MAKATI Finance Corp. (MFin) shares climbed 49.862 percent to P5.44 on April 10 from P3.63. Finding this “unusual,” the Philippine Stock Exchange asked the company to explain the stock’s trading behavior.
Like other listed companies that had experienced a similar “unusual” surge or plunge, MFin, thru Wilma Fundan, the company’s accounting manager, responded with the “usual” explanation: “Please note that the company has no knowledge of the existence or absence of any undisclosed information or any other significant factors that could have triggered the unusual price increase.”
As in its “unusual” letters of inquiry in the past to certain listed companies, PSE stopped asking after receiving the “usual” justification. Apparently, the exchange has not learned from experience. Previous postings showed it had sent MFin similar letters of inquiry about past trades and had gotten a similar response.
I am not in a position to judge if MFin, in fact, unusually behaved on April 10. It’s the PSE’s responsibility to require the company to explain the 49.682 percent jump in its share price to protect the public from hidden trades that may have been made by company insiders. In short, the members of PSE’s market monitoring teams are only doing their job.
The only problem with the PSE’s strict adherence to the rules is that public investors may not at all fully understand why the exchange failed to cite MFin’s historical prices. For instance, the PSE’s own website shows MFin hit a 30-day high of P6.35 at one point and a 30-day low of P2.76 at another.
At first glance, that could mean an unusually huge increase of 130.072 percent or 2.3 times in MFin’s share price, but over what period? The public should have been told which came first: the 30-day low or the 30-day high.
From MFin’s historical prices, the public would have recognized a price trend as posted on the PSE’s website.
In fact, MFin dropped to a 30-day low on Dec. 29, 2014. It recovered after 10 trading sessions, climbing and closing at its 30-day high of P5.44 on April 10, after opening at P4.48.
Why were there only 10 trading sessions that separated the 30-day low that occurred on Dec. 29, 2014 and the 30-day high that was recorded more than three months later? Well, MFin is rarely traded.
This narration of MFin’s trading behavior on April 10 does not show the stock ever falling to P3.63. It was based only on MFin’s disclosure to the PSE in response to the regulator’s letter asking it to explain the stock’s climb to P5.44 on April 10. Where did it get the P3.63 figure?
Of course, even MFin omitted in its filing the information that on April 8, it traded at P3.63 throughout the trading session when a total of 13,000 shares changed ownership, which increased to 73,000 shares on April 10. All this meant the 50-percent peak did not happen during the same trading session.
Ask the Benitezes
If MFin’s public stockholders would persist in knowing why the company’s share price on April 10 soared almost 50 percent, they should address their query to the Benitezes, the company’s majority owners. Perhaps, if they did not get the company to respond with a credible answer, they could probably persuade the Benitezes to justify MFin’s “unusual” trading pattern.
Here is an optional suggestion: Try asking board chairman Rene B. Benitez and company director Eric B. Benitez for information. Perhaps, they could also seek the assistance of Teresita B. Benitez in soliciting inside information on the MFin’s financial plans for 2015 or in making Rene and Eric to talk about the stock’s “unusual” market performance. After all, she must have so much influence on them as their mother.
Public investors would even be better informed if Mrs. Benitez herself would do the proper disclosure on why MFin soared almost 50 percent to P5.44 on April 10. After all, she is the vice chairperson of the company board.
The Benitezes control the ownership and the management of Makati Finance through two corporate stockholders, which hold a combined 158.005 million shares, or 77.71 percent. Amalgamated Investment Bancorporation and MF Pikerville Holdings Inc. own 143.584 million shares, or 70.62 percent, and 14.421 million shares, or 7.09 percent, respectively. Company insiders own 23.738 million shares, or 10.307 percent.
If Mrs. Benitez and her two sons won’t talk for fear of prematurely disclosing material facts, why not try asking the two independent directors of MFin? Francisco C. Eizmendi Jr. was president and chief operating officer of San Miguel Corp., while Eugene E. Reyes is a former executive director of the Securities and Exchange Commission.
By the way, Due Diligencer can share with the public a hunch on MFin’s 49.862 percent surge for whatever it’s worth: MFin has been distributing 50 percent of its net income as stock dividend every year. The disclosure coincides with the company’s filing of its audited financial statement. Will it soon announce a financial statement for the year in a future posting?