Wednesday, October 21, 2009

Some Negative Comments

I have been trying my best not to log into my online brokerage and look at stock quotes. Now, i am relying wholly on the noise coming out of the forum as well as the filings on the SGX. i believe this will free up more time as opposed to constantly staring at the screen.

the negative comments i would like to make first is about Transcu Group. i had indirect interest in the company but i told my friend to sell it off because of the notes conversion. the main problem with Transcu is its $80m equity linked notes.

i have posted something on it in the forum and the gist is that Transcu is obligated to issue shares to the subscriber Advance Opportunities Fund (the person who loan transcu money) shares at a deep discount. for the past few weeks the fund has been converting those notes.

things changed recently when transcu announce that it is appointing DMG & Partners to find a subscriber for 320m placement shares. witness from the day of that announcement, the shares crept steadily from $0.115 to $0.20. that was till tomorrow.

My guess is as good as yours. but i think once placement shares are out and the 2nd sell down has commenced. The first sell down was from 23.5 cents to 11.5cents. However, it is important to note that Transcu has made amendments to the terms of the notes. mainly, Transcu has allowed itself some leeway in deciding whether to issue notes for the monies own. and in the even that transcu does not issue those notes, does note constitute a default in payment.

there are those lucky to have caught it on its way down and on the rise up to make a lot of money. however, i would advise those new to this counter to avoid it and not touch it even with a barge pole. its finances are in terrible shape as you can see it is trying all manner to obtain financing. Furthermore, it is still in the midst of obtaining approval for its products and the bottom line impact will not be obvious till maybe 2011. This is a stock where the retail investor is severely disadvantaged and even one brokerage placed it on its restricted list due to its huge volatility. do not pick pennies in front of a steam roller. you have been warned.

1 comment:

  1. I will not even Transcu with a super-long 100-foot pole. Haha.