Yesterday on Market Watch, sam111sam responded to foaad's concern with some of AABAR's relatively short duration liabilities of about $ 3 billion. I'm going to highlight a few statements of his and simply make my comments (no judgementality here believe me, some of you. Besides I know sam111sam would not take these comments personally)
I tend to like lala's picks in another post but think undue risk is taken by investing in AABAR.
sam111sam wrote:
The only complication here (which is causing lots of confusion) is that Aabar wanted To avoid the exposure, if the DAi shares drops before they sell.
So they went to the bank and agree to pay the first Dhs 2B of profit as insurance provieded that the bank will lock any profit they make even if the DAI share decline back.
I think the only way of confirming what exact hedging strategy AABAR is using is to contact the CFO and find out... If someone knows what it is by reading the financials then please state it here on the forum.
My earlier point of the hedge on DAI being a slap in the face of investors is that any hedging strategy that has been or would be executed WILL exact a fee or charge or cost on AABAR. We've already seen it's not a small amount. You pay a premium to hedge yourself against any downside, but by definition, you are limiting the upside on whatever exposure you have in global markets.
I also disagree that the funding is cheap. It may be relatively cheap. The benchmark interbank lending interest rates may be low now but surely funding premia for the banks are more expensive than they were up to August 2007 when the credit markets seized up, and borrowing costs are especially higher than when LIBORs were close to 1% in 2003.
Let us forget about pricing of the loans now. The concern should be the borrowed amount for now. Investing in share markets is a risky, dangerous practice when you are playing with unborrowed cash. Investing with borrowed money is insanity, unless you really know what you are doing, but honestly, how many people really know what they are doing?
sam111sam wrote:
Aabar is 71% owned by gov of Abu Dhabi, and they are experienced investors...and I believe they know very well what they are doing.
That should not mean anything, or necessarily would engender confidence in the stock. Sovereign Wealth Funds do not necessarily have stellar performance in the stock market. Massive institutions like SWF's and pension funds and other large stockholding institutional investors have had a terrible time between October 2007 to March this year. Why might further terrible times be forthcoming? Because similar investing hiccups occurred in 1998 and in 2000-2003 but now the investing landscape is vastly different from those two periods.
I have mentioned the following before in the post on hyperinflation on this forum, but stock markets or stocks in general globally have been underperforming when priced in terms of gold since 2000. Up to mid 2000 in gold, or nominally up to October 2007 (meaning not priced in Gold), stocks globally were in a bull market since at least 1982. That is over, meaning the party for big institutional buy and holders, could be over for a few more years, until whenever the financial situation of the world improves genuinely without government intervention.
In a structural bull market that goes on for more than just a few years, you can buy a mixture of stocks and expect to see healthy capital gains.
Unless the bear market in stocks against gold is over soon. I would be very wary of a company invested heavily in companies like DAI and BSBR (NY Stock Exch) on a long term basis. To me, I would think AABAR knows what it is doing if it exits while still making a good gain, because I cannot see value in owning DAI or a Spanish bank's Brasilian operations. I don't know what else they have invested in. Santander Brasil could be full of negative surprises. Brazil is having a party these days, more so than the rest of the world, but that part of the world is no financial haven of stability. Banks these days also have a very unpleasant knack of throwing new ugly surprises at you when you are least expecting them. In addition, I would not trust Santander. Everyone seems to be calling them a stable bank, but they said that about several high profile banks that were subsequently bailed out last year by governments and SWF's. They always say it is fine, up to the day before it explodes in your face. At this point I would not be exposed to a Spanish bank.
sam111sam wrote:
Still, Aabar Share Price is moving very slow
There are two possibilities that I see:
they big guys are slowly accumulating on this stock and they like to keep the party till the end of season (till the are done making money on Aldar Souroah, then book profit and switch to Aabar...)
or
Aabar is hiding some bad news
How would we know its accumulation? I think we would know only once the price of AABAR stock breaks out, up or down. Then that question would be answered, in hindsight of course.
"Accumulation" and "Distribution" are labels. To this day I have not seen a reliable method of identifying accumulation or distribution. When stocks do not do anything over any time frame, it is called accumulation or distribution, depending on how the beholder sees the trend (Glass half full or empty)
Having said that AABAR is a higher than usual risky stock to be in, like the property stocks here, I still think the trend is up so the smart play is to be in AABAR stock and hopefully ride an extension of the uptrend. But if the trend looks like it has reversed, jump ship as soon as possible and do not regret it.
Again, I am simply stating reasons stating why it is riskier being in AABAR. Not issuing a buy or sell call by any means. For all I know AABAR may be at 12 dirhams by March. Also I am not telling anyone to buy gold. And if you don't own gold as an investment I am not looking down on you
Further to what I wrote about the riskiness of AABAR above joypsam's reply , I have this to say about supposed or rumoured insider buying or by their relatives.
joypsam1 wrote:
One thing I knew closely is that AABAR shares are accumulating by its own top officials / their relatives.
joypsam, I am trying to help out here on this forum. Really. I have no vested interest in writing in the late hours (when I have free time usually), really.
You have been excited about AABAR for some time now on this forum, even exhorting people to blindly buy the stock. Now I clearly see why.
Before I say anything, understand this: AABAR may go up much more, double, triple, whatever. It would not suprise me if it did. After all we are in a powerful uptrend. No one, absolutely no one really knows when trends end. There will always be people who correctly call a crash or a trend reversal but it is usually a one-time, unique affair. Later, they get ridiculed for being wrong multiple times.
If AABAR hits 9 or 12 dirhams then people will say yes, after all shares were accumulated by top officials and their relatives, because they knew things. That is what people normally remember, the good positive outcomes.
In all my years in markets, and knowing MANY people who were brokers and fund managers and high networth clients, I will tell you that after being told Mr So and So purchased shares of this Company or that, or the sister of the Chairman purchased shares, I have seen instances where markets kept going down. The reason is they were buying in downtrending markets, usually.
Me and others, including brokers who are privy to what clients are doing, have lost big wads of cash betting on rumours of insider trades, or because of tips from inside companies.
Real insider tips of real consequence like really affecting share price are rare, and expensive.
All I am saying is don't make buy or sell decision based on the kind of information you have mentioned.
A story for you before I go to bed:
Last year in October when the financial world seemed like it was collapsing, I was talking to a man who ran a Very Big Brokerage out of Abu Dhabi. He told me his life savings were close to being wiped out, but that he was not scared, because the Really Big Boys in AUH told him not to worry, they would bring the market up.
What happened from October to February this year? Markets continued collapsing and the important man who is in the stocks business, he understood better what "wiped out" really meant. People big and small and companies that invested in stocks, lost a lot of money. This year is like waking up from a nightmare. Now everyone is afraid to go to bed again.
joypsam, it is very difficult to manipulate or control liquid markets. When a market wants to go up, it will. When a market wants to go down it will.
An interesting note in the current bull market in America is that insiders have been selling all the way up since March. Insider buying is very low. So the people within the companies are now regretting selling early, or are regretting not buying shares earlier.
Yesterday on Market Watch, sam111sam responded to foaad's concern with some of AABAR's relatively short duration liabilities of about $ 3 billion. ...
No problem at all...
I benefit more from reading "other" view specially when it has some solid facts or news
I appreciate the effort that you put..I know how much time would it take to compile such long detailed posts...Only one comment here
My main purpose of participating in the market is to make money, So the most useful posts for me are the ones with suggestion how to make money (early news, recommendations, market direction, analysis...). I think many of the other members also have the same target...
So it would be great if you can invest part of your efforts in this direction for the benefit of everyone.
P.S No doubt, it is also important to avoid losing money on high risk bets... But I think we need a mix of both making money and avoid losing money...a paradox
Please review the forum guidelines about posting information as fact when it is not.
joypsam1 wrote:
One thing I knew closely is that AABAR shares are accumulating by its own top officials / their relatives.
Making claims like this is rather pointless since it's not verifiable. That is one reason why those sorts of comments are discouraged.
joypsam1 wrote:
But it is confirmed by some close circles.
Again, a pointless comment since it is not publicly confirmed.
joypsam1 wrote:
But one thing is certain; it is heading for a breakout.
Nothing is certain in the markets.
joypsam1 wrote:
AND most probably it will be positive, that is why everyone in the market gossiping "AABAR will touch Dhs.9 soon.
I remember hearing "everyone" gossiping about Taqa hitting 20 dhs per share on listing day. It didn't.
joypsam1 wrote:
Let us wait to see the fate.
That sounds sensible.
Theories about "big boys" buying or selling Aabar (AABAR) shares or any other company are just that. Theories. Any posts speculating about what "big boys" are or are not going to do, sound more like an attempt to hype a stock than real information to me. On a similar note to something fayesloan said, the past 12 months have shown that the market is bigger than the biggest of big boys anyway.
joypsam, your hyping of Aabar comes across to me as misplaced enthusiasm rather than a deliberate intention to manipulate forum members. So please keep your enthusiasm for more appropriate posts. _________________ UAE IPO list | posting guidelines
hold on AABAR, definitely you will double the amount in 6 months.
Please don't say things like that. It is impossible for you or anyone else to say what Aabar will "definitely" do tomorrow, or any other day.
You can say that you are "hoping", "expecting", or even "confident" that Aabar share price will double in 6 months. _________________ UAE IPO list | posting guidelines
GPIC,
I do not think Aabar is worth investing in longterm because it is not worth the risk. Investing in a company longterm that, for example, supplies cement or other building materials or commodities to the MENA region and globally, with a disciplined, experienced management, would be a less risky investment. Investing in a solid bank, or Air Arabia, or a pharmaceutical company would be less risky.
Investing in a company that gambles in the global casino entails more risk. Some of my thoughts on Aabar's investments are discussed above in this thread in a few posts.
I am also interested in why people praise or are in love with the management? Aabar is just another investment fund. There is nothing special or unique about it. Nothing new here. If anything, I think they are invested in the riskiest areas of the global economy. No one is clear that the global economy is systemically stable yet so in case of a financial or economic shock, Aabar's investments will take a massive hit. But that is why they are hedged, I think. The hedges also limit any profit because of how expensive such hedging activity is. So nothing special here. That is just my view. It should not really matter.
Any breakout out of the current trading range on the upside and 5 is a realistic target.
I have picked out a few of the points you have kindly made:
fayesloan wrote:
it is not worth the risk
Investing is all about risk, and managing your risk. Managing your entry, managing your exposure and managing your exit.
I have been investing for some 20 years now. From land purchases, through developments, various businesses and stocks, and the most important thing i have learnt is not to have all your eggs in one basket.
Surely investing in a cement company, making one product, for one market is more risky than investing in a diversified business...!
fayesloan wrote:
I am also interested in why people praise or are in love with the management. Aabar is just another investment fund.
I don’t see people in love with their management. What i see is people respecting the management choices...
fayesloan wrote:
There is nothing special or unique about it.
I see the resemblance you are making to an Investment Fund, but surely this is different because of the close vested interest Aabar has for Abu Dhabi.
I am not aware of any investment fund that has such a tie to a country's interest.
fayesloan wrote:
That is just my view. It should not really matter.
this is what this Forum is all about, peoples opinions and beliefs. I am sad that you finished your post with this point, as it sounds as though you may even doubt your own view. If you believe in what you say, you should finish with ... and "that's how i see it"...and not "It should not really matter"...!
Thanks Faye. Have a better picture of where you are coming from now.
1) I don't think funds or companies that are sovereign or sufficiently large to be considered important have any special significance in the long run.
Lots of these funds lose money. If many of them have returned well the past few decades it was because of the bull market in stocks worldwide.
That bull market has turned to a bear market in terms of gold, at least in Europe and US and Japan.
2) My view should not matter because more often than not I am wrong about things. Aabar may be the greatest gift to someone who invests in it at 2.6 dirhams a share and holds for however long it takes to reach 200. That is a possible scenario. I believe such a scenario has a probability associated with it. It might be very very low so you invest accordingly. I own Mashreq Millionaire certificates, for example. Do I have more than 0.01% of my wealth in them? No! But at least I have a chance of winning something.
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