by: Tam Ging Wien
All examples and stocks quoted here in this article and on the ProButterflyTM site are for learning purposes; it does NOT constitute financial advice or a Buy/Sell recommendation. Contents are reflective of personal views and readers are responsible for their own investments and are advised to perform their own independent due diligence and take into account their own financial situation. If in any doubt about the investment action you should take, you should consult a professional certified financial adviser.
Just last week, commodity trader Noble Group Ltd announced its full year results for FY2017 and shocked the market with as US$4.9b loss. The following news report from Channel News Asia provided a good summary of the Noble's recent results announcement: Noble Group plunges to US$4.9b loss, in talks to wrap up debt deal.
Again this week, news broke that Noble had paid its outgoing co-CEO Jeff Frase a remuneration package of approximately US$20 million last year. This is again summarised nicely in the Business Times article: Noble Group paid co-CEO US$20m as company lost billions.
As a result, its share price has suffered this year halving from a high of 30c on 25-Jan-2018 to close 05-Mar-2018 at 15c.
Was its actions justified to pay such a huge remuneration to its co-CEO while its shareholder's suffered? The press seems to be all over Noble Group - painting a less than noble picture of the commodities trader.
The commodities trader is still currently in talks with its stakeholders to come to an agreement on restructuring of its debt.
The worse is certainly not over for the embattled commodity trader. Once a darling of the stock markets, its stock price was hit by an anonymous analyst known as Iceberg Research more than 2 years ago. Concerns surrounding Noble's ability to fulfill its debt obligations and accusations of inflating its assets and contract values have hit the stock hard.
In mid-March 2017, Noble had appointed Paul Jeremy Brough as Chairman of the board. Brough is a veteran in restructuring. Involved in many high profile corporate collapses, his counts the liquidating Lehman Brothers's assets in Asia, turning around the bankruptcy of Sino-Forest and restructuring failed fishmeal supplier China Fishery Group. Will this man be able to turn-around Noble in the years to come?
We will certainly be watching.
In August last year, Iceberg Research released yet another scathing attack on Noble and pointed a finger at the failure of the Singapore regulators. Iceberg Research is an anonymous research house that has been attacking Noble since Feb-2015 when it first accused Noble of being a repeat of the Enron saga.
If you haven't had the chance to catch Iceberg's report, please click on the link below:-
Since then, Iceberg has released 2 more reports - one warning Noble's creditors of the poor management and the second attacking the restructuring plan. The key message that Iceberg seems to be delivering through these 2 additional letters is to point out that the same incompetent management remains at the helm of Noble will not change its fate regardless of the restructuring plan. We quote from the Iceberg's open letter to Noble's creditors: "you have been royally screwed".
We believe that the investing community as a whole as much to learn from the Noble saga. Drawing upon the lessons from this crisis will certainly help us as investors to always be on a look out for risk.
We have been following Iceberg Research since its first report in Feb-2015 and we found their analysis very insightful. Their reports have exposed many tricks used by Noble in order to inflate the values of their assets on their balance sheet.
While the reports are indeed heavy reading, we do encourage season investors to read them is helps you become aware of complex accounting slight-of-hand. We compile the links to the major reports by Iceberg below:-
However we understand that some of our readers may not have the in-depth accounting, analysis and investment knowledge to decipher Iceberg's reports which could come across as fairly technical in nature.
Therefore, here is a short summary of each of the 4 reports which we hope will help the larger investing community out there to appreciate the contents of these highly insightful reports:
With regards to Noble, ProButterfly is presently staying out and observing the story unfold on the sidelines.
We hope you appreciate this education piece from ProButterflyTM.
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