The Tipping Point at Galleon

The Galleon Group,a hedge-fund firm, was busted last week for insider trading. A co-founder,Raj Rajaratnam, a Sri Lankan and 5 others were rounded out after wire-taped conversation sanctioned by the courts put paid to their wile ways.

Rajaratnam and five others were detained and charged last Friday with involvement in a ring that allegedly traded on nonpublic information involving International Business Machines Corp., Google Inc. and other big companies.

Federal prosecutors Friday charged Rajaratnam and three others not at Galleon with securities fraud and conspiracy, and two others with conspiracy. All six also face civil insider-trading charges leveled by the Securities and Exchange Commission.

Known to be a hard taskmaster in corporate intelligence gathering, the Galleon Group will not tolerate failures. Traders who do not make the mark were berated and let go.

What was the magic formula that made the Galleon Group one of the biggest traders on Wall Street?

Historically , Galleon made its name investing in tech stocks in the 1990s. In that era, analysts and favored clients got early looks at analyst reports, tips about corporate earnings and allocations of hot initial public offerings. That world ended after the tech bubble burst in 2000 and new rules -- dubbed Regulation Fair Disclosure -- barred companies from disclosing information selectively.

So what made Galleon the darling of investors up to this date?

Chiefly,it has an asset-that web of contacts among technology and health-care executives and some of whom have been investors in the firm's hedge funds. Their constant good performance attracted the billionaire investor along the way.

The modus operandi and strategy at Galleon was and is always the same. Get exclusive information, aggressively pursue rumors and used every resource to get it. Pressure was more intense on traders and analysts especially about up-coming corporate earnings.

Galleon, a fast-moving firm, makes about 1,000 trades a day. Its position as a big commission generator encourages brokerage firms to dole out favors. For instance, the fund firm has been a big recipient of IPOs, generally bestowed on the best clients.

Rajaratnam once told an employee he couldn't know where the broad market was going but he could make money if he could get a 'sense' of what a company's earnings might be. So you have to get an edge or you're gone."Galleon is looking for that little bit of extra edge. That's what the firm is all about."

Just like Galleon, aggressively pursuing information is the mainstay and very much commonplace on Wall Street. The case against Rajaratnam will likely hinge on whether he crossed the line and profited from information obtained illegally. As of now, his lawyer says he did nothing wrong and will fight the charges.

"I get thousands of calls a week with people pitching ideas," Raj Rajaratnam said in a rejoinder to one friend on Saturday. He said information he obtained was just another piece of the puzzle that Galleon assembles before conducting buying or selling stocks.

Well, he seems to be the biggest fish caught on Wall Street to date. How it will unfold is anybody's guess.

Staving Off Dementia the Internet Way

Want to stave off dementia? Just browse the web!

A new study has revealed that using the Internet can help boost brain power in people as they age.

An international team which carried out the study found that Internet use can boost the brain activity of the elderly, potentially slowing or even reversing the age-related declines that oftentimes end in dementia.

The study found that Internet browsing stimulates the mind more strongly than reading and its effects continue long after a web session ends.

"We found that for older people with minimal experience, performing Internet searches for even a relatively short period of time can change brain activity patterns and enhance function.


"Our most striking finding was that Internet searching appears to engage a greater extent of neural circuitry that is not activated during reading," team leader Prof Gary Small was quoted by 'The Sunday Times' as saying.

The findings were based on an analysis of brain scans of 24 volunteers, aged between 55 and 76. Half were experienced Internet users, the rest were not.

The subjects were all asked to conduct a series of Internet searches while their brains were scanned using a technique known as functional magnetic resonance imaging (fMRI). This measures changes in blood flow around the brain to work out which parts are the most and least active.

After the initial scan, the participants went home and used the Internet to carry out specified tasks for an hour a day at least seven times over the following fortnight. Then they had a second brain scan, while searching the Internet.

Researchers found the impacts began immediately, with the first scan demonstrating brain activity in regions controlling language, reading, memory and vision. By the time of the second scan, however, the activated areas had spread to include the frontal gyrus and inferior frontal gyrus, areas known to be important in working memory and decision-making.

According to them, Internet searching stimulates brain cells and pathways, making them more active.

"Searching online may be a simple form of brain exercise that might be employed to enhance cognition in older adults," said Teena Moody, a member of the team which would present its findings soon at the Society for Neuroscience in Chicago.

So, who says internet is more bad than good?

The Malaysia Day Watershed

Did it need to take 16 years to break a denial syndrome?

Today is the watershed of Malaysian nationalism. The government of the day finally recognized Malaysia Day in the true sense of the word. PM Najib, the most far-sighted leader of Malaysia today, more than a month after September 16,2009, declared Sept 16, which is Malaysia Day, as a national holiday from next year.

We,right thinking Malaysians, laud his move to portray his administration as inclusive. This is what substance is all about. No rhetoric, no sloganeering and no playing to the UMNO gallery!

By making Malaysia Day a holiday he is now visibly indicating the importance of the Sabah and Sarawak's block of vote that gives the balance of politics between Barisan Nasional (BN) and Pakatan Rakyat (PR) in its favour.

Axiata- The PT Excelcomindo Pratama Tbk Rights Issue

Axiata is the majority shareholder of PT Excelcomindo Pratama Tbk (XL)through is subsidiary, Indocel holdings. It will undertake to buy all its share of the rights issue as well as to subscribe to all the unsubscribed shares after the share issues closes. To do this,Indocel which holds 83.8% of XL, has entered into a Standby Buyer Agreement to undertake to subscribe to all these unsubscribed shares,if any. The rights issue is expected to be completed in December 2009.

Let us look at the structure of the rights issue.

USD300 million worth of rights issue of 1,418 million new Ordinary shares of IDR100 each (“Ordinary Share”) will be issued on the basis of 1 Rights Share for every 5 existing Ordinary Shares at an issue price of IDR2,000 per share.The subscription by Indocel of its entitlement and the Unsubscribed Rights Shares does not
require the approval of Axiata’s shareholders. The extraordinary shareholders meeting to obtain the approval of the shareholders of XL in relation to the Rights Issue is expected to be held on 16 November 2009.

For those who need to know some background of Axiata, here is a short brief of the creature.

Axiata is one of the largest Asian telecommunication companies, focused in high growth low penetration emerging markets. It has controlling interests in mobile operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia with significant strategic stakes in India, Singapore and Iran. India and Indonesia are amongst the fastest growing markets in the world. In addition, the Malaysian grown holding company has stakes in non mobile telecommunication operations in Thailand and Pakistan.

The Group’s mobile subsidiaries and associates operate under the brand name ‘Celcom’ in Malaysia, ‘XL’ in Indonesia, ‘Dialog’ in Sri Lanka, ‘AKTEL’ in Bangladesh, ‘HELLO’ in Cambodia and ‘Idea’ in India, ‘M1’ in Singapore and ‘MTCE’ in Iran (Esfahan).

As of December 2008, the Group, including its subsidiaries and associates, has over 90 million mobile subscribers in Asia. The Group revenue for 2008 was RM11.3 billion. The Group provides employment to over 25,000 people across Asia.

Axiata’s vision is to be a regional champion by 2015 by piecing together the best throughout the region in connectivity,technology and people, uniting them towards a single goal: Advancing Asia.

Axiata was awarded the Frost & Sullivan 2009 Asia Pacific ICT Award for Best Telecoms.

Question: What is the impact of this rights issue on Axiata and its shareholders? How is the rights issue for Indocel's potion going to be financed? Are they going for a rights issue again? No, unlikely as it would be too soon. A PDS? This is very likely if they can work out a revenue forecast that the payment towards the debt notes pose no issue.

The Genting Group-A time to Harvest

Genting Singapore has announced that its rights issue of S$1.2 billion announced in August,has been oversubscribed by 135.1%. This augurs well for a company which overran its construction costs of the much touted Resort World Sentosa.

The company sold 1.9 billion rights shares at a ratio of one rights share for every five existing shares. Its parent company, Malaysia-based investment holding and management company Genting Berhad, subscribed in full to its entitlement of 1.04 billion rights shares, which is equivalent to 54.32% of the total number offered.

Of the capital raised, Genting Singapore will use 60% to fund future investments while the remaining 40% will be utilized as working capital. When the rights issue was launched, there was some speculation that the money could be possibly directed towards the company's major Singapore project, Resorts World Sentosa, which has exceeded its earlier budget.

The Genting Singapore rights issue is the third largest to be completed in Singapore this year. It was led by CIMB Group and DBS.

There was another public debt security raised by a subsidiary of Genting Berhad in Malaysia. Genting Berhad could use its drawing rights from this to fund potential acquisitions as well as to use it for operating expenses.

From the market operations, it looks like all’s well that ends well for the Genting Group. It is small wonder that Genting Berhad’s share has topped RM7.50 today and will go beyond after Budget Day 2009. If that be the case, expect Genting Malaysia to also hop on the bandwagon and go places.

I believe capital appreciation is coming the way to the much ‘starved’ shareholders of all Genting shareholders since the share split many years ago. The wait may not be long as Resorts World Sentosa opens its doors to the public before Chinese New year 2010.

I think it is about time that XO bottles can be brought out from the cool wine basement to ring in the good cheer as the year ends in two month’s time.

Only in America-Bailed out Bonuses

Fall out to handout. Bailout to bonuses. That is the new order for you on Wall Street.

Sometimes I wonder, is Main Street serious when helping Wall Street only to find out that they have taken the liberty to pay themselves bonuses even higher than earlier years before the onslaught of the sub-prime woes. Is there not a caveat somewhere when bailouts are being done to ensure excesses like paying bonuses are kept to a bare minimum?

Let us read a Reuters report touching on this matter circa 18 October 2009. I have paraphrased to ensure brevity.

White House has lashed out at Wall Street firms for handing out huge bonuses while the rest of the economy struggles and small businesses cannot create jobs because of a lack of credit. Case in point: Goldman Sachs Group Inc's $20 billion bonus package, which make this year a record year of bonus at the firm.

Similarly, compensation is also soaring at several other big firms riding on the back of good times at Wall Street.

But Wall Street is an oasis of sorts as the national economy remains weak and unemployment, now at 9.8 percent, may climb further above 10 percent.

David Axelrod, a senior adviser to President Barack Obama, said on the ABC News program, "This Week." that the bonuses are “offensive”. He added, "There are a lot of small businesses, credit-worthy businesses around this country who still can't get the capital they need to grow, which is important for our economy." He said that they are considering a variety of options to boost the economy and rekindle job growth and at the same time, they are mindful of the budget deficit.

White House is currently proposing for a broad rewriting of financial regulations aimed at preventing a repeat of Wall Street's worst crisis since the Great Depression in the face of vocal opposition to block these reforms. The finance sector, which was saved from the brink of collapse by a $700 billion bailout from the U.S. government, has a duty to back the financial reforms. In fact, they should the first to support financial reforms.

A bill approved by the House of Representatives would impose new limits on executive pay, but the Senate has not yet acted on the issue. For firms that still owed the government money under the bailout program, Treasury's pay czar, Kenneth Feinberg, says he has the means to crack down on these shameless compensation packages.

For those who have already paid back the bailout money, "moral suasion" will be used. This included such firms as Goldman Sachs which are no longer subject to the Treasury's oversight of compensation.

Obama has faced criticism over the financial bailout program and his $787 billion stimulus plan enacted earlier this year. The financial bailout program was begun by the Bush administration in September 2008 and continued under Obama.

Republicans have labeled the stimulus package wasteful and say the high jobless rate is evidence it has not worked.

Meanwhile, Obama administration officials say the stimulus plan helped save the economy from disaster and it will take time to fully feel its positive effects.
While there are possible moves to consider additional steps to give the economy a jolt, the Obama Administration are reluctant to use the label "stimulus" to describe any possible further measures. Whatever the case, they are determined to prevent the economy from "cascading backward into a recession.", saying President Obama is paying close attention to the U.S. budget deficit, which hit a record $1.4 trillion in the just-ended 2009 fiscal year.

That is the latest snapshot from Main Street and Wall Street. I think the picture is getting less murky.

One Fervent Hope

Ever hopeful are these young nubile girls. In each of their bosoms lies the hope and the wish to be selected as the top fashion model of Japan. This Model competition is held in conjunction with Fashion Week Japan 2009.

Look at this photo. Observe their anticipative faces. There can be only one winner. Could they be the lucky one?

Is Liow About to Fall As Well?

Hardly had he warmed the seat as Deputy MCA Chief for 36 hours when the walls starts to fall down on him.

When thieves are together, secrets are tightly kept. The moment they start to quarrel and fell out of "love", so to say,these well kept secrets start to find their way into the internet media.

So based on a 'Malaysia Today' Report on the purchase of a Toyota Alphard for the wife of Liow Tiong Lai by a company, Axis Construction Sdn Bhd (ACSB), that continues to get contracts from the Ministry of Health, the Segambut Member of Parliament, Lim Lip Eng today lodged a police report at the Sentul district police headquarters over this alleged 'gift' .

Interestingly, details of the cheques paid up by the company was also mentioned in the post? Isn't this authentic or what?

Will the MACC take immediate action on this matter?

This we shall see. Will MACC start grinding its teeth or has it to get its denture from someone else before they can start biting?