Saturday 12 October 2013

Contacted by concerned investor

A running bronze figure from a book, Karlskrona Sweden

Yesterday I received an email in my function as CEO from a concerned investor that were wondering if my company and the company he has invested in could not cooperate to decrease material costs that seems to be expanding exponential in his investment. Here I quote "It would be a win-win situation!".

Since the company is working in a similar field to mine but are as of yet still not a direct competitor I know their products but I have not looked into their financial situation for the last couple of years. I quickly took a look at it last night to see if anything had changed.

It had indeed not changed at all. This company has for the last seven years been living on their shareholders and by issuing more and more common stocks each year. The poor investor have probably seen his investment become less due to falling share price, dilution and maybe even worse he might even have been throwing good money after bad.

From the email I received it was also very clear that he did not know what they were doing, what we are doing and was just hoping that something could be done. The development of a joint product in the chemical/pharmaceutical field is of course done in a couple of weeks and would then save his investment from going insolvent which I guess is his current fear. I felt very sorry for him and I had problems to even write back to him. The only thing I wanted to write back to him was RUN AWAY! Run just like the little bronze figure is running out of the book to create a new future for himself that does not end with the final chapter of the book... Write your own ending! Invest in Münchener Rückversicherung or why not Allianz and sleep well every night and all night long!

My guess is that he would neither have listened to me or done it. I got a little tempted telling him that of course we can decrease the raw material costs for the company he has invested in because I wonder what he would then have managed to accomplish with that reply... Would he rush into the CEO of the company with his 0.0001% shares demanding that they should start to cooperate with the clever guys in Berlin? But that would have been ugly so I did not do that.

Sometimes I wish that there would be a very clear regulation saying that small private investors simply would not be allowed to buy stocks in companies below the size of 200 million € in market capitalization.

In Germany they do have way to protect a small investor against that which is based on a five scale risk scale. The thing is that it is more for the safety of the bank then for you because if you loose all your money on something dodgy then they can show the papers saying that you accepted the highest risk. I also guess that everyone just like I did filled out that they want to have the freedom also to work with the highest risk of stocks, bonds, derivatives etc. As an example the shares in H&M are classified as the highest risk since they are foreign and I doubt that anyone in Sweden would even classify H&M as a risky share to own even though they today are pretty expensive but that is a completely different matter.

I hope that the poor guy will not loose all his money and that he will manage to rewrite the final chapter in his book without being forced to flee from it.

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