Tuesday, January 27, 2009

Bakrie & Bumi: The saga continues

The always-dramatic dealings of the Bakrie family have caught the attention of America's foremost investing newsweekly.

Barron's has an article this week on a head-scratching financial conundrum. Execs of coal giant Bumi Resources have announced a big share buyback within a couple of weeks, setting the price at a fixed level (2,500 rupiah). Here's the crazy thing: Shares are currently trading well below that level, in fact more than 400% below it. Theoretically, then, you could quadruple your money within days ... a better investment than almost anything else on the planet, except some aggressive loan sharking.

So what gives? Basically, folks don't believe the Bumi/Bakrie story. "Put simply, few Indonesian investors think it will happen," author Eric Ellis writes. HB Capital managing director James Bryson says he would be "very surprised" if the buyback actually takes place. Given that Indonesians know the Bakries and Bumi far better than Western investors, we'll stick with them, and look at this apparently once-in-a-lifetime deal with a very skeptical eye.


Today's Top Stories

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Indonesia wants Hambali
Bali bombing mastermind currently in Hotel Gitmo

No stretching allowed
World snickers at yoga ban

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