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baufinanciaphaster 👹 Profile picture
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28 Nov, 4 tweets, 2 min read
Did anyone notice Evergrande Auto did a Friday night drop?

The language is a little imprecise but they 'gave back' undeveloped land to the govt, in return for cash, which was partially "confiscated" by the govt (to pay for other land, etc).

www1.hkexnews.hk/listedco/listc…
The language in the Chinese media is not dissimilar to the language used in describing how the Guangzhou Govt "took back" the land under the Guangzhou Stadium last week. Possible that Evergrande/Hengda gets an influx of some cash (the original stadium land price was RMB 6.8bn).
I assume the stadium and team are owned by Hengda (onshore) so any monies refunded would only be available onshore.
cc @discountinvestr @jackycwong
Though I guess it is possible there are inter-company loans so proceeds could flow back up to offshore.

Life is pretty hairy on the sharp edge of default.

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More from @bauhiniacapital

baufinanciaphaster 👹 Profile picture
27 Nov
If there were anyone out there who wanted to install/attach a tonearm onto a Technics SL1200 or SL1210 turntable... because for whatever odd reason they were shipped separately...

Be careful.

As consumer audio objects not meant to be dismantled, they require a little care.
Assuming the thing has been shipped to you correctly (and most pros are OK at this), and it needed to be broken down (which it usually does not, if packed correctly, but would ultimately be safer)...

then, the install is relatively straightforward.

Underneath the turntable
Remove the platter so it shows a "naked" frame with a hole where the tonearm goes.

Then flip it over, putting the tonearm hole at the upper left, and put stacks of books under the upper right, lower right, and mid-lower left, leaving the hole for the tonearm, and the space
Read 34 tweets
baufinanciaphaster 👹 Profile picture
26 Nov
This story had a more interesting path than conclusion.

SBI bought 5% of Shinsei in 2019. They went to Shinsei and said "SBI will buy a big chunk, use Shinsei as the centrepiece for our plans, then Shinsei will slowly buy back all the minority-held shares at a low PBR, then...
we'll squeeze out the rest using Article 235 of the Companies Act, and then we'll buy back the govt held shares at a much higher price."

Shinsei rejected that as unfair to its shareholders.

SBI in 2020 got up to near 8-9% of shares out.

In Feb 2021, Shinsei signed a deal w/
Monex Securities (SBI's online broker rival) to take over Shinsei Securities and provide brokerage services to Shinsei bank customers. SBI had proposed similar, and SBI head Kitao-san got POed and bought another 10% of voting rights in 2 months.
Read 11 tweets
baufinanciaphaster 👹 Profile picture
24 Nov
This has become a lot of fun.
First there was a poison pill proposal. Then a fight. Then the govt got involved. Then Shinsei called off the fight at the last minute (the poison pill EGM was meant for tomorrow).

Now the TOB is "clean" but if SBI gets its 58.2mm shares (27.68%
of voting rights), then afterwards it will be fun/complicated/messy.

It was knowable from the start but few seem to have thought it through.

The Tender going through as designed creates real problems.

Toys will fly out of prams.
It can be partly resolved through a technical action, and better resolved with some astute structuring, but it is not as clean as it should be.

Without TOO much hassle, it is resolvable.

But it is technical, and helpfully for all probably involves more accretion.
Read 4 tweets
baufinanciaphaster 👹 Profile picture
22 Nov
Why are so many people selling subscriptions?

Why are so many people working in finance?

The difference? One group of people works for and gets paid by a single entity. The other group gets paid by lots of people.
Interestingly, a fund - regular or HF - often has many customers who pay a "subscription fee" by investing in the newsletter writer's ideas.

Of course, those particular newsletter writers front-run their own newsletters by investing realtime but only releasing newsletters
once a month, at best.

Those newsletter businesses have a higher cost base so they charge more, and they also often charge performance fees - sometimes for alpha, often for beta.

But there are LOTS of subscription-based financial services out there.
Read 13 tweets
baufinanciaphaster 👹 Profile picture
17 Nov
For those following the Evergrande situation, there is one special commentator who deserves singling out.

The "former Fitch analyst" Dr Marco Metzler is the key man. He is a veritable fount of misinformation and bad analysis. And he is absolutely prolific. Today he had this out.
The "recent DMSA study" to which he refers, where he concludes that there must be massive CDS exposure to Evergrande, is today's press release.

It shows that Asian high yield bond funds held (and still hold) Evergrande bonds. Some are active, some are passive.
The first bit:

Top 10 Evergrande holding funds have lost $7bn this year. They own Evergrande which trade at 25cts on the dollar. Fitch says they are going to 5cts, therefore there is 20cts left, therefore they will lose $2bn more.

If they'd owned $10bn of EG to start 2021...
Read 16 tweets
baufinanciaphaster 👹 Profile picture
14 Nov
@therobotjames For the sake of playing devil's advocate, I will take the other side of that, "for most" for a couple of reasons.

I will start with the following assumptions (which may be wrong-footed, but their mine):
a) there is no tax differential between high turnover and low turnover
@therobotjames b) we are talking institutional - comms are 2-5bp, cost structure in mgmt fees is, say 15-20bp/yr
c) end investors WANT active share risk which is why they pay you the big bucks to provide active risk.
@therobotjames What IS certain in this case is that
a) you are in the active mgmt business so it is CERTAIN you have inherent expectations of creating positive alpha vs benchmark. You may not succeed every week, but on average, that's your business model.
b) Moving from say 4.5bp/yr comm
Read 27 tweets

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