477 replies to this topic

[Investment novice]

Not fear at the bottom... I don't see their revenue trajectory... Lots of competitors in their space and no more easy gov contracts.... Can't make sense of their valuation....

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[SoleTrader]

[quote name="Investment novice" post="275514" timestamp="1530111494"]Need to better understand their revenue from gov and municipality contracts....dont see much i.t. innovation apart fom support...
I want to buy eoh...just cant make heads or cents of revenue flows.
Too mch management instability and gft wrapping


Classic fear at the bottom!

Buy when the blood is flowing in the streets of Paris - Baron de Rothschild

[SoleTrader]

Dumped 50% of my holding at R43, put the money into Blu at 815c

[Investment novice]

will out at R43

[Polly]

i got out at R39.00

 

now high of R43.00

 

probably ride the wave to r50.00

[Investment novice]

Nice one... When should we exit... Would we expect a peak in mid 40s.... I will take profits now... As still concerned about fundamentals.



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[Polly]

look at this one go

from R26.00 to R40.00

 

out of all my positions at R39.00

 

been one hellva ride...

[Polly]

nice short squeeze today. Up 10%

[Investment novice]

Need to better understand their revenue from gov and municipality contracts....dont see much i.t. innovation apart fom support...
I want to buy eoh...just cant make heads or cents of revenue flows.
Too mch management instability and gft wrapping


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[SoleTrader]

The company is either fucked or this is a major buying opportunity. I took some at R24 today. Not even Alviva had such a large drawdown when it's director was fingered for fraud

[Spree]

Probably insiders getting out before the close out period. Directors, including the finance director, are known to do stupid things.
 
Today it is trading at its worst level in 5 years, so the insiders saved themselves a lot of money.
 
This company does not have a shred of credibility left. Soon they will start losing customers.

Another abject lesson in value destruction! A once admired and highly valued company now seemingly going down the tubes!

Is there any way back for this company?

[Bullhunter]

Does anyone know the reason for the unusually heavy volume of shares traded last Friday, a!most Five Million shares(more than 10x the average daily vol). Also, the share traded as low as R55 on the day. Is this more director shenanigans? Forced sale, again? I really hope not!

Or was it a fund manager buying or upping it's stake in the company?

Probably insiders getting out before the close out period. Directors, including the finance director, are known to do stupid things.

 

Today it is trading at its worst level in 5 years, so the insiders saved themselves a lot of money.

 

This company does not have a shred of credibility left. Soon they will start losing customers.

[Spree]

Does anyone know the reason for the unusually heavy volume of shares traded last Friday, a!most Five Million shares(more than 10x the average daily vol). Also, the share traded as low as R55 on the day. Is this more director shenanigans? Forced sale, again? I really hope not!

Or was it a fund manager buying or upping it's stake in the company?

[Bullhunter]

I guess there is some consolation in the fact that these moronic directors took the biggest hit in this whole debacle!!

But, more seriously, if the CFO enters into such high risk transactions and is so reckless with his own investments and finances, how can he be entrusted with managing the finances of such a big and acquisitive company??

 And someone has made a lot of money as the share price recovered so rapidly. Probably the brokers who instigated the forced sales.

 

I put an order in at R30 but it ran away from me within minutes to R45.00. Lesson learned: If a share falls and rebounds that quickly, forced selling has just occurred.

[Bullhunter]

Thank you, Bullhunter, for the link. Quite helpful as always☺. ( I don't think I have the stomach for this sort of thing! Lol).

I guess there is some consolation in the fact that these moronic directors took the biggest hit in this whole debacle!!

But, more seriously, if the CFO enters into such high risk transactions and is so reckless with his own investments and finances, how can he be entrusted with managing the finances of such a big and acquisitive company??

Exactly. If you look at EOH's SENS announcements going back 2-3 years you would think the FD is in the business of trading the company's shares (with put and call options 'nogaal') rather than running the business.

 

On the subject of margin calls, PSG Wealth brokers have informed their clients (in red) as follows :

 

Dear Client 
Events surrounding Steinhoff have caused extreme price volatility in the market. We are therefore increasing the margin on Steinhoff single stock futures (SSFs) and contracts for difference (CFDs) to 100% from today. 
No new SSF and CFD positions will be facilitated on Steinhoff. Existing clients may close their positions at any time during market hours. Please ensure your account is sufficiently funded to accommodate the increase in margin and to avoid subsequent margin calls or your position being closed out. 
Also note that Steinhoff will be removed as an approved share for Scriptfin loan facilities. 

[Spree]

Jehan Mackay's forced sales of 3 153 128 shares, as low as R26.55, lost a sh*t load of money.

Thank you, Bullhunter, for the link. Quite helpful as always☺. ( I don't think I have the stomach for this sort of thing! Lol).

I guess there is some consolation in the fact that these moronic directors took the biggest hit in this whole debacle!!

But, more seriously, if the CFO enters into such high risk transactions and is so reckless with his own investments and finances, how can he be entrusted with managing the finances of such a big and acquisitive company??

[Bullhunter]

https://www.investop...margin-call.asp

Jehan Mackay's forced sales of 3 153 128 shares, as low as R26.55, lost a sh*t load of money.

[Bullhunter]

I'm still struggling to wrap my head around this! Surely, the bank / funder does not benefit from the collateral almost becoming worthless, so why do they force sell at any price?? (Or, am I missing something!)

I am not a trader and I know very little about the workings of futures and derivatives. I'm just an ordinary small investor who USUALLY buys and holds for the medium to long term. Hopefully, some of our more knowledgeable members can explain this more clearly. (Maybe also mention how to spot these shenanigans before they collapse another company!)

https://www.investop...margin-call.asp

[Spree]

They need to change brokers. Their brokers screwed them nicely. Broker never acted on behalf of their clients. You dont drop a share 70% juts to recover margins. Surely they cud have sold slowly into the market and not hit the bids consistently as the price fell. Some thing more to this i promise.

I'm still struggling to wrap my head around this! Surely, the bank / funder does not benefit from the collateral almost becoming worthless, so why do they force sell at any price?? (Or, am I missing something!)

I am not a trader and I know very little about the workings of futures and derivatives. I'm just an ordinary small investor who USUALLY buys and holds for the medium to long term. Hopefully, some of our more knowledgeable members can explain this more clearly. (Maybe also mention how to spot these shenanigans before they collapse another company!)

[Bullhunter]

Analysts hit out at forced selling by EOH directors  

12 DECEMBER 2017 - 05:53 HANNA ZIADY

Forced selling by EOH directors faced with margin calls on geared positions, which collapsed the share price last week, drew heavy criticism from analysts on Monday.

"If I had a board of directors doing that I would fire them. It puts the share price at risk," said Just One Lap founder Simon Brown. Although EOH’s actions were not illegal, they threatened acquisitive growth ambitions, since past acquisitions had been largely funded through share issuances, he said.

Earlier in the day, EOH disclosed that the substantial drop in its share price — 35% on Thursday — was caused by margin calls against equity-financed transactions, including to two EOH directors.

An investor receives a margin call from a bank or stockbroker if the value of a share they have bought with borrowed money falls below a certain level. The investor must then either deposit more money into the loan account or sell the asset to cover the margin call.

Jehan Mackay, CEO of EOH’s public services division, had been forced to sell more than R130m worth of EOH shares just to meet the margin call, suggesting his shareholding in EOH was highly leveraged.

 

Finance chief John King was forced to sell more than R16m worth of shares.

It was risky to take out fixed debt on a floating asset such as shares, said Keith McLachlan, fund manager at AlphaWealth. "I don’t like management teams to have geared positions on the companies they manage, as they then watch the share price rather than focus on their jobs."

Transactions by Mackay and King were done to buy more EOH shares at the time, reflecting their confidence in the company and its long-term prospects, EOH said.

McLachlan said it was good to have management teams who were aligned to the interests of shareholders, but not where a collapse in the share price might lead to an insolvent board, which would no longer qualify to hold directorships.

Cy Jacobs, founder and MD of 36One Asset Management said it was uncommon and "tot-ally undesirable" for directors to take derivative positions on shares in their companies.

King and Mackay could have paid for the shares in cash and did not have to sell, he said.

EOH said it had finalised an agreement to sell Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions back to their original shareholders. At least one of these businesses, Forensic Data Analysts, and the director of all three companies, Keith Keating, are implicated in an investigation into procurement irregularities involving the South African Information Technology Agency and the South African Police Service.

EOH had decided to unwind the November 2015 purchase of these businesses because of failure to meet performance warranties. This had been expedited by "recent media allegations" against Keating, it said.

The acquisition of the businesses had undergone a "rigorous due diligence process" and annual audits of the companies did not raise any red flag.

EOH had appointed Edward Nathan Sonnenbergs to conduct a "fact-finding review" of the commercial activities of the businesses, the group said. The law firm would have oversight of all material public sector contracts in future. "This is in addition to the internal compliance measures adopted by the board’s audit committee in July this year, which includes a review of EOH’s governance framework," it said.

The market was encouraged by EOH’s announcement, with the share climbing 8.54% on Monday, after a 5.6% gain on Friday, to close at R51.58.

ziadyh@businesslive.co.za