The Andrew Tan group of companies have always been a huge part of my portfolio through the years. I'm no stranger to other companies and stocks, but at the end of the day, its the stocks in the Alliance Global group which have always been my staple because I fundamentally believe in its growth story.
Andrew Tan is a visionary and a pioneer in the real estate community; building townships that supports foreign investments and create job opportunities and in the gaming industry providing entertainment and leisure.
Enough with the intro, here's where the story begins...
Last July, Andrew Tan's sold an Alliance Global block which made headlines. It was reported that the Php7.87 billion block was sold to Fidelity (a huge investment house the size of $1.3 trillion) which was brokered by UBS and reported in Inquirer's Biz Buzz.
At that time, AGI was seesawing at +- Php30/ share and Fidelity got in at a discounted rate of Php27.3 per share. Fidelity's entry fueled both positive and negative speculation amongst the masses, but in the end foreigners were net sellers for the rest of July dumping Php1.7 billion worth.
With the earnings season coming in, speculation flew the second time around. Foreigners were net buyers for the first week of August.They managed to pump the price up to Php28/share. The not so stellar earnings then started a selling frenzy. Year to date, AGI is 11% down.
Here's how the rich get richer and the rest get screwed:
Remember how Andrew Tan offloaded Php7.87 billion before earnings? Well! He's now buying it back at a 10-12% discount via his rumored broker Aurora Securities or broker 167. This means that he effectively made approximately Php800 million from the Fidelity sale and Fidelity lost that much at current prices assuming he's buying it all back.
But Andrew Tan isn't just buying AGI. He's buying Travellers International (RWM) as well. RWM has gone down 30% since its IPO last year. He's also bought a lot of Megaworld a stock analysts' peg at a target price of higher than Php5/ share.
Investing is a leap of faith. We are willing to pay a huge premium for solid companies with a strong management team and an interesting growth trajectory. Despite AGI's many hurdles: from rising operation cost for Golden Archers, weak sales for Emperador, slow down for Travellers amidst rising competition, the growth story is still there.
MEG is building a hotel monopoly partnering with global brand we love such as Marriott,Westin, Hilton, etc. It's building townships that will lure foreign companies (particularly in the BPO sector) and tourism projects that will lure foreigners to visit the country.
Emperador is entering uncharted territory buying up vineyards in Spain and has recently acquired Whyte and Mackay from Diageo (the world's largest liquor company). This opens doors for Emperador in distribution and brings the company to a global level.
While Mcdonalds is grossly lagging behind homegrown Jollibee, Golden Archers is aggressively expanding and building new stores to rival the later.
Let's not forget Travellers International, who benefits from the move of international carriers to Naia 3 from the old rundown Naia 1. Travellers is expanding Resort World Manila with the addition of Marriott hotel rooms and a grand ballroom, Maxims hotel rooms, a Hilton hotel and a Sheraton hotel. In the entertainment city along Roxas Boulevard, they plan to break ground this year.
Pretty exciting if you ask me....
Share price concerned, it's a goddamn endurance test watching the price descended down a slippery slope. AGI has broken a lot of key supports to get where we're at today and so have MEG and RWM.While there's never a foolproof guarantee when it comes to the equity market, a share price buyback by the head honcho is a positive indicator.