Brainsmasher, Cleez, Treit, sorry about not backing up my thought and comment. I haven't really followed SIAF closly, know they sold or vacated the cattle space, a while ago, know the big play here is the FF, know the current ratios suggest high undervaluation, risk still seems very apparent but my comment was not about any of this, any company specific business.....really only one thing bugs me about siaf and the rest of the comments are sector specific.....so here goes. In saying this I am reminded of my own failures, truth be told, as an investor, and in the words of Yeats, (to be explained below). "...And therefore I have sailed the seas and come
To the holy city of Byzantium...."
1. About SIAF and the Swedish connection (Swede-fish connection?). At first glance I was delighted, due to the apparent "legendary" track record of this group,...but really, I think that is largely wrong.....I have never seen a single bit of data to show that this stock picking group has performed above market in such a way as to make any particular pick statistically significant. SEMAFO, more on that below, is meaningful for me on a personal note. What bothered me was that this mirco stock was getting ownership sponsorship from a geo grafic group that did not make a lot of sense, other than general, good natured herd following. Swedes and South Chinese fish farms, seems like a natural fit, wouldn't you say? Not exactly like Swedes and Vikings, Swedes and Beautiful Blondes, Swedes and good people, to me these are natural fits....The downside to this thorn in my brain was that the stock was not enjoying broad based investor interest, which makes it doubly risky. Stated clumsily, if there is a herd or cult like interest coming from a town or two or three in sweden, the stock is probably much higher, much more herdlike, than it should or might be. After all, if the stock club goes cold, FOR WHATEVER REASON (MAYBE THE FOUNDER GETS CAUGHT IN A DOMESTIC SCANDAL, DROPS DEAD, or maybe there is general market risks in the area itself..etc...anyway, I came not to like or trust this herdlike interest from a tiny town or two or three.....in short, if the stock club changes its mind, even "incorrectly," the stock gets crushed for no good reason, and I do not like to get crushed if I am right about something. Doesn't seem fair.
2. Sector issues: Structurally, american "civilians" investing in small cap chinese companies beyond the reach of Western law, where the executives live in china and have no ties to the west, and more importantly, have no culture of capitalism.....makes no sense. Institutions realized this, so that is why they are loathe to put a nickle in Chinese micro caps. ...... So, therefore, we have an investment that makes double no sense: Swedish herdish stock club investors, investing without their Vikings and Blondes, in Chinese based fish farms, "using" chinese managers (or east asian) who are outside the reach of U.S. law, with the company's money? CAN'T WE DO BETTER THAN THIS AS INVESTOSRS......
3. SHORTS KNEW ALL OF THE ABOVE ABOUT THE SECTOR. They are generally smarter than retail american investors who do not have the support of institutions at all. They saw it as a fragile sector, built upon a legal foundation without recourse, and they piled in.
4. The internet. Shorts further knew, or rather over time quickly discovered, that it is all about information. The internet gave them the direct pipeline to emasculate and psychologically destroy retail joes who go home and like to figure out financial entities on the home computer. So, what happened was, they pressed or double downed on their position. If a sizeable percentage, quite large really, of these retail america owned (and swedish) little vehicles were corrupt, they would use the internet to max out their position that they were all corrupt, and easily quadrupling their money by setting up heavy short positions before publishing their hit pieces.....such easy marks were we!!! and the good natured Swedes.
5. The viciousness of money. Nobody, but nobody, a year or two ago, could have foreseen how vicious the shorts were. They didn't want to win their bets on merely the large percentage of corrupt and disorganized dodgy china micros, they wanted to destroy all of them, and they are in the process of doing so. By lying about the ones that are making efforts to at least try to play by the rules....
6. MACRO ECONOMIC CONSIDERATIONS. We would all have to be living under a rock not to know this is a vicious and generational bear market. DUHHHH, and it is yet again, a sucker's bet to think that one can outthink it by investing in western equities, and if a company trades on an american exchange, it IT A WESTERN EQUITY, a hard lesson for me and us to learn. So, this means I am buying terrible risks, losing propositions, in the middle of probably the worst bear market ever. Ever. Not a good idea, nor a formuaele to be successful.
In short, the company, however well intentioned, never was worth the 1.6 price due to the Swedish imbalance, the sector itself is structually diseased for easily identifiable reasons, and the macro economics assur one of bad returns unless we are 5x smarter than even we think we are, and the truth here is that we are not EVEN as smart as we think we are! If this were not so, we would not be in this sector to begin with.
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WHO WOULD WANT TO INVEST THEIR MONEY AGAINST THESE ODDS? NOT ME.
A neat part about perception. It is hard to expression an observation before it comes to somebody. Where is the genesis, or the genius for that matter, of a deep thought or perception? In this space, it requires many things, but removing personal illusions is a requirement. I knew that SIAF could not possibly escape its current stock price a while ago, even though I respected many of the posters on this board, the three above being foremost but here are others....and I do not see the risk reward in owning SIAF even at this level. Not with these factors being undeniably present, and not (see below) where there are better opportunites that are obvious.
......which brings me back to that lovely and sad Yeat's poem, and the stock SEMAFO. I am sure that nobody in the history of the world has ever put Sailing to Byzantium and SEMAFO in the same sentence, so there, that makes me the first of 8 billion earthlings (I love that word!) to have ever done so.
About 3 years ago, there I was, getting wiped out in the gold market, in equities, losing the million dollars that, by my vision, I had just made in the prior 4 years, starting from scratch. A hard thing to do. I had been decimated (a great Roman word, to decimate), and moving down the food chain, believe or not, one of the very last companies I was looking at, was Semafo, a little south african gold company with a PE of about 1.5. Needless to say, I did not buy it. Congrats to those here who did. I do remember that PE, and I found the little gold micro myself...and guess what, you say that SIAF now has a PE of 1.5 or so. Coincidence? NO. Double and triple no. or rather, there is utterly no similarity between the two, for this reason: All equities, especially china micro caps, present bad risk reward profiles, and for reasons peculiar to this sector, especially chinese equities. Semafo, on the other hand, was a micro cap emerging in what will probably be the greatest bull market in history, as western financial systems deteriorate.
My conclusion: I have returned to the only sensible investing market open to western investors, and one that is gonna be hugely profitable: the gold bull market. Back to my Byzantium Even dummies like me make money in a gold bull, because a bull market will fix your mistakes; it is forgiving. Sorry for not being able to better condense these overlong thoughts. sorry too for my typical typos....there, my memoirs are at an end.
And I have not read that poem in 20 years, but now I just have, and here are the last lines:
Once out of nature I shall never take
My bodily form from any natural thing,
But such a form as Grecian goldsmiths make
Of hammered gold and gold enamelling
To keep a drowsy Emperor awake;
Or set upon a golden bough to sing
To lords and ladies of Byzantium
Of what is past, or passing, or to come.
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Gold is there too! coincidence? how nice. - tootalljones
