Tuesday, March 17, 2015

Stock sold March 2015: Asian Bamboo

Asian Bamboo, yet another criminal Chinese company

I finally decided to put on the trousers as they would say in Germany and I sold my entire Asian Bamboo investment. I have many times written that I should have sold it a long time ago and for tax reasons it did not make any sense to sell them but today enough was enough.

Back in December 2014 two of their creditors demanded their money back and since apparently nothing has happened they today demanded Asian Bamboo insolvent. Nothing good will come out of that and the latest preliminary results for Asian Bamboo for 2014 and outlook for 2015 were appalling and they were expecting even lower revenue and are completely stopping to sell products and keep preparing for them becoming a construction company... So the bunk story continues.

Asian bamboo joined my stock portfolio as my fourth investment and it was bought on the second month (5th of April 2012, holding time 34 months) that I took the decision to become an investor. I no longer remember if they had published their annual report for 2011 or not but my investment was based on the annual report from 2010 and the years before showing a very successful company.

I still believe that selling Bamboo trees as well as sprouts is a solid, profitable business. When I look back and think about it then I see that problem started in 2012 when the founder and manager became unhappy with the development of the share price and found it unjustifiable. I think that was maybe the moment when he decided to become a crook. In my eyes there is no chance that the company has not been making money, it has just been shuffled via other channels into the founders pockets instead of increasing the value of the company for the greater good of the shareholders.

Either way my journey stopped today and I sold my 950 shares for a value of 866.10 € (with the fees removed) this means a loss of -5,855 € that will be added to the books as loss and still part of my invested value. During the 34 months I also received 72 € in dividend which makes my total loss -5,783 € (-86% in total and around -30% per year of holding).

I thought it would be much harder to take the unrealised loss and to realise it by making the sale but I have no feelings at all concerning this matter. The only thing I do feel is disappointment that the founder of Asian Bamboo turns out to be an equally big crook as so many others of the Chinese companies that had their IPO here in Germany. It is sad to see and shame on them and shame on the companies that put them on the German market and finally shame on me for falling for it all!

To take a look at my current Stock Portfolio then please click on that link. The portfolio will however not be fully updated until the end of the month.

I just took a look at my Rules for Investing & Divesting and discovered a serious fault on that page. I have only positive rules for when to divest and nothing about stepping out of a company when things are bad. There will therefore be a couple of additions to that page from now on:

My never list:

8. Never invest in a company that have not been at least five years on the stock exchange so that they have been forced to file, hopefully, more accurate financial statements.
9. Never invest in companies that have their largest part of business in a country that does not apply to regulations similar to the country that I currently live in.

Asian Bamboo would have failed both of these criteria.

My rules of Divesting:

6. When a company change their fundamentals in a direction that I do not agree with then directly sell the shares.
7. When the managers are proven or known to be crooks then sell the company.

On my Investment Mistakes Made page I will also make some changes:

Running Mistakes 2015:

  • Had no rules for when to divest a poorly performing company.
  • Did not sell the company when the fundamentals changed into a direction I found unacceptable. 


Anonymous said...

Shit - as they say happens! What you take away is a hard lesson. Perhaps it will prove to be worth it in the end?

Anonymous said...

Hahaha, yes, i hope i took a lot with me.

Taking a closer look at the German tax system I am now able to sell stocks with profits up to a value of 5822 € without paying any taxes! That is indeed good news and even better... There is no timelimit on this meaning I am not forced to sell something this year.

But back to AB. The company made me create several rules and most importantly it was AB that removed my stupid rules of always doublng up when the share price dropped. I am so glad that rule is gone!

-fredrik von oberhausen