There was a comment from a reader who shared that there was plenty of hindsight bias when it came to talking about Hyflux – and wanted to know what we should be avoiding now instead of talking about what had already happened.
After all, it is easier to talk about the past than to predict the future.
The reason why you rarely see short reports or sell reports about situations such as Hyflux is that the downside to publishing such articles are so high.
When Iceberg Research first published its report on Noble Group in 2015, it got a lot of flak and was even sued. Events that transpired next proved many of his initial points correct, but you won’t see any awards being handed out.
The fact is no one gets rewarded for being the bearer of bad news.
So yes – many financial professionals in the know are actually aware and do have a good sense of companies that have red flags, but you aren’t going to see reports on these.
Most of the time, when a company hits a bad patch, coverage mysteriously ceases, and that is the end of it.
There is just too much downside to publishing such reports for people to do it for free (or even paid for that matter) that you don’t see much of an industry in Asia. Even in the US, it is a contentious subject.
At the end of the day, you have to take charge of your financial education and literacy. I happen to like case studies as they can draw upon what has already happened to distill specific learning points for future use.
Hyflux Case Study – Link
- The key takeaways and learning points of Hyflux
- How to think about fixed income issues
- Cash flow and how it is different from income
- How Hyflux’s business model works and why it led to its eventual distress
- Whether it would have been able to avoid Hyflux without hindsight bias
- The problems with “implicit guarantees” and why they should be avoided
This is part of a series of new videos I will be doing on case studies in Singapore to better drive home investing principles.
Disclosure: The author does not own Hyflux stock or any of its related securities at the time of publication. This is not a buy or sell recommendation but merely the written opinion of the author meant for educational purposes.