Temasek reduces Merrill Lynch stake - True or False

A total of 87m shares have been sold off at a loss, according to US recorded filings.
Temasek Holdings has sold off half its ill-timed investment in Merrill Lynch - or about 87m shares, according to a mutual funds report on institutional trades on US stocks.
The online report, MFFAIRS (Mutual Fund Facts About Individual Stocks), reported it sold off 86,949,594 shares (50%), leaving a current holdings of 86,949,594 shares (50%), according to the filings made public.
The report gave no exact date or price of the sale.
Neither has there been any confirmation from Temasek, which had paid US$48 a share last year. Last week Merrill Lynch was traded at $31.
At that price Temasek would have suffered a loss of $17 a share - or a total loss of about US$1.48b for the 87mil shares.
The company's equity capital position is weak relative to competitors, said Brad Hintz, a New York-based analyst at Sanford C Bernstein, reports Ambereen Choudhury.
"With $19.9b in CDOs still frozen on the balance sheet and with counterparty risk rising on the hedges underlying these troubled positions, the potential for additional material write-downs remains a concern,” Hintz said.
The third-biggest US securities firm probably will report a loss of $6.57 a share this year, compared with an earlier forecast of $1.07, Hintz said.
The revised estimate assumes the company generates no earnings in the second half.
Merrill may have to take an additional $10 billion of pre-tax write-downs related to its holdings of mortgage securities, Moody's estimates.
Huge paper lossesThe disposal leaves Temasek Holdings and the Government Investment Corporation (GIC) still holding substantial parts of big troubled Western banks.
Its remaining investments in UBS (Switzerland), Citigroup, Barclays and Merrill Lynch - at an original cost of US$21.88b - have declined on by some 47 percent in value.
Some experts believe that Temasek has made an error of judgment.
Investment guru Jim Rogers said in July he believed that US bank stocks could fall further and predicted that Singapore's state investors would lose money on Citigroup and Merrill Lynch.

Comments:
Before you come to the conclusion that Temasek has made a lousy investment decision which has resulted in losses, it seems like nobody can verify on the accuracy of this news. According to the Mutual Fund Facts website, they have sold off 50% of their stake. That means at the start, Temasek should own about 174 million shares. However, I am inclined to think that this piece of news is untrue. The numbers simply do not add up. I did a simple search online and found the following:

On 3rd Jan 2008, in a 13G filing on Merrill Lynch, Temasek Holdings disclosed that they hold a 9.4% stake, or 91,666,666 shares, in the investment bank. In December, Merrill, hit with massive write-downs due to the submprime debacle, said they would raise up to $6.2 billion in a deal with Temasek Holdings and Davis Selected Advisors. Under the plan, Temasek Holdings was to invest $4.4 billion in Merrill Lynch common stock, with an option to purchase an additional $600 million of Merrill Lynch common stock by March 28, 2008. Under the deal, Temasek's ownership position will at all times be less than 10% of Merrill Lynch's outstanding shares. Temasek made the initial investment of $4.4 billion at $48 per share (91,666,666 shares). Temasek has an option to buy an additional 12,500,000 shares, also at $48.


Currently, Merrill Lynch's share price is hovering at around US$34. So assuming Temasek exercises the option to increase its stake, the extra $600 million will net another 19 million shares. Taking into consideration that Temasek has bought an additional 12.5 million shares at US$48, the total amount of shares it is holding should be in the region of 123.5 million (92+19+12.5).

How did Mutual Fund Facts website get 174 million???????
Never take news report at face value. Always double check.