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Croesus Retail Trust: Substantial shareholders are buying.

Thursday, February 20, 2014

On 28 January, I blogged about why some retail investors were badly burnt investing in Croesus Retail Trust. This was shortly after I blogged about why the Trust at the price of 87c a unit then was a very good investment for income.

In the blog post of 28 Jan, I said that persistent selling by almost all the substantial shareholders as the Trust's unit price rocketed through the roof to touch a high of $1.18 a unit and then retreated was the main reason why many retail investors were burnt.

The dumbest reason in the world to buy a stock is because it's going up. - Warren Buffett

The only substantial shareholder that consistently increased their stake was Target Asset Management as the Trust's unit price retreated from the high. They increased their stake at 98c, 95c and 96c in May, June and July 2013, respectively.

On 4 February 2014, Target Asset Management increased their stake again by another million units at an average price of 87.35c per unit. Now, they have an 8% stake in the Trust.

For anyone who does not know:

Target Asset Management was established in Singapore in April 1996. It specializes in equity investment in Asian markets. It practices value investing philosophy.
 
The Company was founded by Mr. Teng Ngiek Lian, a former Managing Director of Morgan Grenfell Investment Management Asia and Managing Director of UBS Asset Management, Singapore. Mr. Teng has more than 45 years of industrial and investment experience in Asia.
 
 
Of greater interest to me is the more recent 2.54 million units bought by AR Capital Pte. Ltd.

AR Capital Pte. Ltd. sold down their stake in the Trust from October to November 2013, some at an average price of 86c a unit and I wondered why. They still held a 6.73% stake in the Trust after all that selling.

Recently, on 14 February, AR Capital Pte. Ltd. became a buyer and bought 2.54 million units at 92c a unit. Yes, 92c a unit. I am baffled.

Why did they sell low and buy high? Many possible reasons come to mind but your guess is as good as mine.

After this recent purchase, AR Capital Pte. Ltd. now holds a 7.32% stake in the Trust.

I took a look at AR Capital Pte. Ltd.'s website. It looks more professional than Target Asset Management's. Very nice. See for yourself: here.

AR Capital was founded by Leong Wah Kheong, who has 28 years of equity investment experience. Prior to starting up AR Capital, he spent 20 years with global asset management firm Schroders, where he was the Chief Investment Officer for Asia Pacific ex-Japan equities from 1996 until his departure in 2005.

Could we be seeing the start of the return of stronger buying interest in Croesus Retail Trust? Honestly, I don't know.

However, I do know that there will always be windows of opportunity for investors to buy good income producing assets at prices that offer good value for money.

These investments could possibly turn out to be for keeps.

Related post:
Croesus Retail Trust: Why some were burnt and burnt badly.

3 comments:

SnOOpy168 said...

Perhaps the BB are positive about the outlooks of Japan and saw something that we did not spot. Afterall, all the discussions we had are based on published facts and a quick visit by AK. They may have already scout around that country but not wanting to navigate the complex Japanese business cultures.

Anyway, I am happy that it is seeing good buying interest.

AK71 said...

Hi SnOOpy168,

This reminds me of questions by some people as to why I don't buy properties in Japan since I like the assets so much.

Blogged about it last year in July:
Invest in Japanese real estate.

I am a lazy guy and if I can have the benefits of ownership but without the work, why not?

The Sun said...

Perhaps many parties, especially those who were able to get lots from the IPO allocation, were taking profits from their investment in CRT when the price was over a dollar per lot back then. Conversely, many - including retail investors - were buying due to the bull run in the stock price, especially after its IPO. All these points to the fact that CRT's price may have been driven somewhat by sentiment and profit taking before.

IMO, the current price of slightly over ninety cents better reflects the counter's true value as it is currently priced very close it's NAV of about ninety cents. With the share price fluctuating much lesser now, hopefully we would see more people buying and selling due to its fundamentals rather than market sentiment.

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