Syndicates 101

1. a group of individuals or organizations combined or making a joint effort to undertake some specific duty or carry out specific transactions or negotiations.

2. a combination of bankers or capitalists formed for the purpose of carrying out some project requiring large resources of capital.
3. a group, combination, or association of gangsters controlling organized crime or one type of crime, esp. in one region of the country.
4. to sell shares in or offer participation in the financial sharing of (a risk venture, loan, or the like): to syndicate a racehorse among speculators; to syndicate a loan among several banks.

From the start, I want to stress that the word syndicate may have a wider meaning in most, and in most countries the word is not immediately linked to something sinister. There is nothing inherently bad about syndicates, its just a gathering of a few like minded capitalists bent on making some money. But mention the word syndicate among stock investing folks and they regard people in syndicates as being just inches from a prison cell. However, not all syndicates operate on bad stocks, there are some who engineer trading with the gradual release of good fundamentals. Sometimes the gathering of a few institutional funds acting together in cahoots is also term as a syndicate.

Professionally managed firms usually do not get their hands tainted with "syndicates", they do not want to see artificially managed run-ups. If mgmt lacks real ability and professionalism, they are very likely to associate themselves with syndicates, or may act as one themselves. Even among syndicates, there are "good" and "bad" ones. Good as in the sense that they know what they are doing and are "successful", bad ones rely more on "hopes" and usually on a badly thought out strategy (or no strategy at all).

Syndicates 101 - Mantra: Collect, spread news, push, consolidate, distribute, hold, push, hold, distribute ... Hence its not as easy as it looks, even with strong capital backing. It requires a good understanding of market psychology, appreciation of technical resistances and support lines, ability to lure and retain participation, in other word 'how to make a dog stay as long as possible' ... stay... I said stay, good boy.

Bad syndicates do the above badly, and when they get lucky with market sentiment, they tend to dump all shares and let it slide. That is poor syndicate strategy because there will be a dramatic shortage of followers when the same syndicate tries to push up again or tries to do that to another stock.

Understanding markets' and investors' psyche is the 64 thousand dollar question, or should I rephrase as "the 6 million ringgit question". A good syndicate knows how to continually give followers hope, and comfort to continue to hold the stock. Examples of current syndicate plays and their report cards:

"A" = KNM, DNP

"B" = Jaks, Faber

"C" = PA, Eden

"F" = Nextnation

You cannot stop the existence of syndicates, so got to understand them better... and not easy for syndicates to do what they do.. well.