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PCRT: St. James' RTO.

Tuesday, March 25, 2014

I feel that this is a good email correspondence to share because it shows how I look at my investments as to whether they are good to hold or divest.

Hi AK,

When last and first we exchanged descriptions of owners on the subject of first time car buyers, your thought of "obscene" seems appropriate now, including "greedy" and "grasping" (my opinion) on the issue of St. James' reverse takeover of PCRT.  Having been allocated a fair number of lots of PCRT at IPO and watching the price go down through the years has been painful for a retiree.  The dividends received so far has at least eased the loss.  With this latest development and a call to downgrade/sell the stock, I'm wondering if I will be stuck with a dud share for many years.

... Would you be so good as to comment on PCRT/St James and give some words of wisdom and perhaps comfort to shareholders like me?
Thanks so much.
My reply:
Hi AH,

I have divested my remaining stake in PCRT and blogged about it. You might want to read the blog post, including the comments that follow. Search for "PCRT: Full divestment."

Try to recall what was your motivation for investing in PCRT and ask yourself if it still does the job you expected it to do. If it does not, what should you do? What if it does? I think you will have your answer then. :)

Best wishes,
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AK71 said...

My comments to a friend in FB:

there is a good reason why PCRT trades at such a big discount to valuation

buying into PCRT now is to buy into a hope that the new entity's share price will hold... because PCRT's unitholders will get shares in the new entitiy which value PCRT's units at 70c each.

this is not a simple deal in arbitrage which is the case with price difference in rights issues...

If I were to make a guess, the new entity's share price could do a free fall once it starts trading. So, must be nimble in selling.

This was what happened at PCRT's IPO.

Solace said...

My Advice to a friend is along the same line:

I don't think this deal is good for minority shareholder. From fundamental view, too much uncertainty and unknown risks which is hard to predict.

If you still in the black after getting dividends, should just sell and take the money. I don't like uncertainty

AK71 said...

Hi Solace,

We take calculated risks in investments. In this deal, I find the risk hard to calculate. -.-"

Of course, for me, the matter is more an academic exercise since I sold before the RTO was made known.

For unit holders who stayed invested, the RTO was a blessing as it sent PCRT's unit price to a high of 60c (before declining again) which allowed them to sell at a higher price. :)

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