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Bought Hyflux and AIMS AMP Capital Industrial REIT.

Friday, December 2, 2011

My overnight buy order for Hyflux at $1.20 was filled. Looking at the daily chart, it is immediately clear why I put in a buy order at that level. It is support. Even with a confirmation of a reversal signal, we want to buy as close to support as possible. Of course, luck plays a part because in very bullish circumstances, price could have gapped up and gone higher.



A white hammer was formed again today as price moved marginally higher on the back of lower volume. It was a weak white candle day. Bulls seemed to be rather cautious as the weekend is always a wild card. If nothing untoward happens this weekend, price could resume its upward climb. Immediate resistance is at $1.28 in such an instance.

It would be interesting to see if price could rise as high as $1.39 which is where the declining 50dMA is approximating. Of course, in another few sessions, the 50dMA would be lower and a gap filling at $1.365 could prove to be a rather strong resistance.


Today, I also bought more AIMS AMP Capital Industrial REIT at 95c. This means a pre-consolidation price of 19c per unit. For long time unitholders, it would immediately look cheap. At that price, we are looking at a distribution yield of 10.5%. The fundamentals of the REIT have not deteriorated. Well, not that I know of. So, the weakness provided me a chance to increase exposure to the REIT.



Regular readers might remember that I divested a significant portion of my investment in this REIT and moved the funds to Sabana REIT to have equal weightage in these two industrial properties S-REITs. The only way to entice me to increase my investment in this REIT once more is to offer a meaningfully higher distribution yield, everything else remaining equal, and that happened today. So, you would see me accumulating on further weakness. 90c next?

Technnically, despite a spike in volume as price gapped down today, all that was formed at the end of the day was a doji. To me, that is an encouraging sign for long holders.


26 comments:

Dividends Warrior said...

Hi AK71,

I was looking at AIMS at 95 cents too. However, in the end, I bought more First REIT instead. I want more healthcare REIT in my portfolio.

Anyway, feels great to see you accumulating more REITs when people are getting skeptical about this type investment. I feel more confident to be in the same camp in you. ^^

AK71 said...

Hi DW,

Yes, I would like to increase my investment in First REIT too. However, it would be nice to see it testing a stronger support before I do so.

There will always be skeptics but they often forget that in any sector of the economy, there will be better run entities and those which are not. As investors, we have to make choices.

Of course, choosing not to invest in REITs altogether is also a choice. There is no right or wrong but the reasons behind the choices could be right or wrong. ;)

Anonymous said...

Hi,

It was announced that AIMS sold some of its shares to pay for divideneds. Would that be a concern (alarm bell ringing)?

AK71 said...

Hi Anonymous,

I think you can switch off the alarm bells. ;)

Another reader asked me this before in another blog post. The REIT management sold off some of the units paid to them as management fees in order to pay their shareholders (i.e. AIMS and AMP Capital). It is not to pay us, the unitholders. So, nothing wrong with it. :)

Serendib said...

Hi AK, thanks to your blog I realized that AIMS is a very different animal to it's predecessor. So I was convinced enough to buy AIMS at $0.955. Don't think I have time to perform all but the most basic TA, so that's good enough for me. Sabana also looks attractive, although I will wait for it to dip down to the low 80s before going in. Fortunately it's also available under POEMS' share builder plan, so will consistently buy a little every month in the meantime.

AK71 said...

Hi Serendib,

I am glad to share my analyses but I am sure you did your due diligence too. ;)

As for Sabana REIT, it would be nice if it could retest its low of 83.5c. That would see me adding to my long position too.

Buying a little every month sounds like a plan. :)

Anonymous said...

Hi AK, thank you for ur reply :)

May I seek clarifications on the following:

"management sold off some of the units paid to them as management fees in order to pay their shareholders"

1. is the "management" refering to the reit manager?.. reit management fees are "salaries" to the reit manager and thus belongs to them?.. if that is so why would they need to pay their "salaries" to another party?..

2. if the above is not correct and somehow the shareholders need to be paid, what is the difference between a unit holder (those who buy their reit) and a shareholder?

3. why would the management need to sell off its own shares to make payments?.. i mean.. any compay would need to make some form of payments (expenses, fees, etc), but they don't sell their own shares to raise those funds?

Thank you for ur time and patience..

AK71 said...

Hi Anonymous,

We have shareholders (investors) and management. Management is paid for their services. Shareholders (investors) get dividends, sometimes.

Managers of REITs get paid for their services. The REIT manager could be an entity set up by certain shareholders and those shareholders could be paid dividends.

These shareholders could also be unitholders in the REIT. I am a unitholder of the REIT but I am not a shareholder of the REIT manager.

Anonymous said...

Hi AK,

Thks for ur prompt reply.

But the question remains.. why would they need to sell their own shares to finance the payment of dividends?..

By the way Goldman Sacs was the one contributing to the higher vol than usual selling last Fri.

Do they know something we don't?

AK71 said...

Hi Anonymous,

The shareholders could have decided to monetise the units which were held by the manager of the REIT. This is not something unitholders have a say in.

As an insider, when the manager sell their units, they must make a timely announcement and, in addition, they divulged the reason for doing so.

I didn't know that Goldman Sacs was behind the higher volume in the last session. The counter parties for my purchases were MSCO and Credit Suisse. Why were they selling? I have absolutely no idea. Do they know something we don't? They could.

INVS 2.0 said...

Hi Ak71,

How to convert the current consolidated price of AIMS back to the pre-consolidated? For eg. $0.950 --> $0.19

Tks.

AK71 said...

Hi INVS2.0,

They consolidated 5 units into 1 back then. So, just divide the current price by 5 to get the pre consolidation price. :)

Marco said...

Hi AK71 and Anonymous, till now, do you have any idea why the reit manager disposing the share for dividend payout?

AK71 said...

Hi Marco,

They did that to pay their own shareholders. It has nothing to do with us as unitholders. I won't let it bother me. :)

Anonymous said...

Hi Marco,

no idea why the reit manager disposed the share for dividend payout.. hope they are not facing credit crunch or getting insolvent like the Europe banks.. had to resort to selling their own shares to make payments..

Side note, these few days of selling is unusual.. hope nothing's wrong.

AK71 said...

Hi Anonymous,

The shareholders of the REIT manager probably just want to monetise the units they had on hand. I won't be bothered by it.

As for whether there is anything wrong with the REIT, who knows for sure? We can only make decisions based on facts which are publicly available. ;)

Ray said...

AIMS AMP not the only one being sold. Almost all shares have been. I find Singpost being sold off more worrying actually :(

AK71 said...

Hi Ray,

Thanks for putting things in perspective for us. Appreciate it. :)

I am looking at Singpost too. If it were to weaken a bit more to give an 8% dividend yield, I would like to become a shareholder. ;p

Anonymous said...

I'm looking at spost too.. Can't seem to find any reason why its being sold in such a way too.. Then again.. its behavior is consistent with 2008.. I rem I got some at around 70c.. it subsequently went down to around 60c..

In any case, from about 1.20 to current level.. not considered much of a decline..

AK71 said...

Hi Anonymous,

For Singpost, 60c or even 70c would be a steal. I would be happy to buy some at 80c. :)

INVS 2.0 said...

Hi Ak47,

Managed to load up a small amount at $0.955. The $0.950 was filled with many eager buyers. Still, $0.955 or $0.191 is still attractive. :)

AK71 said...

Hi INVS 2.0,

You aged me by more than 2 decades. ;p

95.5c is a very decent price. :)

INVS 2.0 said...

Hi Ak71,

The price fell to $0.945 this afternoon. :/

Nvm, just continue to sit on the red and take dividends and buy more at another strong support level. :)

But would the looming property crash hit our REITs even harder next year?

AK71 said...

Hi INVS 2.0,

This is one advantage investing in real estate through REITs. If prices should weaken in the new year, we could buy more units. Investing directly in a physical property, unless we are very rich, I don't think it is feasible to so so. :)

Peter said...

Hi AK
Hyflux is @ 1.155 now.. any analysis on this stock? what is the next support?

AK71 said...

Hi Peter,

Technically, immediate support is at $1.15. If that goes, the low of 16 Oct 2008 at $1.11 could be tested next.

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