Patrick Möller’s Post

《Taiwan's unique landscape in May - shareholders meeting gifts.》 In Taiwan, there are always many people at Huaining Street in Taipei every May for shareholder meeting gifts. Last week, I went there to exchange my shareholder's gift. I saw two foreigners passing by. They stopped and looked at the queue. "Are you curious?" I asked them. "Yes, what’s this?" they responded. "This is a shareholder meeting gift office. Every May, if you own stocks, you can receive a notice to exchange your gift," I explained. "Does the government run this?" they continued asking. "No, it's operated by private companies, such as Google and Amazon," I replied. "That's interesting. What kinds of gifts are available?" they eagerly asked. "Each company offers different gifts. For example, I received a mug and a convenience store gift card worth 50 TWD," I stated. "That's great, thank you," they said, expressing their gratitude." Behind this interesting story, we can't ignore the "Butterfly effect" of business behavior. This long queue is for the #UMC shareholder meeting gifts. This company often offers famous Co-branded products to shareholders, and this year it's a hidden version that is as fun as opening a blind box, garnering significant media attention. Some companies' stock prices will increase significantly due to gifts from shareholders' meetings. Therefore, when running a company, any external behavior requires multi-dimensional thinking about the possible butterfly effect, to avoid incidents like the recent gaffe made by the #Baidu Vice President.

Sitting in a number of sessions this week about M&A in the tech industry at Africa Tech Festival - there is a lot of thought being given to valuations in the current market. Imagine you're selling your car. You think it's worth R300,000 because of its great condition and low mileage. But the buyer only offers R200,000 because they think the market's not great right now. This is a classic example of a valuation gap. The same thing happens in M&A. Companies buying and selling each other often disagree on the price. The seller wants a higher price, especially if the market is good. The buyer wants a lower price, especially if the market is bad. To bridge this gap, companies sometimes use a special deal called a Contingent Value Right (CVR). It's like a bet on the future. The buyer pays a lower price now, but promises to pay more later if certain things happen. For example, if a new product is successful or if the company's stock price goes up. For a far more nuanced explanation of how this all works, check out this article by my colleague Vuyo Xegwana https://lnkd.in/dUUC8C9D

😱 Is SingPost a Buy?😱 Do note that for the past 10 years, the net income has been declining. Their net margin has also decreased from 23.8% in FY 2014 to 1.32% in FY 2023. I wonder what the management has been doing for the past 10 years. From the article, 2 things to highlight: 1) Dividend Payout Ratio Quote: “SingPost will also endeavour to pay out 30 to 50 per cent of its underlying net profit from FY2024 to FY2025. It said the board views such a policy as “balanced” in view of the group’s capital requirements and delivering “sustainable returns” to shareholders. Previously, the group’s dividend policy was based on a payout ratio of 60 to 80 per cent of underlying net profit for each financial year.” Unquote. NOTE: If the management is confident of reinvesting the retained earnings vs passing the dividends to shareholders, they should focus on reinvesting. 2) Intrinsic Value Quote: Shares of SingPost : S08 +6.58% closed flat at S$0.38 on Monday. The group said that its current share price “does not appropriately reflect the intrinsic value of the company”. Unquote. NOTE: SingPost currently has a PE of 25X. With many other companies that are more predictable and cheaper, I will not touch SongPost. All the best to their investors. At ViA, We Care to Make You a Better Investor. #GrowviaViA #ValueInvestingAcademy #ValueInvesting #Stocks https://lnkd.in/gmXq9B8R

After the market close Trump Media & Technology Group (DJT) issued the following press release, gaining permission for certain non-named shareholders, to sell some or all of their shares. The stock is crashing after hours down about 14% as I type. It was down about 4% during the trading day. It's anybody's guess where it opens on Thursday morning. To be clear for the time being management and directors will be held to the original lock-up period. The company is losing money every day with little to no current revenue and no specific plan to turn this around except promises of future deal making. Since there are no specific deals that have been announced, it would seem that the insider lock-up period ending in a few months will open up the flood gates before any meaningful potential transaction can conclude. The owners of Truth Social, an oxymoron if there ever was one, from all appearances, has no visible means of support beside hope and a prayer. Even after the severe drop it is most certainly extremely overvalued. Question for any shareholders reading this. How will you feel in the fall if you are holding on purely as a statement of support of D. J Trump and he bails out leaving you holding the bag? There is tremendous precedent for that. Follow-up: June 20, 2024 -- The stock closed even lower at $26.75, down 14.56% for the day.

Direct Listing vs. Traditional IPO: Two Paths to Going Public When a company goes public, the method it chooses can greatly impact its fundraising, market performance, and strategy. Recently, Direct Listing has gained attention with companies like Spotify and Slack opting for this route. Despite its benefits, such as reduced costs and a simpler process, the traditional Initial Public Offering (IPO) remains the preferred choice for most companies. But what makes Direct Listing different, and why does the traditional IPO still dominate? Direct Listing: A Streamlined Approach Direct Listing allows a company to list existing shares on a stock exchange without issuing new shares or raising capital. This approach cuts out the underwriter, who typically prices the stock and stabilizes its price in an IPO. For well-established companies with ample capital, Direct Listing can be cost-effective. However, this method carries higher market risks. Without underwriters, shares can be highly volatile when trading begins, making Direct Listings more suitable for companies with strong investor bases that don’t need to raise capital. Traditional IPO: Stability and Credibility Traditional IPOs offer key advantages, especially for companies needing capital and market credibility. 1. Regulatory Scrutiny: Traditional IPOs undergo strict regulatory scrutiny, providing stronger investor protection and enhancing market credibility. Underwriters also help ensure a smooth listing process and increase visibility through promotional activities. 2. Market Stability: Underwriters in a traditional IPO help stabilize the stock price during initial trading, reducing volatility. In contrast, Direct Listings lack such price protection, which can lead to unpredictable price swings. 3. Fundraising and Promotion: An IPO allows companies to raise capital by issuing new shares, crucial for funding expansion or innovation. IPOs also involve extensive marketing efforts, which boost visibility and support future growth. Choosing Between Direct Listing and IPO The choice between a Direct Listing and a traditional IPO often depends on market conditions and the company’s goals. In stable markets, Direct Listings might be more appealing. However, in uncertain times, the stability provided by traditional IPOs is often preferred. Conclusion Direct Listing offers a streamlined path to the public markets, particularly for companies with strong financials. However, for most companies needing capital and market credibility, the traditional IPO remains the better choice. Going public is a major milestone, where stability and investor trust are crucial. 🌟 Explore More: Follow us for insights on Nasdaq listings and capital market trends.

Cross Holdings: When a circular ownership structure is created that is when company A owns shares in company B and company B owns shares in company B or company C. Now there are three instances of cross holdings: 1. Minority passive holdings: owns <20% of voting shares in company 2. Minority active holdings: owns 20%-50% of voting shares in company 3. Majority active holdings: owns >50% of voting shares Value the holding of other company: ---In perfect world we strip the parent company from the holding company with what might be the proportion of voting shares and value them separately ---Value of combined(parent company+holdings in other company) = value of parent company + proportion value of each holding company. To do this we need detailed information of cash flows and WACC of each company where the target company might have holding Solution to how to value the holdings: Market value solution: When a company with what might be the proportion of voting shares is traded in the market use the market cap to estimate the value of holdings. Relative value solution: When we have insufficient information regarding the cross holdings. The company with whatever might be the proportion of ownership of voting shares we have the minority interest or non controlled affiliates in the balance sheet and the target company minority interests or non controlled affiliates, use the PE ratio of the company with whatever ownership of voting shares may be in the sector which the company operates. #value of cross holdings #Valuation

Public M&A Report 01/2024: The German public takeover market in 2023 The market for #publictakeovers is stronger in 2023 than in the weak previous year. 21 #transactions were published, while the total offer volume increased by 41.97% year-on-year to EUR 39.24 billion, the third-largest figure recorded since 2014. The improved figures are mainly due to the increase in both the number and value of large- and mid-cap deals. In contrast, like in the prior year, the number of takeover bids was low compared to the long-term average. Additionally, the number of delisting offers was high in 2023. These are the essential findings of the 01/2024 edition of the Noerr Public M&A Report, in which the editors Volker Land and Stephan Schulz, both partners in the Corporate/M&A and #CapitalMarkets Teams of Noerr’s Hamburg office, analyse the market for public takeovers in the year 2023. This edition of the Noerr Public M&A #Report also features a focus article on the development of the number and price structures of #delisting offers in recent years by Stephan Schulz and Oscar Serra de Oliviera as well as an article titled “Takeover by the major shareholder” by Michael Brellochs which addresses the particularities of offers and transaction structures where the bidder already owns a significant stake in the target company. Read more: https://lnkd.in/ehKvsnrr

Weekend Wisdom Answer! In our last post, we asked How could InnovateX and its early investors potentially minimize or avoid paying capital gains taxes on the sale of their stock? The answer? The founders and early investors at InnovateX could take advantage of the Qualified Small Business Stock (QSBS) Exclusion. Under Section 1202 of the IRS code, individuals who hold stock in a qualified small business for more than five years may be eligible to exclude up to 100% of their capital gains from federal taxes upon selling the stock. Since InnovateX qualifies as a small business and the investors have held their stock for over five years, they can utilize this exclusion to significantly reduce, or even eliminate, their capital gains tax liabilities on the sale of their shares. This would allow the investors and founders to keep more of their profits from the acquisition. Want to learn more about these tips? Contact us today! #TaxDaddy #PeterholtzCPA #WeekendWisdom

OFFICE OF THE CONTROLLER GENERAL OF PATENTS, DESIGNS AND TRADEMARKS (CGPDTM) launches Open House Portal - submit your grievance on any IP and raise a ticket for resolution.   The 0ffice of CGPDTM, under the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India has taken a significant step forward in enhancing its services and improving stakeholder engagement with the launch of the Open House Helpdesk Portal. The Open House Helpdesk Portal offers a single window for communication that will provide swift and effective resolution to the queries and grievances of applicants and stakeholders across the six key areas of intellectual property: Patents, Designs, Trademarks, Geographical Indications, Copyrights, and SICLD (Semiconductor Integrated Circuits Layout-Designs) which are administered by the O/o CGPDTM. Key Features of the Open House Helpdesk Portal: 1. User-Friendly Registration: Applicants and stakeholders can register themselves on the Open House Helpdesk Portal through a simplified process by using their email IDs. In case of queries/grievances related to an already existing application, the email ID associated with the IP application shall be used for registration on Open House portal. 2. Tickets and Real-Time Notifications: For every grievance that is registered, a ticket is raised. 3. Self-Paced Issue Resolution: The Open House Helpdesk Portal grants applicants the freedom to close their support tickets once they believe that their concerns have been satisfactorily addressed, putting control back in the hands of the stakeholders. This initiative is in line with the Government of India's commitment to creating a conducive environment for innovation, creativity, and entrepreneurship. By providing a dedicated platform for communication, the Intellectual Property Office aims to foster a collaborative ecosystem where applicants and stakeholders can seek guidance and clarification in a transparent and efficient manner. For more information and to access the Open House Helpdesk Portal, Please visit : https://lnkd.in/dNS2Y45p

Weekend Wisdom Answer! In our last post, we asked How could InnovateX and its early investors potentially minimize or avoid paying capital gains taxes on the sale of their stock? The answer? The founders and early investors at InnovateX could take advantage of the Qualified Small Business Stock (QSBS) Exclusion. Under Section 1202 of the IRS code, individuals who hold stock in a qualified small business for more than five years may be eligible to exclude up to 100% of their capital gains from federal taxes upon selling the stock. Since InnovateX qualifies as a small business and the investors have held their stock for over five years, they can utilize this exclusion to significantly reduce, or even eliminate, their capital gains tax liabilities on the sale of their shares. This would allow the investors and founders to keep more of their profits from the acquisition. Want to learn more about these tips? Contact us today! #TaxDaddy #PeterholtzCPA #WeekendWisdom