Much verbal sparring over glove makersBy M. Shanmugam
IN a space of just 15 days Macquarie Research, a well-respected research outfit, has done something quite unexpected. It drastically changed its outlook on Top Glove Corporation Bhd, sparking a huge debate.
The debate wasn’t just about the value of the major glove manufacturer’s stocks. The crux of the debate, in fact, was about the quality of research reports on the company and whether it is compromised by the
interest of investment banks issuing structured warrants that are based on the stock.
Just recently, on Aug 24, Macquarie issued a report setting the 12-month target price for the Top Glove at RM30.40. Taking into account Top Glove’s two-for-one bonus issue that took effect on Sept 4, the target price should be adjusted down to just above RM10.
However, last Wednesday, Macquarie downgraded Top Glove to RM5.40, more than 45% of the adjusted price post the bonus issue. In just 15 days, Macquaries changed its call on the stock from an out-perform to an under-perform.
The rule of thumb is that when there are too many structured warrants being issued, the stock will see heavy price volatility.
Source: The Star
https://www.thestar.com.my/business/bus ... ove-makers
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