Investera i aktier

Vi har sett en katastrofal utveckling i SIAF, och SIAF är det sämsta investeringsbeslutet jag gjort än så länge i min investerarkarriär. Visserligen har jag haft andra aktier som kompenserat någorlunda för SIAFs nedgång de senaste åren (även om jag förra året gick back ett par procent och i år är ner runt tio procent p.g.a. SIAF). Nu utgör SIAF inte längre en så hög andel av min portfölj längre, under tio procent (eftersom aktien gått ner).

Jag klarar mig än så länge, och på de senaste tre åren ligger jag plus 15% trots SIAFs katastrofala nedgång. SIAF är och har varit en katastrof men jag överlever just den saken i alla fall. Jag vågar inte tänka på hur bra det hade gått om jag hade satsat SIAF-pengarna i mina andra aktier istället, då har jag haft en riktigt bra utveckling.

Vad var då misstaget jag gjorde med SIAF? Jag blev gift med aktien och trots att den inte levererade så stannade jag år efter år. Jag inbillade mig att SIAF skulle göra mig rik. Jag tror inte att jag kommer göra samma misstag igen i framtiden då jag nuförtiden är mycket mer försiktig när jag går in i bolag av lite mer instabil karaktär. Jag går bara in med ganska små summor nu för tiden i bolag som inte delar ut pengar eller har stabila kassaflöden. Jag gör fortfarande misstag men inte så stora misstag som med SIAF.

Hur ska man se SIAF? Jag ser det som en investering i stilen Grahams Net-Net strategi som går ut på att investera i bolag med lågt bolagsvärde i förhållande till tillgångarna. Investerar man i ett stort antal sådana aktier så får man en god avkastning i genomsnitt, men den låga värderingen indikerar också problem vilket leder till att ett visst antal av bolagen med låg värdering i förhållande till tillgångarna kommer att haverera.

Med andra ord, jag viktade SIAF alldeles för tungt. SIAF passar som en mindre investering där man är beredd att förlora insatsen. Jag var för girig.

Man har klagat år ut och år in på SIAFs lednings oförmåga att skapa aktieägarvärde men ändå har man behållit dem som ett tungt innehav. Man får till viss del skylla sig själv. Samtidigt hade SIAF funkat som ett mindre innehav i portföljen som sagt, problemet var att jag viktade dem för högt.

Hur som helst så planerar jag för tillfället att behålla dem SIAF-aktier jag har tills jag ser hur det blir med finansieringen, utdelningen av Tri-way samt om Capital Award får några utlandsprojekt. Men man ska inte förminska att SIAF är ett högriskbolag där ledningen hela tiden försöker mörka motgångar och framhäva positiva framtidsutsikter.

Å andra sidan värderas bolaget just nu till ca 6% av Net Current Assest Value. SIAF är ett bolag med problem men värderingen är oerhört låg. Jag behåller aktien medveten om att det både kan gå bra eller skita sig. Samtidigt ska jag försöka att inte hamna i liknande situation igen där jag satsar för mycket pengar på ett bolag med så hög osäkerhet.

Har ni SIAF på OTC (inte merkur) så maila siafotc@mail.com, The Swede gör en sammanräkning av antalet aktier där för att ta reda på om collateral shares säljs i USA.

Jag vet inte om han kommer komma fram till något men det är ju ganska enkelt att skicka ett mail så hjälp honom i detta tycker jag, om ni har era aktier på OTC i USA.

Bra sammanfattning från Solomonmötet: Länk.

Läs det här om ni vill. Det är användaren snow på iHub som kommer med detta. Ytterligare ett litet vittnesmål från ett möte med Solomon.

Nu ska jag lugna ner mig lite ett tag angående SIAF-skrivandet, det känns som att Solomonmötet har avhandlats klart nu i alla fall.

Solomon hopes to get sizable debt financing within two months for Tri-way and it will be game changing. There was only one question left to answer to the bankers. Other posters have mentioned $100 million or $150 million as size of the loan but I did not hear any exact figure myself. I was not on the whole meeting and also Solomon has had other meetings. Solomon wants more debt financing before taking private placement because then he will get better terms for the private placements. So some time after getting this sizable loan for Tri-way I guess they will consider private placements.

The debt financing is for Tri-way only, not for SIAF. It seems to be easier to get money outside of mainland China.

Solomon wants to use the debt financing as down payment to sub-contractors. The sub-contractors will then provide the rest of the financing of the project by waiting to get paid until Tri-way gets income from sale of seafood from the new buildings. Solomon thought it only right that the ones who make money from building the mega farm also helps with the financing. He thinks the build out can be done in 3-4 years with the combination of the debt financing and the financing from sub-contractors, at least such a solution is being discussed. Some of the sub-contractors are state owned.

I asked Solomon how he would avoid getting caught in a trap if seafood production takes longer than expected and the sub-contractors starts to want their money back. He replied that the sub-contractors will build only as much as they can afford and Tri-way will pay only as much as they can afford. I was convinced by his answer.

Regarding the old credit lines for Tri-way/Tri-way subsidiaries they were intended for working capital in China only and (my interpretation, didn’t get it all) since Tri-way was a Hong Kong company there were problems and also some tax or VAT or something would be triggered at 20+%. All in all it didn’t seem favourable or possible to use those loans.

I got the impression that Tri-way is doing very well operationally right now, I could read it between the lines of the discussion and Solomons enthusiasm. I am quite sure of this.

The $18 million fish pond in construction that SIAF has reported is actually construction in progress for Tri-way. So Tri-way owes us that amount.

SIAF will get a substantial amount of cash when Tri-way gets financing.

Tri-way will launch a website. Probably in October.

Tri-way has started to trade seafood. They have for example ordered 20 containers of squid. Soloomon believes that Tri-way will not even be able to saturate the local demand for seafood so that is one reason it is good to start with imports as well. Solomon see a very very big demand for seafood now and in the future as well. Tri-way will not even produce enough seafood for the local market (since the local market is so big).

There was also a little bit discussion about selling some of Tri-ways asset to get cash, but mostly in the beginning of the meeting before the new debt financing plans were known. However sale of Tri-wasy assets are not practical since the assets are so integrated, with one farm producing fingerlings for the other farms and similar things.

Regarding why the Tri-way dividend was delayed, because of that they needed to do an F-1 filing, shortly after they announced the target date in the summer it is because of the following reasons. Three out of four lawyers didn’t think the F-1 filing would be needed. SIAF called the SEC and asked and they said it was not necessary with F-1. SIAF asked for a letter of no action from the SEC but did not receive any such letter. In order to not risk any trouble with the SEC SIAF decided to go ahead with the F-1 filing anyway. SIAF did not communicate any of this to the shareholders because they didn’t want have a conflict with the SEC.

I asked Solomon when he thought that Tri-way will be listed. He said ok I will tell you but please don’t shoot me. I guess he meant please don’t shoot me if the time is not correct since it is only a target date.  Possibly he may also have meant that the target date is later than some shareholders had hoped for. Solomon mentioned two events, the first being in Q3 2019 – I guess this is when Tri-way is approved for listning in Hong Kong. The second date is Q1 2020 when Tri-way begins trading in Hong Kong. On a side note I have read that there is a three year requirement to be listed in Hong Kong (I think it is three years of business history needed) so for those people who knew about this it comes as no surprise that Tri-way will be listed around 2020. Of course most people in Scandinavia and other parts of the world are not familiar with Hong Kong listing procedures so it may be a tlittle bit dissapointing for them. On the bright side Tri-way will probably fetch a much higher IPO price if it is allowed to grow for a few more years before listing.

Solomon is having discussions with a few big funds to make an entry into Tri-way before the listing. However these are only discussions so far and we will see if it yields any results or not.

Capital Award (CA) will be listed before Tri-way. Solomon talked about a bunch of possible countries to list CA in but at the end he mentioned Stockholm with such a tonality that I interpreted it as the most likely place for listning.

There are 3-4 projects in the pipeline for Capital Award and it seemed very likely that an agreement would be completed this year regarding one of those projects and its financing. Solomon talked about India and Malaysia.

On a personal note I think that Capital Award will be a great source of value in the future. If Tri-way gets financing so that they can resume capex  (more about that in the next part about Tri-way) and thus continue buying services from CA and CA also gets other projects in other countries the future looks very bright. Especially if CA can be listed on a stock exchange as well and that the company might be able to secure more debt financing in the future.

SIAFs beef business is difficult because it is capital intensive. They are waiting for a government plan. Solomon does not want to do capex.

Solomon sees canned beef value added products as the future if the government can’t come up with a good plan. Solomon is sure canned beef is the future because there is still not a single big brand of canned beef in China.

They might have a solution with the government before the end of year.

Lots of countries have entered the beef market in China, around 12 countries. US entry of China beef market is extra troublesome for SIAF since the US has high quality meat and SIAF also have high quality meat, i.e. the US imports pushes down the prices that SIAF would receive – making SIAF take a hit again (before it was Australian lower quality meat that made them take a hit).

One problem with the cattle business is that it is difficult to make big changes since it is a capital intensive multi year process (especially when changing to higher quality beef like SIAF did last time). In the fish business it is easy to make quick changes.

General comment about land value, not only about beef business: It is complicated to realize book value from land, and cannot sell agricultural land.  Some land that they have built on also have mortgages.

P.S. The best parts of the meeting was about Tri-way and Capital Award. In the first two parts I cover the HU flowers and beef business and save the best bits for later.

ReadlDutchs mötessammanfattning från ett möte med Solomon kan ni läsa här. Jag tror det är uppgifter som RD fått från nån annan som varit på mötet. Jag vet inte säkert om det är samma möte som jag deltog i eftersom Solomon hållit några styck möten senaste tiden.