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Taiwan Semiconductor Manufacturing Company Limited Message Board

  • mac_2000_gm mac_2000_gm Sep 28, 2000 5:40 PM Flag

    Micheal Murphy

    continues to issue buys on this stock with a target price of 80. I bought in at 22 today with the intent off holding TSM until spring of 2001.

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    • A most intelligent post. Thank you.

      If
      arbitrage was so easy, the premium in the ADR would have
      long been gone. Just think of comparisons that are
      dear to economists: If a haircut is cheaper in Taiwan,
      and you live in the US, it doesn't automatically
      allow you to take advantage of the lower
      price.

      I've wondered why TSMC doesn't simply have a secondary
      offering in the US and simply buy back their shares in
      Taiwan. It mustn't be that simple.

      Meanwhile, the
      premium between the ADRs and the Taiwanese shares
      (2330.tw @NT$ 107, exchange rate:US$1=NT$31.2, 5 sahres
      per ADR) has shrunk to about 20%. Maybe it's best if
      TSMC waits until it widens again.

      Also, I have
      checked the premium on UMC, trading at $12/ADR in the US,
      and at NT$67/share in Taiwan (Symbol: 2303.tw), and
      it's now under 10%. Maybe it's a better value, even
      though TSMC is larger, and better known among fund
      managers.

      Long TSM, and maybe I should be long UMC, if that
      market becomes slightly more rational.
      Wawe7

    • I think we should have technical bounce soon. It
      cannot get down like this forever.

      I'm quite
      curious about Gaintop. He got out at alomost perfect
      timing. I wonder he might know something we don't.
      Unfortunately, I got in at the time he got out.

      I guess
      if there is any manipulation, then it probably
      happens in Taiwan, not in US or Europe (TSMC has similiar
      Depositary Receipts in Europe). Maybe they dominate the
      market at Taiwan, and long/short options in US (Taiwan
      doesn't have stock options). I'll keep you posted if I
      found anything.

    • Thanks for the info, guys, especially the
      original news release on TSM ADR. I was looking for
      that.



      About the arbitrage: This is exactly what I try to get
      at. The key problem is how you convert TSMC (ticker
      symbol: 2330.tw) shares to TSM shares. I believe only the
      board of directors at TSMC has the authority to do the
      conversion, and, I believe, it "should" get approval from SEC
      in US, and it "should" be released as a public
      information in US. If the book runners, such as ML or MSDW,
      can do the conversion at any time as they wish
      without anyone's knowledge, then we all are at their
      mercy and became dead meat long time ago.




      If the investment bankers, such as ML or MSDW, play
      multiple roles such as book runners and major shareholders
      at the same time, then the situation becomes a
      little bit complicated. A major shareholder (not
      necessary the investment banks) can influence the board to
      do the things as they wished. Therefore, the total
      number outstanding ADR shares can be increased if the
      board decided a conversion needed to be done "in order
      to make somebody happy". This is a serious decision
      to make, and I am not sure whether the TSMC broad
      will yield to such demand without any benefit to TSMC
      iself.



      On the other hand, if TSMC wants
      to do the secondary offering to raise up cash, it is
      to their advantage to do the conversion and get the
      cash from ADR shares. In this way, they can get more
      cash.



      Anyway, we are definitely at the
      mercy of TSMC's board. And luckily, to their own
      benefits, they also do not want see their ADR get tanked.




      Next question is "how many conversions the board has
      done so far?". This should be public information and
      in their SEC filings (I cannot find TSM's 10-Q SEC
      filings, Are they supposed to file with SEC???) or in
      their quarterly reports or annual reports. It also
      "should be" in their news releases. I did some looking
      and the following is what I have found in their 1999
      annual report:



      10/08/97: 24.000M shrs
      (initial ADR release)

      11/20/98: 12.094M
      shrs

      01/12 to 01/14/99: 2.000M shrs

      07/15/99: 12.094M
      shrs

      08/17 to 09/16/99: 5.486M shrs

      2000 year to
      date: still looking for it



      Therefore,
      the total TSM ADR shares has been increased from
      initial 24M shrs to 76.894M shrs by the end of 1999
      (after taking 45% and 23% dividend distribution - as
      stock splits - in 1998, 1999 in to
      account).



      I still try to find out how many conversions TSMC
      board has done so far this year. Seems to me they
      didn't have news release after each conversion, and they
      don't have 10-Q filings with SEC(at least, I didn't
      find any).



      PLEASE POST IF ANYONE FIND
      the news release or SEC filings on the conversion
      since the begining of this year.



      I don't
      pretend that I am an expert, but I've worked for the semi
      industry for almost 30 years. There is no doubt in my mind
      that they have the best technology, best equipments,
      best yield and best production professionals. They are
      playing such important role in the semi industry that the
      whole world will suffer if they got a small hiccup. The
      ADR conversion is not a major concern to me even I
      don't like it. The only thing bothers me is the
      political situation there. I have averaged down from $27.5,
      then $25.5, $22.5, now $20.75. It becomes my biggest
      holding now.

    • The information is very useful. Those people who
      are thinking about buy TSMC in Taiwan and selling TSM
      in US can stop thinking now. Two stock markets are
      different markets. You can not interchange one with
      another. Forget all those talks about arbitrage on
      premium. They don't really have knowledge about how the
      market operates. If such arbitrage is possible, do you
      think that you will have any chance to compete with the
      institutial big player or professional
      arbitrager?

      Remember, each TSMC ADR represents five common shares of
      TSMC.

      Be wise when reading information from unknown
      sources.

      Good luck.

    • <EOM>

      • 2 Replies to bil56glsm
      • a guy who gets paid to recommend stocks like this
        and CDO and BMCS and AMAT etc. touts himself as a
        tech guru with inside connections in the industry but
        is whistling in the dark like all the rest of us in
        this market.

        good luck.

      • 1) Political factors as mentioned in this board
        before. The investors in Taiwan still lack confidence in
        the new government.

        2) Very Important one, is
        that there is a group of foreign investors (Merril
        Lynch, Morgan Stanley Dean Witter, among them) who are
        manipulating this stock to go down. I personally found it
        disgusting because it is Merril L. who adviced to buy into
        this stock about one month ago or so. They are
        secretly involved into bringing this stock down.


        Why is this possible and is it legal? The answer is
        yes. This is how they do it.
        About a month ago
        these foreign investors sensed the political
        inestability and decided to take advantage of people's fear
        therefore they started purchasing PUT Options of TSMC in
        big quantities. Since they also have huge positions
        long in stocks, they started selling stocks in big
        quantities, each time they could so they could bring the
        stock price down and earn on their put options. Later
        on when the options expires they take the profits
        and buy back the EXTREMELY CHEAP TSMC
        shares.

        Continued in the next post. pls see.

    • You better make that the spring of 2010.

 
TSM
22.94-0.21(-0.91%)Jul 6 4:00 PMEDT