Ingenuity Solutions Berhad ("Ingens") has gotta be the most 'drama' share for quite a while. Forget your Harvest Court and Raymond Chan sagas. This beats that in my opinion at least. Long story short, I got burnt. Real Bad. Blame it on greed and negligence (I really wanted to go shopping), but what's done is done. All I can do is chronicle the events so that I can learn from my lesson here and move on.
29/08/2012, Ninetology Marketing Sdn Bhd ("Ninetology") made an offer to purchase 39.62% shareholding in Ingens from 4 major shareholders for a offer price of RM 0.550 cents a share. If the deal goes through, this would trigger a mandatory general offer to acquire all the remaining shares Ninetology has not already owned in Ingens.This was after the share, on 28/08/2012 had dropped 20.45% from RM 0.440 to RM 0.350, just a day before. The share surged back up 12.86% to RM 0.395 the same day. 31/08/2012, our country celebrated it's 55th year of Independence. Poetic irony.
04/09/2012, Chin Boon Leong ("CBL") made an announcement calling for a press conference to "clear the air". He was to address the media and stakeholders in his personal capacity. The press conference was to be held the next day 05/09/2012 at 10.15am in Federal Hotel, Jalan Bukit Bintang, Kuala Lumpur.He sent out an invite to the media extended the invite to all shareholders of Ingenuity Solutions, 1 Utopia Bhd as well as other concerned stakeholders. Chin is also the managing director of 1 Utopia.
The announcement above was made in the morning. Later in the day, at 4.19pm, the share started to head south, tumbling RM 0.09 or 25.72% from opening of RM 0.350 to RM 0.260 per share. The counter closed at RM 0.225.
On 05/09/2012, jitters were high in the morning. The stock went south to RM 0.215 a few minutes upon opening and the rebounded to a high of RM 0.270 and then went back down to RM 0.250 and remained stagnant only to drop further as break approached. It was around the same time that CBL made the announcement 'Thanks, but no thanks.' As I write this blog post, market is about to reopen for the afternoon session and lots of blood is expected to spill. Massacre time and death is in the air.
----
It's not like Ingens wasn't rife with drama to begin with. The share has had to answer to 2 UMA queries in August. Volume was high in the past weeks before the announcement. Share has managed to surge from RM 0.120 lows to highs of RM 0.510 in the month of August alone. Things were weird.
Feel free to read what a popular blogger has to comment: http://nexttrade.blogspot.com/2012/09/ingens-restricted-offer-to-buy.html
----
Self Reflection Time:
Why did I go into this counter?
On a normal day, I wouldn't go into a counter like this. Volume has been madness for the past month price has surged beyond measure. Normally I wouldn't go into a counter which's price has surged as that would indicate that the show's over and all that can be priced into the counter HAS already been priced in. The increase in price for the past month has been somewhat incomprehensible and the worst thing to do is to go into a counter blind.
In hindsight, I blame negligence and greed. Plain and simple. Let's analyse the trade:
There are 2 possible scenarios for the play-
1. Ninetology's offer is taken up and therefore there will be a gain on difference between the price bought and the offer price. I entered at 0.405 with a potential gain of 35.81% if deal went through.
2. Ninetology's offer not taken up. Share could tumble down. How far it could go was unknown. My exit price was 0.220. I lost 45.68%.
Assuming the probability of the deal being successful is 50/50, it would be plain to see that I was already a loser to begin with. The risk outweighed the benefit. This doesn't take into the account the fact that I did not analyse or investigate the legitimacy of the offer. Who is Ninetology? Would CBL and the other shareholders be inclined to take up the offer?
What can I take away from this VERY EXPENSIVE LESSON?
Do your homework. Go into counters which are fundamentally strong. If you're late to the party, don't bother attending at all then. Don't be too greedy.
----
There's a lot of emotions going around, speculation that CBL and Ingens are in cahoots with Ninetology and people are angry at Bursa for "allowing" retailers to get conned. But these are market forces, and I think losers shouldn't blame others on their losses, but reflect on the mistakes that they have made in this trade.
Not all is lost. Ingens had a good quarter and there still can be potential in this counter. Alas it's time for me to cut my losses and lick my wounds. Another lesson. Contra is a hard game.
