In one
session of value investing training some time ago, a participant asked, ‘Mr.
Teguh, what is your opinion about Bumi Resources (BUMI)? I read your article
about the
company’s management attempt to restructure their debts. If the attempt was a
success, the
stock will
rise, no?’
And I replied, ‘Whether BUMI would
successful or not in restructuring its debts, or whether
the
company’s financial performance will improved in the future, that only time will tell. But one thing for sure, the
decision to buy BUMI at the price of Rp50 per share clearly offers a very different risk (and also different potential gain) than if we buy the stock at Rp1,000 per share. I'm not
interested when BUMI was still trading at
Rp1,000’s per share, but
what if we
can buy it at 50
only?
Harum Energy
About a year ago, precisely
in July 2015, I found a fact that when the Jakarta Composite Index (JCI) began
to fall, in this case 7% for year to date (YTD), it turned out that mining
stocks, especially coal, has dropped deeper, where the index of the mining
sector have tumbled 26.3%, the worst than any other sector, and it aggravates
the decline that has been occurred since the previous years. I was then asked
myself, 'Is it possible that coal stocks will fall to the price of Rp50 per
share, all of them???' (Note: Rp50 per share is the lowest possible price for
any stock in Indonesia Stock Exchange).
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