BKK Post’s Shareholder Scorecard leaves much to be desired.
Every year, for the past several years, the Bangkok Post publishes a special section called "Scorecard with L.E.K. consulting and PYI Limited". I say reader beware.
Be on guard, as in the past this section looked better then it checked out -that is number and conclusion wise.
At first this appears to be an attractive contribution with many facts and numbers -all around SET stocks and its various nuances.
Sometime ago, I too, used to get exited and once in the past I reviewed it all in much detail. I found some grave mistakes in their tables and so wrote L.E.K, pointing these out. No answer came forth. I so wrote again, only to be ignored again. I then sent them a final mail stating that I would single out "their clear mistake -and post it all at the front page of thaistocks.com". This time they did answer with a short e-mail, stating they are "looking into this". One or two weeks later L.E.K send a letter to the BKK Post correcting their mistake, as if they found it. No reference at all was made to me nor thaistocks.com -and I never heard from them again.
Hence while I appreciate their good yearly effort, I am skeptical on the various results or conclusions they acclaim -and this year is no different. While I must confess that I have not made real efforts so far finding mistakes, I did note some shall we say, consistent inconsistencies.
For example, as was published on March 28 "05, Khun Pathom notes on the first page "that it was the smaller companies… that consistently overperformed for investors during the past decade". This solid and accurate view is then much and unfairly watered down by Mr. Michel Brekelmans" article on page 4, where he proclaims: "The large caps have generally outperformed the mid and small cap companies on one, three and 10 year TSF performance….whereas the small companies on average destroyed value by 7.5%...". I say, you got it wrong Mr. Brekelmans and I wonder why? (This inconsistency is further enhanced some when looking at their page 7 table showing the top rankings of various stocks on a one year, three year, five year and ten year basis. With very few exceptions all "gold medal winners" on total performance are smaller cap selections).
So which is it I ask L.E.K consulting and Mr. Brekelmans? Can it be both? I think not.
Anybody whom has followed our work over the past 8 years knows very well that on average, and over time, Thai smaller cap stocks have by far out-performed the SET averages. This has been shown again and again at thaistocks.com. Should I be surprised at all that our long work on this, is completely ignored by L.E.K. consulting? One thing is undisputable, Thai smaller cap stocks are and remain far less valued (on a p/e basis) then their larger cousins. Smaller cap stocks also pay much higher annual dividends, on average, then larger firms. That simple fact nobody points out at the BKK Post Shareholder Scorecard -as is presented to the readers by L.E.K. Consulting. Ignoring this simple reality is what really got me going here.
If L.E.K Consulting and the Bangkok Post whom published this is out to show that large cap sectors outperform the index, then with all their in house stat’s and acclaimed "gunpowder" and MBA’s they should simply tabulate a performance table based soley on market capitalization. Comparing the largest 25 percentile, as one group, to the smallest 25 percentile as a group. (See below)
If only the SET itself showed a performance tabulation solely based on market cap. say over the past say 2, 3, or even 5 years....all the same, viewers & investors would quickly see, again and again, how the smaller tier shares have for years already, mostly beaten all other market cap sector on the local stock exchange. Perhaps it is not to their advantage to point this out?
Below I show such a true comparison as was published privately by a Thai broker 3 years ago. If we had the in house capability here, surely I would show you an updated version of the table below.
Its sad, besides not very re-assuring, that those groups which do have this in-house capability of showing the true reality, chose not to. Year after year.
You can view this table on performance by market cap at the below link:
