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Saizen REIT: A lesson on the right prices and luck.

Wednesday, November 4, 2015

A reader, Felix Leong, left me a comment on how Saizen REIT's shareholders are just lucky to get a good offer.

As I was replying to his comment, I decided that there is a lesson in this and that I should blog my response instead.

Felix Leong's comment:




Hi Felix,

Indeed, luck has a role to play in this and we should not think that this development at Saizen REIT has nothing to do with luck.

Whenever anyone tells me that he doesn't believe in luck, I would wish him luck.

When people buy any REIT that is trading at a discount to NAV, I would ask them why?

If they are hoping for the value to be unlocked, then, I would wish them luck. They would need it.

Why?

It might or might not happen.

When we buy into a REIT, to me, the main motivation should be for income.

This is a reason why although some are waving flags around for Sabana REIT now, shouting that it represents good value for money because of the huge discount to NAV, I am not convinced. 

I am not saying I am right and they are wrong. I am just saying that I am not convinced that they are right. I have shared my thoughts in a couple of blog posts on why I feel this way too.

I do feel sorry for those who got into Saizen REIT at its IPO so many years ago at $1 a share. We should all take it as a good learning experience and hopefully become wiser investors.

I rarely get anything at IPOs and when Saizen REIT had its IPO, I told friends and family that it wasn't worth the asking price. It just wasn't attractive. That was during my pre-blogging days, of course.

An important thing I try to remind myself all the time (although sometimes I forget) is that all investments are good at the right price.

So, I make an effort to keep an open mind about opportunities. Those stocks which are unloved and neglected could turn out to quite rewarding.

As investors, it is important to know what we want from an investment and if it is able to bring home the bacon.

If what we want an investment to deliver depends on luck, then, it is more speculation than investment.

When I got into Saizen REIT when I did, I was looking at an estimated distribution yield of almost 10%. Of course, there were many other considerations which, to me, made it a great investment for income at the price Mr. Market was offering.

The investment was a good fit for my motivation.

Saizen REIT has been a good investment for me and now Lady Luck has decided to smile on me.

I just hope that she would continue smiling until the sale is completed.

Yes, we still need luck on our side as it is not over until it is over.


Related posts:

1.
Saizen REIT: Deeply undervalued but is it a buy for you?

2. Sabana REIT: What is the right price to pay?

10 comments:

Stoical Keynes said...

Hi AK,

Who needs skill when there is luck?!

Give me all the luck in this world. LOL

Nonetheless, I think it's interesting from Felix to highlight that not all Saizen shareholders are making a profit.

I held it once and sold it off early. But no remorse. :p

AK71 said...

Hi SK,

It is never wrong to take profit, as the saying goes. ;)

You made money. So, definitely, there shouldn't be any remorse. :)

Jing Quan said...

Dear AK,

luck is 70% experience and market timing 30% :)

should we start to stock up on lucky charms? :D

JQ

AK71 said...

Hi JQ,

This reminds me of something I used to say as a lazy student in school:
七分运气三分努力.

It also reminds me of something I said in a blog post more than a year ago:
谋事在人,成事在天.

To retire by age 45, start with a plan.

Siew Mun said...

Create the opportunities for luck to likely come to you. Opportunities include having war chest, good buys, margin of safety and interpreting macros and couple with lots of patience

AK71 said...

Hi Siew Mun,

You have given away the formula in just one sentence! ;)

Great material for another guest blog. Hint, hint. ;p

Michael said...

AK71, kudos for highlighting the value when the price was right. Sterling analysis. Don't let anyone take that away from you. Lots of sour grapes and naysayers out there.

The market decides whether we are right or wrong.

AK71 said...

Hi Michael,

Thank you for the encouragement. :)

I hope to be right at least 6 out of 10 times. I am happy that Mr. Market thinks that this is one of those 6 times.

Michael said...

The best traders get it right 6 or 7 out of 10. The rest is risk management and chasing a winning trade.

AK71 said...

Reader:
"Haha. Saizen REIT RTO. Never buy any?"

AK:
"I am still holding on to my original investment. Plenty of exposure already. ;)"

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