Friday, February 24, 2012

Be careful on Opensys short term trade!

While I may have posted earlier piece on Opensys being a value investment for dividends as well as its attractive valuation, traders should beware of some of these news:

- CIMB sold 21,544,010 units or equivalent to 9.64% of Opensys block to an unknown buyer on 12 December 2011. Since this is a block which is more than 5%, if a single buyer bought this, they would need to file a substantial shareholding report. If any of the substantial shareholders or directors bought the block as well, they would need to do the filing. However since nobody did any filing on new purchases, this means that it was sold to private party or nominees who owns less than 5%. Ever since the block changed hands, the share price was ramped up signalling that potentially the buyer of the block was just doing a short term trade, hence you saw high volume in the stocks ever since 12 December 2011, a day after the block changed hands;

- the CIMB block was sold at 11.5 sen per share. If you followed my piece, the block is at an attractive price, however the volatility is due to there are syndicates playing and potentially trying to dispose off the 9.64% block partly or entirely. Hence for traders, treat this stock carefully for the short term;

-  recently traded price of 20.5 sen high and 12 sen low, it all depends on the new buyer have fully disposed off the 9.64% block;

- article on Thestar on Saturday, 18 Feb 2012 was merely just a rumour, as there is no proof that Yeoh Eng Kong is looking to control the company. If any, why would the price of Opensys dropped from 20 sen to 12.5 sen within a week. Obviously, the news was just planted through Star to misguide investors. Along the story, potentially they could be selling hoping that investors would buy into the story;

- with Opensys having a strong cashflow, at price of 20 sen, I do not see the current controlling shareholders of Opensys to be willing to sell. After all it is starting to ditch out attractive dividends.

It would be interesting to know whether the block that CIMB sold was to interested parties related to the current controlling shareholders or outsiders.

Serious Investing!

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