WHAT two days of the week starts with the letter “t?” If your answer is Tuesday and Thursday, then you gave an incomplete answer. To mesmerize your examiner with a complete answer, you also tell him — “today and tomorrow.” Next question, please…
In using the pronouns “them” and “their,” Anda was referring to the owners of listed conglomerates or holding companies. He posted his comments in the form of a query on March 15 in reaction to a “Due Diligencer” that appeared on this space on March 8. In that column, I took up his proposition that “conglomerates are not born equal.”
To the first part of the question, I must admit I don’t have the exact answer. I really don’t understand why certain stocks are priced lower than others. I can only presume that, perhaps, business owners are only after getting their companies’ shares listed and don’t care at all whether their stock prices either rise or fall.
These so-called tycoons could also have priced their stocks very high when they offered shares to the public through an initial public offering (IPO). Then investors realized they had been had and began unloading.
In some instances, however rare they are, falling share prices create a window of opportunities for the majority stockholders to buy their own companies’ shares in the open market. The reacquisition either by the owners or by their companies could reduce the number of shares below the required minimum public ownership of 10 percent of outstanding common shares.
The second part of the query had something to do with the attitude of business owners toward the investing public,
In the first place, what does care mean to the public investors? Does the word relate to the market performance of a company’s share prices?
If care is used here to mean the acceptance by business owners of the public as their partners, then the word does not and should not apply to listed companies.
As investors, the public is mainly responsible for getting a company’s shares listed on the PSE board. Without the public, a company cannot get its shares listed. It is only with the public’s participation in the ownership of common shares—not outstanding capital stock—that enables a company to list its shares on the exchange.
To set the record straight, listing shares does not make a company “listed.”
By the way, it is about time for the Securities and Exchange Commission to review the original number of common shares sold by listed companies through an IPO and compare its findings with the number of common shares that are still held by the public.
ISM’s sale of shares
Here is another letter from a reader. In it, Karl Salud raised issues on stock rights offerings.
“I’m writing again today (letter is dated April 10) on behalf of my fellow investors in ISM. We seek your help in asking the company for clarification regarding several matters.
“As we can recall, ISM announced last January of 2016, a stocks rights offer by selling 358.1 million of its treasury shares for cash which would be used for certain investment opportunities as stated in their disclosure. The said stocks rights offer was successful and the company was able to raise the said amount of cash.
“It has been more than a year since the stock rights offer and the stockholders are left in the dark on what the company is doing with the cash. We need to know what the investment opportunity being talk upon. I guess one year and three months is enough time to share with us minority holders the news of some deal.
“Because ISM never released any disclosure about it, can I ask you for advice on what to do in this situation?
“Can ISM just raise the cash without doing anything to it and not informing shareholders on what they are planning?
“Does raising cash through a stock rights offering have rules that they have to report any money they use or plan to use?
“Can shareholders compel ISM to disclose what it is doing with the cash?
“Thank you for taking time to read my letter. I hope to hear from you soon. God bless to you sir.”
For lack of enough space, I will answer Salud’s letter in another piece but will wait for clarification, hoping ISM’s people include Due Diligencer in their daily reading habit.