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Insider buying in APTT and Lu Fang Ming.

Monday, August 5, 2019

This blog is in reply to a comment from a reader regarding insider buying in APTT: HERE.

There is usually only one reason why insiders would increase their stakes especially if they should do so in a big way.

After all, no matter how rich we become, rationally, we don't want to lose money.

Personally, I believe that APTT is undervalued.

Otherwise, I would not have bought more as Mr. Market went into a depression.

See:

Gobbling APTT.

and

4Q 2018 and APTT.

It is good that insiders of APTT seem to think the same way.





This video is only about 2 years old.

When Mr. Market was more optimistic about APTT, some thought that the target price should be 64 cents.

Pretty mind boggling.

Some might also say it was irrational.

APTT's business really hasn't changed much.

The big change is that APTT no longer has leveraged income distributions for its investors.

That was what caused its unit price to plunge which, as I have explained in an earlier blog post, isn't rational either.






Of course, Mr. Market can stay irrational longer than we can stay solvent.

Always do our own due diligence and don't ride on other people's coattails. 


Remember, no one cares more about our money than we do.


Don't ask barbers if we need a haircut.







From an investing for income perspective, APTT's much higher income distribution to its shareholders in the past was unsustainable and I said so before too.

However, after being reduced drastically, its income distribution is probably more sustainable now.

Having said this, if the business remains very challenged and if its income continues to dip, income distribution should have to be trimmed, reasonably.

Investing in broadband infrastructure is the key to maintaining an edge that could compensate for the continuing weakness in its pay TV business.

Not paying an unrealistic dividend means that APTT has the internal resources to fund its broadband investment in order to stay competitive.




APTT's insiders should know more than we do and insider buying probably signals some confidence.

However, unless insiders have a very substantial stake or unless their purchase is a very significant percentage, insider buying might not be as meaningful.

This is the difference between insider buying in APTT versus insider buying in Centurion.

Insiders bought APTT's management from the Australians but, if I remember correctly, they don't hold a large stake in APTT itself.




Finally, APTT is in a business that is disrupted and there is a fog of war here.

So, telling myself that it is never wrong to book a gain, doing the novice TA that I do, that was what I did recently in the rally.

I booked a gain and took money off the table.

If APTT's unit price were to fall drastically, all else remaining equal, I could buy in again.

Remember what I said about speculative positions and how to size them: HERE.





Lu Fang Ming is very wealthy and if he were to lose half a million dollars, he might feel it like a pin prick but, for me, it would be like chopping off one of my arms.

Insider buying gives investors (and speculators) some measure of confidence but, still, we should be aware of our own capacity for pain and not throw caution to the wind.





Related post:
Sell into the rally and stay invested.

6 comments:

musette said...

Thank you so much for your insight on APTT.

I agree that we cant foresee the future but we can always size our positions and manage our risk . It more of a marathon rather than a race when on the wealth building process and theres so many things to learn.

Invest Sg said...

thank you for posting AK - to market to market.. see if can reload a bit :)

AK71 said...

Hi musette,

Yes, we cannot predict but we can certainly prepare. :)

Although not working towards financial freedom is probably a mistake, working towards financial freedom, we should remember that it is not a race and we should all work towards it at a pace that is sensible to us.

See:
Journey to financial freedom is not a race.

AK71 said...

Hi Invest Sg,

Mr. Market will do what he will do.

In the meantime, I will just sit back, relax and play Neverwinter. ;p

30YearOldInvestor said...

Hey AK

Thanks for sharing your thoughts on APTT.

Im also starting to see the value of sizing portfolio even though mine is XXXXXS size hahaha

Wish you all the best too :)

KC

AK71 said...

Hi KC,

Position sizing is important but probably neglected by many.

You might be interested in these blogs:
My investment portfolio, market value and positions sizing.
and
$500,000 stuck in a bad investment.

Good luck to us all. :)

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