Thursday, October 24, 2013

The UIS Story - The End Game?

The UIS story first appeared in this blog at the following link:

A few years had passed and the majority shareholders request to liquidate the fund:

Is this the end game for UIS? Will minorities support the liquidation? Will it be able to liquidate close to NAV, considering there are other liabilities to take care of like liquidation costs, taxes etc? I do hope that patient long term investors of UIS will participate in the end game. As for me, it had been a long ride with UIS and it had been a steady top 30 holdings stock for me. An unsung hero that will never get noticed by me most of the time as I look through my holdings, but I always know that there will be a time when its value will be unlocked and discovered.

Maybe it is coming soon..............



Blogger Han Kiat said...

Since the NAV is more or less established, investors vested at average cost that is higher than NAV may well throw in the towels, so that they can re-deploy the proceeds. Hence, they may support the liqudation or try and cash out in the market.

3:12 AM  
Blogger ghchua said...

Hi pal,

The NAV of UIS is not a fixed number, and it changes everyday due to market conditions. Since they invested in mostly listed securities, there is also a risk that they might divest those securities at a low price if the market crashes when they are liquidating the fund. Therefore, the final amount you get from liquidation is uncertain, considering the tax liabilities as well. And I dunno whether UIS will be suspended when they start the liquidation process. If it is, then there is no way for you to get out and you will have to wait for liquidation to complete to get back your NAV net all costs.

The only certain part is when you sell now at market value. Therefore, the buyers of UIS now is expecting some sort of discount to NAV to factor in all the risks. As to how much the discount is needed, it is up to the market to decide and for us to take advantage and buy more or sell based on the discount given.

In short, there is no simple answer to a difficult question :)

9:33 PM  
Blogger Han Kiat said...

Thanks. I presume when the green light is obtained, the assets have to be b liquidated by a certain date. If yes, then it becomes uncertain whether they can be cashed out at the right price. The other question is whether they are ready buyers in the open market.

10:33 PM  

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A self-directed investor, looking to invest for retirement needs and bypass all those expensive financial planners/insurance agents. Investing is fun, profitable or most important of all, knowledge gained is useful for the rest of your life!

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