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Wilmar: "Target reacquired" and target prices.

Thursday, November 14, 2019

Regular readers know that I have been a Wilmar shareholder for many years.

It is difficult not to find Wilmar impressive as a business entity with its breadth and depth of activities.

Many years of Mr. Market's pessimism towards Wilmar gave believers a big window of opportunity to build their exposure.

In the last two years or more, I have been accumulating shares of Wilmar until 3Q 2018 when I decided to sell into the rally, reducing my investment significantly while keeping a core position.

See:
Largest investments (3Q 2019).

It is a strategy that regular readers should be familiar with.

It is so that I would still stand to gain in case the bull had legs.

Some might call it a hedge as, always, I don't know everything.

Well, as it turned out, the bull grew tired and needed a break.






If you are new to my blog or if you are rather forgetful, to understand why I was building a relatively significant long position in Wilmar,

See:
Accumulating Wilmar on price weakness.

You will see how I did temporal comparative analysis in that August 2017 blog.

To understand why did I buy more when Wilmar's share price went under $3.00 a share instead of cutting losses,

See:
3Q 2018 passive income: Wilmar.

Conviction.

Good reasons make it stronger.

Of course, being paid while I waited made patience more affordable.






I watched the latest Terminator movie recently and Arnold Schwarzenegger (aka Carl) in one scene said:

"Target reacquired."

A man of few words, as always.

OK, no spoilers in case you have not watched the movie.

Anyway, Wilmar was still an investment target for me after the partial divestment exercise to lock in gains earlier this year.

Using my limited knowledge of technical analysis (TA), I waited for what I thought could be the right time to increase exposure again.

Over time, as its share price retreated, I thought Wilmar's chart could form either a falling wedge or a cup and handle pattern.





If it was a cup and handle pattern, share price should find a floor at approximately $3.50 a share (i.e. the lowest point of the handle).

Could be a few cents lower or higher. 

I was also keeping an eye on the rising 200 days moving average (200dMA).

Being a long term moving average and a rising one at that, it should provide a stronger support.

By the time I decided to increase exposure again in a big way, the 200dMA was at $3.54 or so which tied in nicely with the approximate low (of the handle) in a probable cup and handle pattern.

I started buying at $3.60 and bought more as it did eventually hit $3.54.

Wilmar became one of the largest investments in my portfolio once more after that. 

If you do not remember reading about this in my blog, you might want to see related post #1 at the end of this blog.








As usual, I scribbled all my TA on a scrap of paper and, unfortunately, I cannot find that paper scrap now.

However, I remember the measurements I took from charting.

Measurements?

Yes, the measured target prices.

Prices?

Yes, that is not a typo.

In the plural.

If Wilmar's share price were to move higher after forming a falling wedge, the measured upside target would approximate $4.50 a share.

If Wilmar's share price were to move higher after forming a cup and handle pattern, the measured upside target would approximate $5.00 a share.






Take my TA with a pinch of salt because I am an amateur, after all.

I know some of you do not believe me but I am just being honest.

Well, amateur or not, if things pan out like I think they might, I would stand to book a pretty handsome capital gain.

If things don't pan out like I think they might, all else remaining equal, I would still stay invested as I am comfortable with my level of exposure in a business that provides me with both elements of income and growth.

Now, who says we cannot be an investor and a trader at the same time?

Older readers would remember this masterpiece of a pyramid drawing by AK the artist:







See:
Investing for income and dividend yields.

and also:

Motivations and methods in investing.

The former was a blog from March 2017 while the latter was a blog from July 2013. 

Newer readers who wish 

1. to know what the pyramid drawing is about 

and 

2. to understand my investment style 

should find the blogs useful.






Newer readers might also want to read related post #2 at the end of this blog. 

Why do I invest the way I do?

You tell me.

Related posts:
1. Largest investments updated (4Q 2019).
2. Peace of mind as an investor.

2 comments:

Yu said...

ak shifu,
now i understand why u keep emphasizing on warchest :((
as i just started working, no moneyyyy :(

AK71 said...

Hi Yu,

If you read related post #2 at the end of the blog, you will see that having a war chest is one of the 5 things I listed that will give investors peace of mind.

Always "eat bread with ink slowly." ;)

It is good to be young as time is a valuable resource.

No rush.

All in good time. :)

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