Quarz is activist. They can run CSE as well as Pershing Square can run Valeant
(07-03-2018, 09:10 PM)karlmarx Wrote: [ -> ]I don't think it is wise of Quarz to try to squeeze cash out of a struggling business. Dividends should be distributed from a position of strength. If core operations worsen, this will negatively impact its liquidity and lead to an accelerated decline. It is not as though CSE has lots of cash lying around.
Unless Quarz is ready to take over the managing of CSE, which is not in a great situation, it should sit on its hands. Or look for a buyer of its large block.
It appears that Quarz is anxious about the huge position it has taken for itself and its associates.
Ha ha specuvestor, nice one..
Judging by Quarz's historical behaviour, they typically target cash/asset rich companies and would then proceed to send a letter to demand cash distribution to shareholders to "optimize" the balance sheet. Metro, IHC, HG Metal, and now CSE Global. Quite the activist, ain't they? Contrast this with 3G Capital, or our local Novo Tellus Capital Partners.
(08-03-2018, 09:00 AM)holymage Wrote: [ -> ]Ha ha specuvestor, nice one..
Judging by Quarz's historical behaviour, they typically target cash/asset rich companies and would then proceed to send a letter to demand cash distribution to shareholders to "optimize" the balance sheet. Metro, IHC, HG Metal, and now CSE Global. Quite the activist, ain't they? Contrast this with 3G Capital, or our local Novo Tellus Capital Partners.
There's nothing wrong with that, it's all part of the modern landscape of investing. Perhaps Quarz was already planning this move before the loss of the legal case which CSE took a very big hit.
If CSE does not want to return capital to shareholders it should at the very least start doing some share buybacks. At the current lowish prices, it would really benefit shareholders and even management.
Having said that, CSE management has historically been generous with dividend payout and thus has been fair to shareholders.
-nv on radar-
The good thing about activist is that they look at the structure layer. The bad thing about activist is that they only look at the structure layer. They are not businessmen; more finance guys for shorter term shareholder interests. Good for OPMI though.
PE and IB at least can help to synergise / opttimise the businesses and assets. Better for longer term stakeholders
Quarz is really flexing its muscles and CSE appears to be bending over to their demands with the publication of this report. This must be humbling for CSE to explain in detail what went wrong and how they are making it right. With regards to Quarz's demand for dividends, CSE is saying, 'I really got no more money already! You want me to borrow from ah long? Next quarter if have then I give you, can?'
http://infopub.sgx.com/FileOpen/CSE%20An...eID=492189
(08-03-2018, 07:56 PM)karlmarx Wrote: [ -> ]Quarz is really flexing its muscles and CSE appears to be bending over to their demands with the publication of this report. This must be humbling for CSE to explain in detail what went wrong and how they are making it right. With regards to Quarz's demand for dividends, CSE is saying, 'I really got no more money already! You want me to borrow from ah long? Next quarter if have then I give you, can?'
http://infopub.sgx.com/FileOpen/CSE%20An...eID=492189
Well hope Quarz sell out their position and push the stock lower so we can accumulate some at rock bottom prices
Personally, I think those activists that simply empty the coffers of companies, or demand a reduction in investments in order to generate a quick improvement in profitability is bad for the targeted company in the long run. Personally, my preferred investment style would be, to invest with an owner mentality.
Thomas Russo explains this concept in his Google Talk lecture (check out his example on Cadbury Schweppes vs Geico for instance).
Of course, your mile may vary.
(08-03-2018, 07:56 PM)karlmarx Wrote: [ -> ]Quarz is really flexing its muscles and CSE appears to be bending over to their demands with the publication of this report. This must be humbling for CSE to explain in detail what went wrong and how they are making it right. With regards to Quarz's demand for dividends, CSE is saying, 'I really got no more money already! You want me to borrow from ah long? Next quarter if have then I give you, can?'
http://infopub.sgx.com/FileOpen/CSE%20An...eID=492189
It's interesting that on the same actions by CSE, I don't see the "bending over" and "humbling" aspects of it. Rather I see CSE saying "I see you have proposed several items, but what do you think we have been doing the past few years?"
My opinion is that if CSE had the upper hand, they wouldn't have to explain themselves in such detail and length. And they wouldn't promise to maintain dividend too; it doesn't make sense from their financial position. Perhaps they foresee a windfall in receivables collection in the next few months.
In any case, if the operating situation remains poor or worsen after the dividend is paid, then it is likely that CSE shares will be available at 'rock bottom prices.'
I do agree with you on this description regarding the dividend 'I really got no more money already! You want me to borrow from ah long? Next quarter if have then I give you, can?'
