IPO- The Moneymaker ?

Like many other small investors, I used to think that an IPO (initial public offer) issued by a company is a way of making fast and easy money. In fact it used to be that about 10 years ago but somehow, lately I noticed that the valuation of IPOs has tended to be on the high side. Examples are PChem at 5.04, ARMADA at 3.60 and now FeldaGlobal at 4.60 and Gas Malaysia at 2.20.

I remember  Air Asia IPO was at 1.25 and so as ThPlant. These were affordable prices for  individual investors and as a result wealth was shared all around. Higher valuation gives the impression that the company is doing well and also extend more opportunity to institutional investors to get the shares.

Another consideration now in light of the Facebook IPO fiasco about 10 days ago, is the nonavailability of certain information regarding the company to retail investors who apply the IPO in good faith only to suffer losses as the price depreciated following the listing. Some people who are in the know stood to get a lot of money from this unlevel playing field. FB IPO lost some 18%  of its value by end of the week of its listing.

Facebook  IPO - The fumbled sale of the century (Getty Image)

The hype about this tech IPO was over the top. Everyone who intended to make money was almost sure that the listing was godsend. What they forget is to look at the fundamentals of the company and its business model.

Selling advertising space in FB used by some 900 mil  people, sounds very good but how much earning has the company achieved prior to it being made public? Sure FB Inc. made money but the people who put their money wishing for the share price to soar are sure disappointed this time.

Imagine FB Inc. was valued higher than SHELL which has tangible assets unlike the former . That in itself should have alerted some investors to rethink their intention.

So Facebook IPO is no moneymaker for small investors.

As I said before this very public fiasco, I had faith in IPO. I have applied so many and got some and not others. And I must admit I did make some money but with higher capital outlay like in the case of PChem. Now I am wishing I have not applied for Gas Malaysia IPO which closed on 25 May 2012. The valuation is made at 18 times its PE and it was pointed out on 27  May that the prospectus which I failed to read was rather vague on the financial performance of the company apart from being affiliated to big names like Petronas Gas. I am rather worried that much as I wanted to lessen my risks during these "unusually uncertain" times , I  still have a soft spot for IPOs. Emotion is not good in investing.

 I hope I am wrong about Gas Malaysia Bhd IPO.

As for FeldaGlobal IPO valuated at 4.60? I think I am going to give it a miss and buy the shares in the open market a few weeks after the company's listing.

Lipid Lowering Drugs: A Patient's Experience

Lipid lowering drugs (statins) have been vaunted as the "miracle" drug to reduce or prevent morbidities and mortalities due to heart attack. Experts quoted research findings testifying to that effect. But like any other drugs, statins have side-effects. The only difference is some patients suffer more than others. Another point worth mentioning is some patients accept the side-effects while others, perhaps too adversely affected might complain about them.

I have come across many patients with different behavioural responses to the medications prescribed to them. As I like to engage patients to talk about their health in relation to their medical conditions, I tend to get a lot of feedbacks from patients. I find these feedbacks valuable as they form a part of sharing of experiences which could help other patients who are less vocal or suffering in silence.

And so today I had one patient who came in without an appointment, insisting agitatedly to change one lipid lowering drug labelled S which she has been taking for the last four years with another labelled L.

Upon checking my medical notes, I actually changed the S statin to L statin four months ago when I discovered that her lipid was still elevated despite being on S for such a long time. However on her subsequent visit two months later I inadvertently reverted the statin prescription to S. After taking S for nearly a month she observed that her brain became "jammed" again, yes, that was how she described it. She felt she was more depressed and also forgetful. Her joints ached and she felt generally "down". she said her problems were greatly reduced ,in fact for the first time in many months, she felt much better when she was on L statin (for the two months she was on). She was adamant that she wanted it to be reverted to L. I happily obliged.

Well, I listen to my patient intently because she is the one taking the medication and she should know best what and how she feels while on the drugs. Compliant patients will report genuinely to enable us to individualise the medications and reduce adverse effects and consequently improve their quality of life.

In the meantime her lipid level is monitored every six months to observe the effects of the prescribed statin.

Statins are known to affect the muscle and some patients are affected more than others. While this is noted in the literature, large scale studies normally would not capture so called "isolated" observations. And there is always that possibility that pharmaceutical-sponsored research would somehow skip negative findings of the drug under trial. It may sound preposterous but it has been reported.

Taking cognizance of evidence-based medicine, medications are tailored to indicate the compliance with the standard practice. However anecdotal evidence needs to be looked at for optimisation of therapy for individual patients.

And you would not be able to optimise the treatment unless you engage your patients. Quite often patients complain that doctors do not talk enough to them or that they are scared to tell the doctors what they are experiencing. It is a tragedy for patients who are in this predicament, they see doctors regularly and yet are not able to express their  fear and anxiety. Try putting  yourself in their shoes.

For all doctors out there, do engage your patients because as the saying goes , we cannot always cure but we can always comfort. Addressing their fear and anxiety and listening to them is a major part of their therapy.

AMB Unit Trust at 3% sales charge till...

As a form of diversification I have decided to purchase some AMB (Amanah Mutual Berhad) unit trust. My banker at Maybank had tried to persuade me to buy these units since early last year (2011) but I was skeptical ( without even looking at the annual financial report!). I am more comfortable with the "regular" PNB unit trusts like AS1M,ASM,ASN3 and ASW.

Last week Agnes (the persistent banker) had texted me that AMB unit trust was selling at a discount of only 3% sales charge as opposed to the usual 6.5%. My interest was piqued. I started to look for the information on this unit trust and the prospectus and was encouraged to invest. In fact I truly regretted not investing in it much earlier Launched in 2003, this PNB-owned unit trust fund has been making impressive progress giving an upside of 167% over the period. Of course you will realise that past performance is not a guarantee of future income distribution ( as they always like to remind investors!).

I withdrew some of my saving last Thursday (11 May 2012) to purchase this Unit Trust and was looking for more fund before the deadline of the discount sales charge that is today 15 May 2012! Was counting myself lucky when I received a text from HSBC on Friday 12 May, that my BNM Bond (SSR) acquired in 2009 would mature on 14 May 2012, Monday. Gosh,the 50k capital "out of nowhere"! I was adamant all of it would go to AMB unit trust. So you could imagine my desperation to get back that money in time before 4pm on 15 May today.

I checked online for the credit  last evening , but still not in. This morning I enquired "left,right and centre" for the fund as it was going to be a last minute purchase kinda thing. The telebanker said it was BNM which was delaying the crediting and the HSBC branch manager was trying to influence us to buy their managed unit trusts by saying that they could also give us a 10% return to rival AMB and that past performance is not a guarantee...blah,blah......and at 4pm there was still no sign of my "money". I was disappointed to say the least.

And just now at about 9.30pm  (15 May 2012) when I checked online, there it was my 50k nicely nestled in  among the transactions. Well, I missed the discount and now hoping that the AMB unit trust price would fall following the Eurozone crisis with Greece possibly withdrawing from the Euro (or being ejected). I noticed today there is a broad selling down across the board at Bursa Malaysia in tandem with other regional markets.

As I am no longer risk-happy like I used to be, I am into unit trusts and let the fund managers deal with the market volatility. Luckily, I  managed to come out of the market just before the selldown, leaving only my telco stocks which are broadly defensive. Though AMB unit trust is an equity fund , I feel a lot safer to be in a group rather than on my own as I am looking for returns beyond five years of investment. Trading and speculation are out as far as I am concerned (for the time being :).... at least)

A discount of 3.5% is quite substantial if you were going to buy a lot of units. As usual one can never be lucky all the time and come to think of it, the process of fund acquisition in fact constitutes half the fun of investing,