Choose sleep over extra profit

“I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits.” Source: Letter to shareholders, 2008 by Warren Buffett.

Such a philosophy would be hard to find in the manipulated, short cut based, corruption promoting brokers and wheeler dealers in the Colombo Bourse. There is virtually no chance that a properly governed company will survive in this market. They practically advice companies to list so that those frauds who are called owners can charge the companies even for their kitchen sink and the listed entity suddenly makes reduced profits or even losses. The CSE or the SEC is not interested in knowing why those super profit projections for these companies before listing are going south (after listing), by which I don’t mean to Hambantota!

The market regulators should follow up after listing to find out whether the company
* used the funds as mentioned in the prospectus
* suddenly started charging significant amounts thru related companies for services
* started paying large amounts for directors, compared to the information in the prospectus
* started paying significant expenses after listing for no relevant reason
* used the money to acquire assets from the owner/related parties at higher than market values.
* acquired intangibles just before or just after listing, which look suspicious/ unfair.

It’s time to act if the Colombo Stock Exchange is to be considered a market with fundamentals and to give a reasonable chance for good companies to succeed and for good investors to make money, without losing sleep!

About surenraj

“Views expressed are my own”
This entry was posted in Governance and tagged . Bookmark the permalink.

One Response to Choose sleep over extra profit

  1. prvz says:

    Enjoyed reading the article as it was very well written.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s