• This is still a thought in progress, thus excuse the usual typos/grammatical errors etc etc … but the idea of momentum (effectively I’m thinking of a derivative of Soros’ Theory of reflexivity) is an interesting phenomenon. There is something to be said about the nature of momentum for a company’s business and thus its stock price movement. Companies demonstrating consistent quality earnings growth seem to have an air about them that nothing can go wrong with their business and quarter after quarter, year after year, they will have positive news developments, positive business developments that maintain or lead to a strong price performance. This is then further compounded by positivity from the media, from the sell-side analysts and brokers, from the buy-side fund managers buying into the name out of FOMO. The momentum continues to a point where the company (may) raise equity at valuations which at the time can be perfectly justified by 99% of market participants and then (perhaps) the business will use the raised capital to expand the business to yet an even high level. From the top of my head I can think of companies such as CPALL, BDMS, and SCC as straightforward examples that have continually shown decent ROIC’s
• But what prompted this was a discussion in the office regarding TTCL,  BEAUTY and TKN’s share price performance. These are names that showed positive momentum for a period of 2-4 years, either raised equity at high valuations or had owners selling stakes to funds at valuations that, at the time, made sense to the buyers. Now looking back people will call the founders cheeky/clever for exiting a portion of their net worth, but most of the time this will probably be coming from the same investors/traders/market participants that purchased the shares and defended the high multiples/valuations at the time.
• Flipping to the other side, negative momentum, TTCL was a high flier, winning projects doing well left right and center on everything they touched. But with a sudden loss of projects in Myanmar, followed by their main Japanese investor/partner leaving. One has the sense that this negative momentum may translate into further projects lost and continued weaker earnings. Now no sell-side analyst covers them (ok a few but not like 12 months ago), their earnings are continuing to decline and there is no positive news flow. Will the same occur to BEAUTY or TKN? Time will tell, that’s the benefit of hindsight..
• And so what? Markets are what they are, on the way up the sky is the limit, on the way down there seems like there’s no end in sight, so just apply some common sense…

Chart 1: LH 12 month stock price

• GIC is the shareholder that Anant Asavabhokhin aim’s to buy the stake from.
• He may increase his official stake from 24% to 34%.
• The tender offer price is THB 11.80 / share
• This could reduce what market participants are saying is an overhang on the stock price.