Wednesday 21st April 2010

Dear Reader,

NEW ARTICLE
Imagi rights v shares gap
With Imagi's stock down 67.4% in 3 days since our bubble warning, the rights began trading this morning, at a huge discount to the share price, raising obvious questions of whether the market in either counter is false. If you own the shares and believe in the current valuation (which we don't) then why aren't you selling your shares and buying the rights to get free cash?

RECENT ARTICLES
Multiple statutory derivative actions
David Webb responds to the Legislative Council's invitation for comments on proposed amendments to the statutory derivative actions regime. In its current form it is unlikely to be useful to public shareowners of listed companies, but we suggest how to improve it. We also call on the Administration and Legislators to get behind class actions, litigation finance and contingent legal fees. Justice is the friend of fair societies, and litigation is the path to it. (18-Apr-10)

Imagi bubble
We issue a bubble warning on Imagi (0585), up 616% in 4 days on turnover of 185% of the company. The confusing timetable, with a 10:1 consolidation yet to come, has likely contributed to more chaos than we have seen since Asian Citrus. The market price implies a valuation of 33.2 times book value, or a premium of HK$17.3bn (US$2.23bn). We think a discount would be more appropriate, for the characters involved. (14-Apr-10)

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