FDC, FLI
JFC
LC/B, MA/B
APC, BEL, SINO, LR
RFM, SFI
PHES, FPI, WIN, WPI, ACE
ACE, EG, ATN, PRC, CHIPS, LIHC
Enrique Razon
Ramos Group
Jerry Angping
“Known” Brokers
Asiasec, Mandarin, CS, CLSA,
UCPB
CLSA, MacQ
PCCI, Summit, BDO
Belson
BPI
Papa, SB Eqty
ATR
Papa
BDO, Lucky, Regina
CS, Venture
Alakor
Angping, Goldstar
RCBC
Aurora, Abacus, Summit, UBS,
CLSA
Panasia, Triton
Summit, ATR
Fyap, BPI
Belson
Westlink, Transasia
PCCI, Guild, Done-tru a lot
Old brokers used in buying:
Coyuito, Ansaldo, AT Castro
Belson
Viewpoint - Megaworld Corporation: Stock Rights Offering
By Dr. Victor S. Limlingan
Chairman
July 15, 2009
On 30 April 2009, Megaworld Corporation issued a “Prospectus Relating to the Stock Rights
Offering of 5,127,556,725 Common Shares With a Par Value of P 1.00 per Share With Four (4)
Bonus Detachable Warrants for every five (5) Rights Shares subscribed to be offered at the
Exercise Price of P1.00 per Rights Share to be listed & traded on the Philippine Stock Exchange”.
Quite a mouthful! In essence, Megaworld is asking its existing stockholders to subscribe to
additional Megaworld shares at P 1.00 per share. As Megaworld shares were trading on 31 March
2009 at P 0.56 per share, why, if we wanted more shares of Megaworld for our portfolio would
we buy the new shares at P 1.00 per share when we could buy them in the Philippine Stock
Exchange for P 0.56 per share? Before we answer that, we must first ask why Megaworld is
undertaking a public offering of its shares at P 1.00 per share when the book value per share of
Megaworld shares were P 1.96 per share as of December 31, 2008?
It could not be due to extreme need on the part of Megaworld to raise cash. As of December 31,
2008, Megaworld had P 12.3 billion in Cash and Cash equivalents. It could not be due to inability
to raise money through debt financing. Its total liabilities were
P 25.2 billion against an equity
base of P 39.7 billion for a low debt equity ratio of 0.63 to 1.00.
We would argue that this is based on the business model adopted by Megaworld from the lessons
learned during the Asian Financial Crisis.
As may be recalled, the standard business model for real estate companies is to finance their
expansion during good times by borrowing heavily from the banks i.e. discounting of CTS
(Contract To Sell). This is risky as they would be financing long-term assets with short-term debt
(Technically called a maturity mismatch).
The hope of the real estate companies is that they would be able to anticipate the coming bad
times and so go into consolidation and reduce their exposure to the banks way before the banks
curtail their loans. If they fail to anticipate the down turn, the banks cut off their credit lifeline and
eventually take over their real estate portfolio. As the banks are better capitalized as well as fully
supported by the Central Bank, they ride out the storm and reap what the real estate companies
have sown.
Having narrowly escaped this fate, Megaworld adopted a policy where financing comes not from
the banks but from the stock market. In a downturn, the common stockholders unlike the banks
are unable to foreclose and so have to ride out the storm together with the management of the
company.
This however raises the issue of loss of control. Megaworld or more precisely Andrew Tan dealt
with this issue in two ways. Firstly, Andrew Tan set up two holding companies, Alliance Global
Group, Inc. (AGI) and New Town Land Partners (NTLPI) to consolidate his holdings in
Megaworld. Thus AGI held 5,248,128,361 common shares of Megaworld while NTLPI held
4,145,743,672 common shares for a total 9,393,872,033 common shares or 45% of the
20,510,226,901 common shares.
Secondly, Megaworld, in July 2007 with the proper approval from the Securities and Exchange
Commission reclassified 60 million unissued common shares with a par value of P 1.00 per share
to P 60 million worth of voting, cumulative, non-participating, non-convertible and nonredeemable preferred shares with a par value of P 0.01 per share. The 6,000,000,000 preferred
shares were then issued to AGI.
In essence, the preferred shares were “golden shares” since they had 100 times! the voting power
of the common shares. AGI in effect got 6,000,000,000 votes for the price of P 60 million pesos.
This meant that instead of controlling 45% of the votes, Andrew Tan now controlled 58% of the
votes (9,393,872 common shares plus 6,000,000,000 preferred shares over 20,510,226,901
common shares and 6,000,000,000 preferred shares outstanding)
Back to the Rights Offering. To induce the present stockholders of Megaworld to subscribe to the
new Megaworld shares at P 1.00 per share despite the then market price of P0.56 per share,
Megaworld sweetened the pot by offering four (4) Bonus Detachable Warrants for ever five (5)
Rights Shares subscribed. These warrants gave the holders the right to buy common shares for P
1.00 per share over the next five years even if the market price were saying P 5.00 per share.
The warrants raise one final financial reporting issue. How does Megaworld report the cost of
these warrants. The warrants are like the stock options given to executive. In the past, their cost
was not reflected in the financial statements of the company. Now they are. Will the cost of the
warrants to Megaworld be similarly reflected?
Megaworld warrants get SEC approval
Philippine Daily Inquirer
First Posted 22:50:00 11/13/2009
Filed Under: Real Estate
THE SECURITIES AND EXchange Commission has approved a proposed issuance by tycoon
Andrew Tan?s Megaworld Corp. of bonus detachable warrants that could raise as much as P4
billion for the property developer over five years.
The SEC cleared the issuance and registration by Megaworld of 4.1 billion in bonus warrants
backed by the same number of underlying common shares. Megaworld will give four warrants
for every five existing common shares at no cost to all those who subscribed to its recently P5.1
billion rights offering.
The warrants will entitle holders to buy one new common share of Megaworld for every bonus
warrant held at an exercise price of P1 a share beginning on the 24th month from issue date.
The exercise price represents a 37.5-percent discount to the closing market price rice of
Megaworld of P1.60 yesterday.
The warrants will expire on June 14, 2015.
Megaworld expects about P4 billion in net proceeds assuming that all the warrants were
exercised. The proceeds were programmed to finance its capital and project expenditures from
2012 to 2015.
Specifically, P1 billion will be earmarked during the three-year period to boost the development
of a business process outsourcing (BPO) center in its new development Newport City across
from the Ninoy Aquino International Airport Terminal 3 in Pasay City. The remaining P3 billion
will be used for working capital.
Last May, Megaworld raised P5.1 billion to support its capital spending from the sale of new
common shares to existing stockholders. It was able to raise P3.2 billion from the first round of
rights offering, while another P1.9 billion was taken up by parent company Alliance Global
Group Inc.
The company is primarily engaged in the development in Metro Manila of large-scale, mixed-use
planned communities, or community townships, that integrate residential, commercial,
educational, leisure and entertainment components. Doris C. Dumlao
BoH Tips & Tricks #03: Paraburst
Posted by genkumag ⋅ May 5, 2012 ⋅ 1 Comment
Source: http://genkumag.wordpress.com/category/boh-research/boh-tips-tricks/
A term coined by Senor Hernan Segovia, “paraburst” is a cataclysmic event that occurs at the
end of a parabolic run. While the actual distribution phase from a parabolic may vary by degrees
and time duration, as this is typically a function of commitment by sponsors and participation of
the investing public, the ending characteristic is the same with bursts sharp and declines
extremely painful.
As a reminder, Paraburst is not your garden variety correction that ought to be immediately
bought on dips. The drops are sharp because sponsors are normally gone, early adopters who
were not able to sell near the top often do so at any price to preserve gains, while late comers
who’ve been sucked in are there to fuel the decline.
At some point on the deep retracement, sponsors can re-emerge to initiate a relief bounce (which
are often tradeable and quite profitable if you’re coming in fresh), but such bounce are brief, with
the math still in favour of sponsors, before the stock resumes its downward spiral. And other
times, sponsors just never come back.
There is a certain criminality to it, sure, but it is what it is. The best thing you can do is to know
the drill.
Again, Parabolic. Paraburst.
Wash, rinse, and repeat!