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Wednesday, October 15, 2008

Blog Capsule 4 - Is Seadrill Selling Sapcres or Not?

Since the start of this week, "newbie" made several unsubstantiated comments that Seadrill has been disposing SAPCRES. If my memory serves me right (I could be wrong), I vaguely recalled he first made the comment first on Monday. Certainly, as of yesterday, he repeated them more than once here. His latest was last night, at 11:14 PM.


Note newbie's 23:14 which said "since Sep 30" (which is over 15 days ago) and note "disposing SAPCRES "every day".

Is this true?

Checking Bursa announcement today (lunch time, Wednesday, 15 October), Bursa has not yet made any such announcement, despite well over 2 weeks.

Personally, I doubt this news very, very much for the following reasons:

1. Seadrill has been accumulating SAPCRES since last year. They've gone from zero to 23.4%. The 20% level is a key level, suggesting strategic buying. They would need to have very, very strong reasons to backtrack, as their accumulation price is clearly higher than today's level.

2. They have been consistent net buyer. As far as I am aware, they have never sold Seadrill before. Their latest purchase is on Friday, 19th September, which they reported on Monday, 22nd September. Note their generally prompt report and their practice of never selling.

3. Newbie claimed that Seadrill has been selling "every day" "since Sep 30, which is a Thursday. IF so (and I seriously doubt it), then, this would makes it well over 2 weeks already, and Bursa has yet to report on it. So, the longer Bursa don't announce, the greater the signs of "untruth" here.

Anyway, this morning, I noticed a couple of chatters - Windsurfer and Moolah - has already queried newbie, and I also left a comment for newbie at 8:48 AM. Others like "ezi" also started querying where newbie got this source, since it is not reported in Bursa.



newbie finally joined the chatbox at around 11 AM, not his usual behaviour.

After my query, newbie said "Seadrill has sold or has been selling thru CLAS broking firm no. 35" at 11:03 AM.

When queried by cycle, he said he doesn't know how much Seadrill have sold at 11:07 AM.

At 11:11 AM, he asked me "Seng, wat if Sea drill sold just a tiny percentage of their holdings must they announce?" (Note the "what if")

At 11:15 AM, newbie claimed that his remisier knows this.

At 11:16 AM, newbie claimed his remisier told him this and repeated "Seadrill selling thru CLAS".

***************

Anyway, the purpose of this blog capsule is to see whether newbie is telling the truth or just spreading a false rumour at a critical and sensitive time.

Price wise, SAPCRES found bottom on Monday AM, I suspect many in my chatbox started buying when the price was around or below 92 sen on Monday PM. I suspect many held it overnight Monday night, started selling on Tuesday, but continued to hold overnight on Tuesday night also. On Tuesday night, US markets profit take, and Bursa KLCI was down 16 points at today's lunch time.

So, the timing of newbie's rumour has the potential to cause a major fall to SAPCRES price, because of the sensitivity of the news - Seadrill is the MAJOR reason that makes SAPCRES a bullish case, and the absence of Seadrill means the stock price has the potential to fall.

Also, the timing of newbie's rumour is "good" (i.e. good if you want SAPCRES price to fall), because it creates additional uncertainty, when overall recent uncertainty was already at its highest.

There is no doubt in my mind what newbie wanted to do with his rumour since Monday. All experienced traders and knowledgeable investors also knows exactly what newbie was trying to do.

I am naturally dissappointed with newbie's behaviour. But at the same time, nothing is certain in stock markets, and newbie could actually be doing us a favor, if it was the truth. But the manner in which he spreads rumours and the manner in which he does this more than once - speaks very loudly in itself also.

Anyway, this is a blog capsule. Let's see whether newbie (or as he claimed, his remisier) has been telling the truth. The truth shall come out later anyway, one way or another.

2 comments:

jasonred79 said...

EXACTLY Seng!
The key word here is "IF"

IF newbie is correct, it's a totally different scenario from the one where he is just spreading a rumor.

Also, I would like to add... newbie claims he got this info from his broker. ... So, I bet you that IF HE TURNS OUT TO BE WRONG... he will turn around and say, "looks like my broker was lying to me"

However, if newbie turns out to be correct, Seng, you will probably be forced to eat humble pie, since you seem fairly accusatory in your blog.

Personally though, I think you're safe. Your logic seems sound, so yeah, my bet is that it's just a rumor.

So, my total bet is newbie is wrong, and he blames it on his broker.

Also... IF newbie was correct, I do not think that he actually wants Sap to fall. If he was correct, he would try to short the counter as much as possible, then wait until announcement from KLSE, right? Your presumption is that the rumor is false, AND newbie is stirring all this up just so he can grab Sap at cheap price....

We shall see.

Seng said...

Jason,

To me, the issue is simply one of responsibility by an experienced trader when he knowingly spread a rumour at a sensitive time.

Nothing accusatory.

I did chat with newbie after I published this. He actually raised it with me since he just read the article. I asked him if there was any sentence in this article that is unfair. He said no. And I offered him the opportunity to comment on here or in my chatbox at ANY time if there was any sentence in my article that is unfair.

So, my conscience is clear, since this is something I observe and I wrote it down.

As an aside, there is a silver lining to this episode, so, not all of it is necessarily bad. Even though newbie may be spreading a rumour early, it forced everyone to look at Sapcres and Seadrill closely.

But I must say, this entire episode - to my own personal standards - reminds me too much of syndicate behaviour, that I feel quite uncomfortable with the entire episode and don't wish to see it repeated.

Hence, this article.

No repeats.

Seng.