The Webb-site concentration screen
22nd January 2010
Webb-site.com today announces the launch of a new function in the Webb-site
CCASS Analysis system, for investors to check on the concentration of
shareholdings in listed companies. CCASS, or Central Clearing and Automated
Settlement System, is the book-entry system and central depository used to
settle virtually all trades on Hong Kong's Stock Exchange.
As many investors will be aware, Hong Kong's Securities and Futures
Commission occasionally puts out
announcements regarding the concentration of ownership in HK-listed
companies. The SFC used to do this by the circuitous route of informing the
stock exchange, which then informed the relevant listed company, which then
eventually made an announcement to the Stock Exchange, but since July 2009, the
SFC has also been making direct announcements to speed things up. The SFC has
access to beneficial ownership information held by brokers, banks and
custodians, so they can dig deeper than the public can.
However, such warnings from the SFC are fairly rare, and we are not aware
that they have any comprehensive screening system to scour the market for
potential problems. Rather, they wait for people like us to alert them, and then
they launch an investigation. Many of their past ownership investigations and
concentration warnings have been triggered by requests quietly filed by
Webb-site.com.
So to speed this process up, our database will now tell you and the SFC, for
each day since 26-Jun-07 (when our records begin) and for each stock:
- the percentage of the shares in CCASS, excluding unnamed (or
"Non-Consenting") Investor Participants (NCIPs), which are held by the top 5
CCASS accounts.
- the percentage of the shares in CCASS, excluding NCIPs, which are held
by the top 10 accounts
- the percentage of the shares in CCASS, including NCIPs, held by the top
10 accounts plus NCIPs
- the percentage of the company which is in CCASS, based on the latest
number of issued shares published by HKEx
The results for each day can be sorted by
any of the above statistics (just click on the column-headings), with the third
one (top 10+ NCIPs) being the default. You'll find our CCASS Analysis system,
and many more goodies, in the Webb-site database.
For each day's concentration screen, you can click on the name of the stock
to see the CCASS holdings for that day, or you can click on the "history" link
against each stock to see how the concentration in that stock has changed over
time. Within each history page, click on the date to see the holdings on that
date.
Keep in mind that there are several different types of CCASS account.
Custodians, whose CCASSID is prefixed by "C", usually hold shares for
institutional investors. Stockbrokers, prefixed by "B", usually hold shares for
clients and/or for their own account. So each of those may represent numerous
beneficial owners. However, this is the best we can do with public data and
allows you a good idea of where the concentrations may lie. Investor
Participants are direct beneficial interests of individuals and companies with
their own accounts in the CCASS system, including your editor and the
National Social Security Fund. Most IPs do not consent to their names being
disclosed by HKEx, so these are aggregated under one line for NCIPs. For a quick
look at what stocks Investor Participants hold, see our
daily IP holdings page.
Concentrated holdings tend to make stock prices more sensitive to an increase
in volume, as they are more tightly held. That can work both ways, down as well
as up. Some undervalued small-cap stocks in which your editor invests are
tightly held by value investors, with a high CCASS concentration, and liquidity
comes in bursts when someone decides to sell. Similarly, some mid-caps or
large-caps which have become institutional or hedge-fund "darlings" and been
chased up, are also high on the concentration list, with most of the stock held
by custodians.
To get things rolling using this screening system, we have this week filed a
number of requests with the SFC for investigation of possible concentrations of
ownership and will step up the pace of those. These include:
Bauhaus International (Holdings) Ltd
(483), Bloomage BioTechnology Corp
Ltd (0963), Melbourne Enterprises
Ltd (0158), Samson Holding Ltd
(0531), Southeast Asia Properties &
Finance Ltd (0252), Tan Chong
International Ltd (0693) and
Tern Properties Co Ltd (0277).
In our view, disclosure is the best regulatory response to concentrations of
ownership. We don't favour suspensions, as this would just trap existing
minority shareholders through no fault of their own. The concentration is
usually not within the control of the listed company itself, and therefore it is
impractical to require them to do anything about it. Disclosure of
concentrations puts investors on notice that the stock price is less likely to
be an accurate reflection of fair value for a company's stock, whether
overvalued or undervalued.
Our CCASS records and analysis are subject to the limitations and disclaimers
in these notes.
© Webb-site.com, 2010
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