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First REIT: Dragonfly doji at 71c.

Tuesday, December 21, 2010

The bulllish harami identified on 14 Dec delivered most sportingly as I said then, "It is my personal belief that the 200dMA support at 67c has been recaptured.  Further upward movement in price would find immediate resistance at 68.5c.  This will be followed by 70c and 71c. In due course, if these resistance levels were cleared, the counter could cover the gap at 73.5c. There are some who are still waiting to see how low the price could fall before buying in. Their hands could be forced in the next two days if price continues to be resilient and this would contribute to a further strengthening in price."

First REIT's trading volume has reduced markedly as price rose higher in recent sessions. Today, price closed at 71c, forming a dragonfly doji, suggesting a lack of selling pressure as price rose on relatively low volume.

The OBV formed a sharp V since the formation of the bullish harami candlestick pattern. It has continued rising but more gently so. Accumulation continues. The MACD is poised to form a bullish crossover with the signal line, although in negative territory. Could this upmove in price be just a rebound?

I am of the opinion that it is more a recovery from a deeply oversold condition. Valuation is now moving towards fairer levels. In the days ahead, we could see a gradual rise in price and it could cover the gap at 73.5c. A retest of 75c, the adjusted historical high would be next in line.

Not so long ago, during the days of mad selling down which saw the rights touched a low of 16c and the mother shares touching a low of 66c, what was presented to us was a window period of a few days to load up on the cheap.

Only with strong confidence that comes from knowing the sound fundamentals of the REIT would we dare to buy more and I said as much when asked what would I do then. Friends sent SMS, readers left comments and sent emails. To all, I said we should recognise the window of opportunity, ignore the noise and buy more which I did.

"Am I not worried whether the price would decline further? No. Why should I worry? I cannot do anything to influence the price movement of the REIT. If the market is willing to sell a good thing to me at a lower price, I would buy. It's simple. So, would I buy again if the price declines further. Yes, I would." 13 Dec 10.

I could be sticking my neck out by saying this but congratulations to all who conquered their fears and held their positions. In my opinion, the fair value for First REIT remains at 80c /unit.

Related posts:
First REIT: Quiet confidence.
First REIT: XR and fair value.


WK said...

ho seh la...

i finally paid up my rights n applied for excess...

hope they give me the xmas present...

AK71 said...

Hi WK,

I am also crossing my fingers and hoping that I get as many excess rights as I applied for. ;-p

Chu Yeow said...

I'm thankful to you because your posts have given me confidence in First REIT and some info of the reasons behind the selldown to 66c. I bought some last week to average down and am happy that I did so (though I should really have bought the rights instead of mother share).

Anyway, will be applying for allocated and excess rights tomorrow. Going all out (my bank account, that is) in hopes of getting some excess rights :)

AK71 said...

Hi Chu Yeow,

I am happy to share and I am glad that my blog posts did you some good. Hope that you get all the excess rights you are applying for. :)

demio said...

hi all, i wonder if anyone has a rough idea how much excess rights might be allocated? can i go back to the atm and apply for more excess rights?

AK71 said...

Hi demio,

I do not think anyone would know how many excess rights are available and how many each of us would be given, if any. Will just have to wait for the results.

I am not sure if we are allowed to apply more than once at the ATM for excess rights. Personally, I only made one visit to the ATM. Maybe someone would be able to advise on this?

Isaac said...

Hey AK,

remember I commented quite abit on your First REIT post?

haha. I've been queuing at 69c both days but didn't get. sigh...

la papillion said...

Hi demio,

I don't know how many excess rights are available, but by the time it's announced, the rights exercise would have been completed, so the knowledge is not helpful.

How many excess rights are allocated depends on whether you have odd lots and how much mother shares you hold upon XR. If you have odd lots, quite guaranteed that you'll have it rounded up to round lots. The rest depends on the number of mother shares you hold. Allocated excess is proportional to that, at least according to the AIMS experience.

I've read it somewhere that you can only apply for excess rights once, but I'm not too sure. Why don't you try it again? If it can't be done, then they'll either not accept your money or they'll accept your money and refund you back.

AK71 said...

Hi Isaac,

I remember you but I can't remember what you said about First REIT. Poor memory. :(

First REIT's immediate support is now at 70c. Good luck. ;)

AK71 said...

Hi LP,

Thanks for taking the time to comment on this one. :)

I am not sure about how many times we can apply for excess too. I remember cookie mentioned that he went to the ATM more than once to apply for more excess. I was curious if it was allowed and if the additional applications would even be considered.

Anyway, good luck to all of us. Hope we get what we want. :)

Isaac said...

Managed to get 3 lots at 0.700.Though had I waited a couple of hours more, could have got it at 0.690. Looking forward to my 9.00% Distribution next year!

when would be the next distribution date?

la papillion said...

Hi AK,

You got mistaken about cookie's atm adventure. He applied for his entitled rights first. Then he went for another trip, paying another $2 to apply for the excess rights.

In other words, after so many words, we are still clueless whether we can apply for excess rights in two separate tries, haha :) I'm not dying to find out, just an academic curiosity ;) I suppose demio can call the helpline to find out.

AK71 said...

Hi Isaac,

With thinner trading volume, we could possibly see some volatility. If price closes below the 70c support, the next support is at 68.5c.

Today, 69c was a touch and go affair with low volume. Check the trade summary and we find it was only 1 transaction with 5 lots sold down.

Next distribution expected in Jan/Feb 2011. Expect it to be about half of the last DPU as income from acquisitions would probably only kick in from January 2011.

Therefore, expect DPU for April/May 2011 to be much higher. :)

AK71 said...

Hi LP,

Cookie did that? Why did he not do both in a single transaction? More work to visit ATMs twice and costs more too. Of course, it would be interesting to see how it turns out. :)

I waited till the trading of nil-paid rights ended before going to the ATM to pay for entitled rights + rights bought in open market + excess rights application.

la papillion said...

Hi AK,

I remembered that he mentioned about waiting for his bonus to come in or something. I don't know why he can't wait until the last minute to do everything in one shot though.

Me too. I always wait till the end of the nil paid trading rights to end before subscribing. I'm not sure if I'll buy/sell my nil paid rights off the open market and I don't see why they should hold up my money longer than they have to, haha :)

demio said...

thanks la papillion and AK71!

i went to the ATM at 9:10pm today to apply for more excess rights and the machine did accepted my money. i will update again if my second request is successful or not... keeping my fingers crossed! =)

AK71 said...

Hi LP,

My thoughts exactly. I wasn't thinking of selling my rights but there is always a chance I might end up buying some nil-paid rights at a bargain which happened this time. :)

AK71 said...

Hi demio,

You did it at the eleventh hour, I see. Haha ;)

Well, we will all know the results by the 30th of this month, I suppose. :)

Anonymous said...

Wishing a belated X'mas present of lots of excess rights. Sometimes, I'd wished that things move a bit faster. Free up the refunds, if any, for other purposes.

Huat ah everyone and have a wonderful holiday.


AK71 said...

Hi SnOOpy168,

We live in a world craving for instant gratification, don't we? ;-p

All in good time, my friend. Merry Christmas! :)

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