Replies to post #2852 on Global Value Investing

[fat baboon]

Keck Seng and Nanyang

I'm so happy to find some people following these two!

I've been a Nanyang investor since 2006, with a bit more added in 2009. In 2006 I went on a bit of a splurge in HK small caps. Got my ass handed to me in a couple of frauds: First Natural Foods and China Packaging. But my big (relatively to the other two) position was Nanyang, so I've got a net gain on the adventure. That said the position is pretty small relative to my normal investment size. I spent some time researching over the years but I don't seem to make enough progress to really get big. Even managed to get Lincoln Yung on the phone in 2006 - but it wasn't that helpful! Keck Seng is a newer position - and is absolutely tiny! but I like it and i like the trade they just pulled off on the japanese blocks. And i admire the W SF move.

It is great to have a couple of others interested in these companies.

Here are a few questions:

1. Why does the bank do rights issues and pay a dividend? There's 20% withholding on the dividend so it seems pretty stupid to me given that the bank is controlled by the same family.

2. What do you think of the bank? The bank wasn't a big deal when i invest in 2006 and to be honest i wasn't that happy when they bought it. Made me very suspicious at the time! It may be great but I just don't know and I don't find simplistic analysis of banks on the basis of reported financials enough to go on. Bank financial statements nearly always look good until they don't. Do either of you know the bank? Do you know the family?

3. Why is Keck Seng public? it has such a tiny free float. And with this much cash on hand and such a discount to nav they certainly don't need the independent shareholder's capital! It makes no sense and that makes me suspicious.

4. This much cash on hand makes me suspicious about how much leverage they have on their shares. And this is compounded by the subsidiary shareholdings through the listed entity. i.e. keck sent, goodland and a couple of the others seem a bit twisted up.

If either of you want I have a good and long interview with the father of the current Keck Seng generation on pdf. It's a good read.

Also another titbit: there was a very large (for the time) tax case against the Keck Seng family in the '80s or '90s. I can't remember the details but it's googlable!