Posted by: donmihaihai | May 10, 2019

Money is always there, but the pockets change

Reading BH 2016 letter again and noticed that below is happening to Singapore.

You need not be an economist to understand how well our system has worked. Just look around you. See the 75 million owner-occupied homes, the bountiful farmland, the 260 million vehicles, the hyper-productive factories, the great medical centers, the talent-filled universities, you name it – they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion. 

It’s true, of course, that American owners of homes, autos and other assets have often borrowed heavily to finance their purchases. If an owner defaults, however, his or her asset does not disappear or lose its usefulness. Rather, ownership customarily passes to an American lending institution that then disposes of it to an American buyer. Our nation’s wealth remains intact. As Gertrude Stein put it, “Money is always there, but the pockets change.”

 Hyflux and Tuas Spring

Since I am on Hyflux, let look at some statistics.

Statistics of perpetual class A preference shares as at 14 March 18.

13,572 preference shareholders hold 1 – 99 shares total 571,360 preference shares.

6,127 preference shareholders hold 100 – 1,000 shares total 1,461,300 preference shares.

388 preference shareholders hold 1,001 – 10,000 shares total 862,800 preference shares.

17 preference shareholders hold 10,001 – 1,000,000 shares total 1,104,540 preference shares.

That is about 20K perpetual preference shareholders and plus another 17K ordinary shareholders equal to what the press has been written about – 37K mom and pop investors.

Ignore equity shareholders because equity shareholder enjoy all the upsides and bear all downsides, the above says, on average 13,572 pref holders hold 42 pref share at $100 each, mean these 13,572 invested $4,209 in average. 6,127 pref holders hold 238 pref share at $100 each, mean these 6,127 invested $23,850 on average.

Of course these are average but it does say the amount invested by most investors are not significant and at least close to 75% of these pref shareholder invested less than $10K.

These stats actually paint a different picture from what are being printed in the news. Out of the total 37K investors printed on the news, the only one hurting from Hyflux should be less than 5K investors. Actually, logically speaking, only 405 pref shareholders (388 + 17) will be seriously hurt by Hyflux. It is a far cry from 37K so called mom and pop investors.

I can understand if one invested a lot into Hyflux pref share and finding all kind of ways to get back their money. But being the press, it has to exercise some sane thinking and professional judgement and not easily misled by other or trying to mislead other due to empathy.

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