Convoy is the largest pseudo-independent financial advisory firm in Hong Kong.
10 months ago, its stock was at $2.31. Three months later, the company’s executives dumped more than half their shares at $1.50. Yesterday, the stock hit a 52-week low of $0.98 before closing at $1.00. The trading volume was nearly 4 times its average.
What does this sell-off mean?
Clearly, it means that the company’s shareholders (and executives) are worried. I think they should be worried. Here are four reasons why:
- 90% of Convoy’s revenue is derived from ILAS commissions. In other words, 90% of the company’s revenue is derived from ripping off consumers.
- Hong Kong’s legislature is about to enact new laws and establish an independent regulator that will make it increasingly difficult for Convoy to exploit consumers.
- Due to a never-ending stream of scandals hitting the newspapers, Hong Kong consumers are learning that they should avoid ILAS.
- A growing number of ILAS victims are becoming emboldened to take legal action against their ‘I’FAs. As the largest ‘I’FA company in Hong Kong, Convoy is the most likely target of future lawsuits.