Replies to post #157006 on Sino Agro Food Inc (fka SIAF)

[RealDutch]

In my view it is naive to assume that provincial authorities will act in a honorable way.

They don't have to. All they have to do is follow the rules. Do what the lawyers tell them to do.

AND, they are doing that already.
http://www.anjielaw.com/en/professional/277.html

The reason why HERB has failed, so far, is probably the same reason why SIAF has failed with the stock dividend. It is tough... to give us Asian stock. Can it be done? Ask the lawyers.

[ks1977]

I think this is a very simplistic approach

I agree. The argument that risk is lower with a lower price is only valid if everything else is equal, or one assumes that a person will buy the same amount of shares disregarding the PPS (while I expect reality to be closer to people spending the same amount of money regardless of the PPS, maybe even more money with a lower PPS). However, everything else is NOT the same. Just to mention one thing; Earlier we had a risk of a lawsuit, now we have one unfolding (the effect is of course un-known).

The question in relation to risk would be WHAT has changed and does it justify the change in PPS. The value of SIAF is NOT the same as it was 2 years ago (100% dilution at fractions of book, and EPS going down as well).

Whether the risk is higher or lower now than before is up for discussion. The same applies for risk/reward.

[ValueInvestor01]

The point is that a lot of other factors are involved when it comes to the risk of investing in a company.

I am fully aware that there many factors that are involved. But the price you’re going to pay for owning a particular asset should justify the risks involved with it such as those risks you have specified.

Therefore it is completely reasonable to say that paying as low as possible is a lot safer than paying higher price for such ownership. It is not so much about the fundamental of the asset or its upside potential that we are talking about here, but rather how much money you are willing to pay for bearing the risks and the amount of capital you could lose if things don’t go your way. Thus, the cheaper you pay, the less you can lose, and the decreasing price does not equal higher risk but quite the opposite.

It’s very simplistic approach yet people keep making it complicated