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AIMS AMP Capital Industrial REIT: Big boys.

Monday, June 21, 2010

This REIT is generally thinly traded but on some days trading volume would spike.  In recent weeks, I have noticed quite a few single large volume buy ups.  These buy ups were usually to the tune of millions of units. This morning at 11.27AM, 2,825,000 units were bought up at 22c. Again, a single large volume buy up.

I went through the manager's annual report over the weekend and they have a very clear idea on the REIT's direction and what they will do in time. They want to offload their Japanese property and concentrate on Singapore.  They want to offload some underperforming properties in Singapore too.  If they manage to divest these properties, they might pay down the REIT's loans or look for better prospects within the industrial real estate sector in Singapore.  In time, they want to venture into high growth China.

Looking at the OBV, it is obvious that there has been steady accumulation in recent times although the momentum has not always been positive. Has this REIT, with its relatively high yield, low gearing and big discount to NAV, heightened the interest of big boys?

A quick check on SGX's website reveals the following:
3 June 10 - APG ALGEMENE PENSIOEN GROEP N.V.  increased its stake from 8.935% to 9.307%. That was their second major purchase within a short time.  An earlier major purchase happened end of May which bumped up their stake from 7.862% . They currently own about 136,501 lots.

Given such a consideration, for anyone who is thinking of buying into this REIT, hedging with a position initially at or close to 21.5c resistance turned support might be a good idea.  It would be sweet to buy closer to the support of the trading range which remains at 20c. However, it might or might not happen.  Hedging is probably again the way to go.


CreateWealth8888 said...

You keep mentioning hedging in many of your posts. What do you really mean by hedging and how did you really hedge?


AK71 said...

Hi CW,

Hedging is basically an activity to reduce risk. In the context of my posts, hedging is to reduce the risk of losing money or not making money, depending on our perspective.

So, if I like a certain stock and I have identified the support level, I might want to go ahead and buy some at one or two bids above support. Why? What if the price does not fall to support and goes up instead? Then, we would have lost out on a money making opportunity.

Similarly, if I want to sell a certain stock and I've identified the next resistance level, I might hedge by queueing to sell some at one or two bids below resistance. So, in case the resistance level is never tested, I have a higher chance of booking some gains.

TA shows us the supports and resistance but it cannot tell us if these levels will be hit. Hedging smooths out the bumps and nothing more. So, when we hedge, we should not take big positions. Instead, these are smallish positions taken just in case things don't go the way we think they most likely would.

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