Why do I not panic? Added Sabana REIT.

In my last blog post and probably a couple more before that, I mentioned that we should stay calm and rational, have a plan and act upon it. This is my personal mantra and it has not changed.

Some wonder how I could act so confidently and decisively. Here are some reasons:

1. I am not investing using borrowed funds or funds which I need in the near future for other purposes.

2. Of my total investible cash, only 50% or so has been deployed in the stock market. In the last few sessions, it could have bumped up by a few % points.

3. I am informed by FA on a counter's value and by TA on a counter's price. I buy when I see value and when prices are at supports.

4. 80% or more of my investments in equities are for passive income and I sleep well with the knowledge that I will have regular cashflow from my investments.

5. I know I will divest partially if prices should rebound to test resistance levels. Yes, I am not one to fall in love with my investments.

This list is probably not exhaustive but they are five reasons off the top of my head.

Today, the only counter that hit my target buy prices is Sabana REIT at 88c and 87c. At these unit prices, we are looking at distribution yields of slightly more than 10% per annum. My overnight buy orders at these prices were filled.

Some ask me if I will be buying more units of Sabana REIT if its unit price were to weaken. Looking at the chart and using three sets of Fibo lines, I have identified stronger supports at 83c and 80.5c. If the immediate support at 86.5c should break, those are the prices where I will be adding to my long position.

Related posts:
Seven steps to creating passive income from the stock market.
-->

STI drops 2.2% to 2,821.09 at closing
Wednesday, 10 August 2011

© 2011 - The Edge Singapore

Bloodbath continues and AK71 went shopping!

Another day of heavy selling. Lots of panic! Pandemonium even! What should we do? Stay calm and be rational. Have a plan and execute it. I took my own advice and did exactly that.

I am currently about 50% invested in the stock market. Of this 50%, about 80% is invested for income and much of this is from S-REITs. Currently, my five largest investments in S-REITs are:

1. AIMS AMP Capital Industrial REIT
2. Sabana REIT
3. First REIT
4. LMIR
5. Cache Logistics Trust

In my last blog post on AIMS AMP Capital Industrial REIT, I suggested that 20c would be a very strong support and that I expected many to want to buy at 20c. So, why not queue 1 bid higher at 20.5c too?

Today, my buy order at 20.5c was filled while the buy order at 20c was almost half filled. However, as my buy order at 20c was some 10 times bigger than the buy order at 20.5c (which was more of a hedge), I am quite happy that almost half of it was filled.

Regular readers would remember that I partially divested AIMS AMP Capital REIT at 21.5c/unit to get more Sabana REIT at 92c/unit some time back. So, buying at 20c today was a sweet moment for me. Having only bought back some 25% of what was sold at 21.5c/unit, I am fully prepared to buy more if price were to retest the REIT's historical low of 19c/unit.

Last Friday, I loaded up on Sabana REIT at 92c. Today, I loaded up again at 91c and 90c which were the two support levels identified in my last blog post on the REIT. 90c is the historical low and more than half of the total units that changed hands today happened at 90c.

There is some support, no doubt, but if support at 90c were to be compromised, we could see unit price hitting 88c or 87c if the Fibo lines are anything to go by. At 88c and 87c, we would be looking at a distribution yield in excess of 10% per annum and I would not be able to resist buying more.

Finally, I loaded more units of First REIT. If you refer to my last blog post on the REIT, you would see that I drew 3 horizontal lines at 77c, 76c and 74.5c. These were the supports I identified. The buy orders I put in at all three levels were filled today.

A these prices, we are looking at a distribution yield of about 8.5% on average. With more acquisitions in the pipeline, distribution yield could increase and the very low gearing the REIT currently has means a lower chance of equity fund raising.

Could we see price going lower to test 72.5c or 71.5c? We could. Then, I would buy again.

STI drops 3.4% to 2,891.86 at closing
Monday, 08 August 2011

© 2011 - The Edge Singapore

CapitaMalls Asia: Did I panic and sell?

CapitaMalls Asia did not start the day higher than the closing price of the last session. So, the bullish reversal signal formed in the last session failed to deliver and price touched a lower low of $1.21.

So, did I panic and sell? No, I only sell when prices test resistance, not when they are going lower. Downtrends are rivers of hope.

The MACD still looks like it could form a positive divergence although it would look less probable with each successive down day. Trading volume is lower today as price moved lower, suggesting that there is some fatigue on the part of sellers.

Indeed, a cross between a white hammer and a white spinning top was formed at the end of the session. Another reversal signal. We could see a rebound in the next session and a gap close at $1.325 could happen. If that were to happen, I would reduce exposure to this counter.

Waiting to increase exposure to AIMS AMP Capital Industrial REIT and First REIT.

Continuing from my last blog post, which I said we should get ready and be greedy, I am interested in accumulating more units of AIMS AMP Capital Industrial REIT and First REIT as well if prices should weaken in the next few sessions.

AIMS AMP Capital Industrial REIT, as mentioned in my last blog post, has the honour of closing with its unit price unchanged in a sea of red in the last session.

I suppose Mr. Market recognises the REIT's stronger numbers and astute management. However, Mr. Market is also known to be whimsical. If there should be a sell down, I am ready to buy more. Buy? At what price?

Since April, price moved higher as the MACD formed lower highs. A negative divergence. So, buying recently at 22c or 22.5c would have been unrewarding. In fact, selling some would have been a good idea. A correction is to be expected.

Where is a strong support? I see 20c as a very strong support. Apart from being a nice round number, it is also where we find the 138.2% and 150% Fibo lines approximating, both golden ratios.

Fundamentally, 20c would be a very nice price to add to my long position as well. That would give a distribution yield in excess of 10% per annum and it would be purchasing at a 30% discount to NAV.

Regular readers would remember that I divested some of my investment in the REIT recently as I balanced its weighting in my portfolio with that of Sabana REIT. With its stronger numbers which includes a higher DPU and plans to redevelop 20 Gul Way, accumulating on weakness is what I will be doing.

However, many are also queueing to buy at 20c. So, one bid higher? 20.5c? Why not?

As for First REIT, its very low gearing and defensive quality of its assets are very attractive. The management also has a very good track record to boot. Closing at 79c, it is now offering a distribution yield of more than 8% per annum once more.

The uptrend on the MACD has been broken in the last session. Could price go lower? It could and if it does, I expect strong support at 77c next. That is a natural support level as it was the top of an interim basing process. It is also where the rising 100dMA will be approximating soon. Buy more at 77c? Probably.

Related posts:
AIMS AMP Capital Industrial REIT: Higher DPU and 20 Gul Way.
First REIT: 2Q 2011 results.

STI down 3.6% on heavy selling! Be fearful? Get ready and be greedy!

Today, almost all of the counters in my watchlist registered a loss. Almost? Yes, although none of the counters registered an increase in share price, one counter closed unchanged. That honour goes to AIMS AMP Capital Industrial REIT.  This demonstrates the relative resilience of the REIT's unit price. Given the bloodbath seen in the stock market today, this is impressive.

The action in the stock market was so exciting that I actually wrote two blog posts in the late morning today. There was a lot of fear to the point of being petrifying. However, if we have already planned for a scenario like this, just execute the plan and there is really nothing to fear.  What? Nothing to fear? Yes, why fear opportunities to collect on the cheap?

In my opinion, the only people who would fear a sharp decline in the stock market are people who are fully invested in the stock market and who

1. Borrow money to invest.

OR

2. Use money which they need for other purposes in the near future to invest.

If we are 50% invested or less and if we are not using borrowed funds or funds we need in the near future, I do not see why we should panic. Stay calm and rational.

As revealed in my two earlier blog posts today, I bought more units of Sabana REIT at 92c and more shares of CapitaMalls Asia at $1.265. Could prices go lower next week? They could, of course. Who can be sure?

Looking at CapitaMalls Asia's chart, we see a huge gap down at the start. Price hit a low of $1.25 before closing at where it started the session at $1.28. That is a nice long legged doji and a bullish one too. It is a bullish reversal signal.

In case you are whooping for joy, remember that signals could fail. If we see price opening higher than $1.28 in the next session, the signal is most probably confirmed and we could see price closing the gap at $1.325. Otherwise, be prepared for possibly more downside.

Sabana REIT's unit price also gapped down in the morning but by the end of the session, it closed at 92c, the same price it started the day at, forming a dragonfly doji in the process.

Volume was relatively high and yet volatility was very low as we saw units changing hands at 92c and 91.5c only. This says something about support for the REIT. If its unit price should retest the 90c low, I will probably buy many more units.

Stay calm and get your warchests ready. There could be many more buying opportunities if the selling persists. Good luck.

Related posts:
A sea of red! Have a plan and execute it!
CapitaMalls Asia: Bought more at 161.8% Fibo line.

STI sinks 3.6% to 2,994.78 at closing
Friday, 05 August 2011

© 2011 - The Edge Singapore

CapitaMalls Asia: Bought more at 161.8% Fibo line.

Just two sessions ago, I bought shares of CapitaMalls Asia at $1.335. Then, I commented on the very high volume behind the long black candle and wondered if price could go lower.

I used Fibo lines to estimate where the stronger supports would be in case of further selling and $1.265 is where the 161.8% Fibo line approximates.

My overnight buy order at $1.265 was filled this morning as price gapped down following the drastic overnight sell off in the US and European stock markets.

$1.265 is beyond the lower boundary of the MA envelope and if volume remains relatively low at the end of the day, things would look more benign.

Panic and sell now? No.

A sea of red! Have a plan and execute it!

US stock market plunged 5% overnight. European markets plunged overnight. The Singapore market opened some 100 points lower. Such ferocity in selling, I have not seen in some time.

Panic is palpable. Fear can be petrifying. However, if we have a plan, fear could be less so.

My plan is to continue investing for income and I like AIMS AMP Capital Industrial REIT and Sabana REIT.

Today, I bought more units of Sabana REIT at 92c. Looking at the chart, 92c should be a natural support level but we have to see how it closes this evening.

If it is unable to close above 92c this evening, we could see price going lower to test 91c and 90c for support. I would buy more then. Good luck.

HPH Trust: 2011 Interim Financial Results.

On and off, I would look at HPH Trust because there seems to be so much interest in this business trust from readers. Anyway, as I invest primarily for income these days, HPH Trust fits into my strategy but is it attractive enough for me?

Before I continue, I will say that  I do not like the fact that it is denominated in a foreign currency and in US$ to boot. On my investment journey, I have only once bought a non S$ denominated stock, TCIL, and that was in HK$. It is a bit messy having to take into consideration exchange rates.

These days, with the S$ strengthening against the US$, chances of exchange rate losses are even higher. So, for me to be strongly interested in HPH Trust, there must be a bigger margin of safety. This, fundamentally, would take the form of a higher distribution yield at the most basic level.

HPH Trust released 2011 Interim Financial Results recently and declared a DPU of HK 14.3cents. It has a NAV/unit of HK$ 7.80.

Closing price on 3 August was US 73.5cents.

Now, isn't this one confusing counter? We have to contend with US$ and HK$. Of course, being in Singapore, we have to convert everything to S$. Wah, I am getting a bit giddy already!

US$1.00 = S$1.174
HK$1.00 = S$ 0.15056
(Source: UOB, 4 August 2011)

Unit price:
US 73.5cents = S$ 0.853

DPU:
HK$ 0.143 = S$ 0.0215

Well, let us see if HPH Trust is able to deliver the full year DPU of US 5.9c as per their forecast. This would be a DPU of S$ 0.0693 or a distribution yield of 8.12% at the unit price of US 73.5c.

If we were to believe that HPH Trust would deliver as per forecast, I would not enter at the current price either. Why? Well, I can get more than 9% distribution yield from Sabana REIT and AIMS AMP Capital Industrial Trust without all the messy foreign exchange calculations now anyway. A 8.12% yield from HPH Trust does not even come close.

Then, fundamentally, would I ever be interested in HPH Trust? If it were to offer a 10% distribution yield, why not? That would give me the larger margin of safety I am looking for. Everything else remaining equal, it would mean a unit price of US 59c before I get my feet wet. Wishful thinking? Well, I shall wait and see.

See financial statement here.
Added (1 Feb 17):

http://www.hphtrust.com/distribution.html