Real Incident

I had been working in a listed company (“ABC”) for 10 months. Within these 10 months, I get to know the past and the major incidents of this company from my colleagues.

On XX-XX-XXXX, my company had announced corporate activities which include par reduction, rights issue with free warrants and cancellation of ESOS. The purpose of par reduction is to write off its huge loss. FYI, ABC had been exercised par reduction once in the past. As an employee of ABC, we already had some insider news and know that there will be a corporate exercise, but all we know is just rights issue with free warrants. The management did not disclose about the par reduction and the date of announcement. Most of the employees thought rights issue with free warrant will not had significant effect on the share price, so they are not aware of this.

When the market opened, the price dropped 3.7% and one of my colleagues managed to sell at that price. Minutes later, the price continued dropped and it never went back to the previous price again. Some colleagues were in fear and quickly rushed up to our department. She did not know what she should do. She gave a call to her remisier and when the time she wanted to sell it, it is too late for her order to be match. Without any option, she sold it on the spot with the current ask price. She told us that she bought few years ago with ESOS subscription. She had loss 55% of her initial investment. End of the day, ABC price had dropped 26% by a single day!! Some of my colleagues still haven’t sell off their shares. They said they had loss so much, doesn’t matter continue losing. They had totally fed up of this investment. One of them had paper loss of around RM38k! I can feel the fear environment of the day!

What made me even mad was the management directors still continue to ask the staffs to buy in. They said they will fry up the shares before right issue. This is not the first time they said so. However, ABC share price is forever on downtrend! I flipped back the 2014 annual report and found that the annual director fees for them are around RM300k to RM600k. One of the ED, the son of the ABC’s founder did not contribute anything to the company but yet he received such amount of remuneration every year! He had Dato-ship, drivers and luxury car. Where is all the money came from? FYI, the company had been making losses for consecutively 4, 5 years OR 20+ quarters!

As an employee, I am truly sad for all the staffs here as there was more than 10 years without bonus and increment. Those employees are nearly at the age of retirement.  The management care about their own welfare and benefit only, they do not even bother about the employees! I am pity for the investors as well.

As for me, I am not affected as I did not buy in any. Conclusion, it is important to fill up yourself with share investment knowledge before putting in money. The quality of management is one of the most important factors to be considered when investing. The best investment is to invest in yourself which you can afford it. Trust me!

Just for sharing.