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[STOCK] OLAM INTERNATIONAL LIMITED
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26-11-2012 8:02 PM
talkcover Offline
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26-11-2012 5:17 PMMrSTI wrotemake no mistake, Olam is finished or not MrSTI dun know n dun care.. but make no further mistake, Olam is definitely not a good quality stock.

.. Cool:

Well even Mr optimistic say so. Laughing:

Based on the chart, it tell me it is a sell
Laughing:
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27-11-2012 12:01 AM
sticw Offline
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26-11-2012 1:36 PMsticw wroteIt's their biz model... Very thin margin biz... Trying to corner the market... Quite a few counters go on that biz model/strategy...

Swiber... Noble... Wilmar think also similar strategy and leveraged game... Heavy gearing and trying to corner the market of their trade... Not a bad strategy just have to manage the timing and the rolling of debts. If you look at reits, also a leveraged play and rolling of debts. Good till music ends and then it's downhill all the way as coupon can't keep up with the mounting debt... These counters are good for trading as they zigzag within bands of valuations of the underlying commodities or asset pricing or yield. Not really long term investment grade unless they manage to really corner the trade they are in. Then they have more bargaining chips and can eventually bring in more money and even up their profit margins........

When it comes to biz or counters to invest in, I like to stick with those that have a good profit margin that the company can defend due to their value add. I like Warren's way of stock picking.

My 2cts although a bit long winded...
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27-11-2012 2:04 AM
tangowhisky Offline
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They can don't borrow, use $1 million to make 5% or borrow, use $1 billion to make the same 5%. This is trading business. They don't use this $1 billion one time, they may use it 4 times per month.....very high risk, may lose a lot with wrong trade.
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27-11-2012 2:58 PM
wiley Offline
the whale

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http://www.muddywatersresearch.com/research/olam/initiating-coverage-olam/

Initiating Coverage on Olam International – Strong Sell
Published: November 26, 2012
Muddy Waters rates Olam International (SGX:O32; OTC:OLMIY/OLMIF) shares a Strong Sell. In this latest report Muddy Waters highlights how:

•Olam runs a high risk of failure. Its “asset heavy” strategy appears to be an off-the-rails CapEx and acquisition binge. Management talks about the “gestation” of these projects, but our research makes clear that they are marred by incompetence and perhaps significant misconduct. The vast majority of the acquisitions we have researched are of low quality assets that appear to bring little more than cosmetic benefits to Olam. In short, these projects are “pie in the sky” that we strongly believe are destroying substantial amounts of capital.
•Bond holders in particular should be asking where their money goes (and how they will get it back). Olam has spent S$571.0 million less on acquisitions than announced. However, it has spent S$996.2 million on unattributed non-acquisition CapEx – most of it since FY2011. One possible interpretation is that Olam is doing far more greenfield projects than realized, which greatly increases its risk profile. Another possible interpretation is that Olam has problems with internal controls and significant cash leakage.
•Over the years, Olam has committed a shocking number of accounting gaffes. We can conceive of two possible interpretations of its accounting track record – either its accounting functions are blithely incompetent; or, there could be malfeasance. (Both could be true as well.) The former interpretation has ominous implications for Olam’s oft self-promoted ability to manage risk. The latter interpretation obviously has even more dire implications.
•We believe it is instructive to view Olam through the lens of failed US trader Enron Corp. There are a number of material similarities in the way their businesses developed, and their actions.
•We value Olam on a liquidation basis because our opinion is that it is likely to fail. In the event of a liquidation, we estimate the present value of the debt to be 14 to 33 cents. In a liquidation, the equity would likely be wiped out, or given “nuisance value” at best.

Download report
http://www.muddywatersresearch.com/wp-content/uploads/2012/11/MW_OLAM_11272012.pdf

c( ͡° ͜ʖ ͡°)ɔ “A fool thinks himself to be wise, but a wise man knows himself to be a fool.” From “As You Like It,” by William Shakespeare
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27-11-2012 10:12 PM
talkcover Offline
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27-11-2012 2:58 PMwiley wrotehttp://www.muddywatersresearch.com/research/olam/initiating-coverage-olam/

Initiating Coverage on Olam International – Strong Sell
Published: November 26, 2012
Muddy Waters rates Olam International (SGX:O32; OTC:OLMIY/OLMIF) shares a Strong Sell. In this latest report Muddy Waters highlights how:

•Olam runs a high risk of failure. Its “asset heavy” strategy appears to be an off-the-rails CapEx and acquisition binge. Management talks about the “gestation” of these projects, but our research makes clear that they are marred by incompetence and perhaps significant misconduct. The vast majority of the acquisitions we have researched are of low quality assets that appear to bring little more than cosmetic benefits to Olam. In short, these projects are “pie in the sky” that we strongly believe are destroying substantial amounts of capital.
•Bond holders in particular should be asking where their money goes (and how they will get it back). Olam has spent S$571.0 million less on acquisitions than announced. However, it has spent S$996.2 million on unattributed non-acquisition CapEx – most of it since FY2011. One possible interpretation is that Olam is doing far more greenfield projects than realized, which greatly increases its risk profile. Another possible interpretation is that Olam has problems with internal controls and significant cash leakage.
•Over the years, Olam has committed a shocking number of accounting gaffes. We can conceive of two possible interpretations of its accounting track record – either its accounting functions are blithely incompetent; or, there could be malfeasance. (Both could be true as well.) The former interpretation has ominous implications for Olam’s oft self-promoted ability to manage risk. The latter interpretation obviously has even more dire implications.
•We believe it is instructive to view Olam through the lens of failed US trader Enron Corp. There are a number of material similarities in the way their businesses developed, and their actions.
•We value Olam on a liquidation basis because our opinion is that it is likely to fail. In the event of a liquidation, we estimate the present value of the debt to be 14 to 33 cents. In a liquidation, the equity would likely be wiped out, or given “nuisance value” at best.

Download report
http://www.muddywatersresearch.com/wp-content/uploads/2012/11/MW_OLAM_11272012.pdf

Enron Corp Big hug:


http://www.bloomberg.com/news/2012-11-26/olam-seeks-more-debt-for-deal-funding-amid-muddy-waters-dispute.html

See what bloomberg say
"Short interest as a percentage of Olam shares outstanding rose to a record 13.4 percent on Nov. 15, according to data compiled by Markit and Bloomberg.
Block said that Olam is “heavily” indebted, aggressive in reporting gains on biological assets, and is booking profits on transactions before it’s clear how deals will work out over time. He also said he’s betting against the stock."
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28-11-2012 9:13 AM
alleggsinonebasket Offline
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OLAM halted again.
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28-11-2012 10:12 AM
sggold Online
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28-11-2012 9:13 AMalleggsinonebasket wroteOLAM halted again.

i also think finish... they strike at the right time... it need refinancing within 12 mths... they will have problem getting funds (or cheap funds)... with this kind of margin.. if the borrowing rate go up.... and close the mama shop alrdy... Laughing:Laughing:

hope Ta ma de wun come in and support! Angry:

eBay PowerSeller
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28-11-2012 10:23 AM
alleggsinonebasket Offline
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Maybe SGX or Temasek should get 3rd party auditors in to take a look.

Publish an independent report.
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28-11-2012 10:42 AM
alleggsinonebasket Offline
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Caveat: this is just my speculation. i am no fortune teller........

From now on, Olam might have problem getting loans (or rolling over old loans) from the market becos of credit risk. even if they can get, interest rate will be higher than normal.

unless it's too big to fail, i dun think Temasek / gov will get involve.
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28-11-2012 10:49 AM
wiley Offline
the whale

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Bloomberg TV: Olam Accounting Is `Incompetent,' Carson Block Says

http://www.bloomberg.com/video/olam-accounting-is-incompetent-carson-says-U1V8p0DiRXumODRCbH03bQ.html

Olam will definately get support from Temasek to fight off this but first they have to clarify their complex business model and its valuation as well as indian accounting model. May take some time and like you said whether Olam can roll over its debt at favorable rates is yet to be seen.

c( ͡° ͜ʖ ͡°)ɔ “A fool thinks himself to be wise, but a wise man knows himself to be a fool.” From “As You Like It,” by William Shakespeare
(This post was last modified: 28-11-2012 10:49 AM by wiley.)
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