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APTT, SoftBank, ECB, Uber, Grab, WeWork and irrational competition.

Monday, November 25, 2019

Didn't AK say he is going to be less active blogging?

Yes, I am currently holidaying in Neverwinter.

Winter Festival and Hell Pit.

The "Hell Pit" event has started but it seems that the first week is pretty easy.

So, it isn't taking up as much time as I thought it might.

Anyway, a reader wrote me a very long comment on APTT.

It is obvious to me that he put in a lot of effort researching APTT's business and prospects.

Of course, he also put in a lot of effort writing the comment.

It is only good manners that I reply.

The reply became a bit too long and I decided to blog about it instead.

Read the reader's comment: HERE.

AK replies:

Hi Verseun,

During "Evening with AK and friends" last year, I explained in greater detail why APTT was possibly a good investment at much lower unit prices after Mr. Market reacted negatively to its huge reduction in DPU.

This was in response to my blog titled:

Gobbling APTT as its unit price plunged.

I believed that APTT's ability to fund further investment in broadband infrastructure using internal resources would see them becoming stronger versus their competition in the broadband space (i.e. telcos).

I explained that the unlimited data plans offered by the telcos in the area were really untenable in the long run compared to what APTT was able to offer.

APTT's broadband infrastructure has much lower OPEX in comparison.

The investment to upgrade would be huge but like I said APTT had the ability to fund it without taking on additional debt with the huge reduction in DPU.

Even now, I could see APTT selling backhaul capacity to the telcos in the future.

However, I also said during "Evening with AK and friends" last year that it depends on how long the competition stays irrational in Taiwan.

In an era of easy money (think SoftBank) and negative interest rates (think ECB), we could see business entities able to and willing to burn cash for extended periods of time (think Uber, Grab, WeWork etc.).

Why invest in money losing Grab or Uber and not in money making ComfortDelgro?

WeWork has become WeWorked.

How do we work these cash burning businesses?

Anyway, in a nutshell, I agree with your conclusion.

However, I have said that investing in APTT is relatively speculative.

It should be a good idea to keep the position small so as not to lose sleep over it.

Sell into the rally and stay invested.

Of course, all of us have different ability and willingness to take on risk.

We are all wired differently and should do what gives us peace of mind.

Peace of mind is surely priceless.

Of course, please remember that AK is mental.


How much passive income is enough?

and maybe also:

UBER and GRAB why you so like that?


keng said...

Hi AK,

In their latest quarterly report, APTT announced there are some updates in their strategic review which will be announced soon.

I'm guessing it will be any time before the next AGM, or else the board will get bread and butter from the shareholders again like there previous AGM which lasted 3 hours!

AK71 said...

Hi keng,

Getting the popcorn ready.

Will be interesting to see what happens. ;)

Verseun said...

Thank you so much for taking time out and on your thoughtful words.

It has certainly been insightful. And like what you mentioned in your previous blogs, to not lose sleep, position sizing is important, which is dependent on appropriate psychology, appropriate money management and investment allocation. And also a balance in capturing opportunity when it presents itself (like Charlie Munger and Belridge Oil) and eating bread with ink slowly.

Once again, I am grateful you are sharing your knowledge with investment novices like myself and sharing timeless and practical views.

AK71 said...

Hi Verseun,

I think I am still a novice but just one with a few more years under his belt. ;p

Yes, we want to pounce on opportunities when they knock but we want to be careful not to throw in everything including the kitchen sink as things might go wrong as they sometimes do.

Have a plan which we can sleep soundly with always.

You might be interested in this blog from March 2017:
When can gambling make more than investing? Hock Lian Seng and Old Chang Kee.


If we are careful, we might still make mistakes but they are less likely to be crises.

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