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LMIR: Divested 42.5% at 52.5c

Wednesday, February 13, 2013

Last night, I made a decision to sell a large chunk of my investment in LMIR. Today, my overnight sell order was filled.

By selling at 52.5c, I am giving up a distribution yield of approximately 5.7%.

As I went through my records to cancel out the units which were sold, I found out that the majority were purchased in late 2008 through 2009. 

I made fewer purchases in 2010 and 2011. 

Of course, the total number of units doubled during the rights issue in late 2011 at a price of 31c per rights unit.

Since the rights issue more than a year ago, the performance of LMIR has been unimpressive. 

I blogged about how unitholders who did not take the opportunity to buy more nil-paid rights as it was sold down aggressively then would have been better off without the rights issue and the subsequent acquisitions.

What is immediately positive about the divestment?

Given my entry prices, the divestment locks in a hefty capital gain. 

A big part of my remaining investment in the REIT is now "free", in a manner of speaking.

I have also put in a sell order at 53c. 

This is for the rights units converted from nil-paid rights bought in the open market in late 2011. 

If the sell order should be filled, it would reduce my investment in the REIT by another 30.5%. 

Then, my remaining investment in the REIT would be truly "free".

Of course, I have not taken into consideration the income distributions which I have been receiving from the REIT since 2008. 

I could check but it wouldn't serve any useful purpose other than to provide me with a way to kill time.

Still invested, I hope that LMIR's management would do better in FY2013 since I would still stand to benefit if OCBC Research's forecast for a much higher DPU from the REIT this year comes through.

Related post:
LMIR: An unimpressive 4Q 2012.


opal said...

Always good to lock in profits. Congrats!

Ps: I look at it slightly differently. Agree that the yield is not fantastic at the current share price. However, looking from another angle, if my purchase price is at 30+ cts, and if I take that as my 'deposit', the yield is actually not bad and i dont think i can find a similar or better yield currently. I am holding it because of this thinking. It might be flawed though.
Another reason is that my motive is to grow my passive income. So I draw a line between shares for capital gain ( i will consider total returns) and shares for long term dividend (steady dividend which may or may not grow but shouldn't drop too much)

OT83 said...

Die. Lmir going to crash!!! BB ak selling.

Hahha. I also sold mine at 0.515 few weeks ago. Now left about 50%. But of course my 50% is your 1% :)

Gong xi fa cai !!!

Howard said...

Happy Snake Year AK!

Just curious what are you going to do with the large cash pile from LMIR divestment? Everything is already so expensive!


yeh said...

Now u have more money for Marco polo! Haha

AK71 said...

Hi opal,

This is probably something I have mentioned before and that is we should always look at yield based on the market price of our investment.

However, all of us have our own strategies. If you feel comfortable holding on for passive income, as long as you are making an informed decision, why not? ;)

AK71 said...

Hi OT,

Hardly. Haha... ;)

Anyway, my 53c sell order was not filled today. Not even 1 lot. It seems obvious that 53c is a strong resistance level.

Gong Xi Fa Cai!

AK71 said...

Hi Howyuan,

If we are just looking for yield, simply moving the funds into Sabana REIT would mean an additional 2% per annum. ;p

I am looking for something more...

AK71 said...

Hi yeh,

Oh, my goodness! How did you read my mind?

Indeed, I bought more shares of Marco Polo Marine today at 42c a piece. ;p

Mind you, this is based purely on fundamentals. Technically, the picture isn't too comforting for people on the long side.

SnOOpy168 said...

Happy Snake Year AK & fellow readers at ASSI.

i am with Opal, counting my yield based on DCA. but will look at current cost yield when i am buying.

On hindsight, FR should have been our poster boy for the Indonesia representation.

AK71 said...

Hi SnOOpy168,

Both First REIT and LMIR are considered big investments in my portfolio of S-REITs. LMIR became a bigger investment after its rights issue in late 2011.

The other big investments in my S-REITs portfolio, as you probably know, are AIMS AMP Capital Industrial REIT, Sabana REIT (super banana to you) and Saizen REIT.

Of the five, LMIR has been a serial disappointment. Anyhow, exposure reduced and hopefully, I could put the funds to better use.

As for building up yield based on DCA (which my oldish brain finally figured out what it stands for), it has the same shortcoming as any approach that looks at yield on our original cost of entry. What is it? We might not know when to sell.

Of course, if you don't ever want to sell, that is something else although I think for some classes of investments, there is a time to buy and a time to sell. :)

Ray said...

it's strange that the poor performance of the management did not depress the stock's price.

AK71 said...

Hi Ray,

I find the fact that Mr. Market is unwilling to clear the sell queue at 53c more telling. Of course, this is just my interpretation.

Let us see what happens at XD. :)

SnOOpy168 said...

Waited for 2 months for the $0.525 mark and unwinded 49% of holdings. Peanuts by AK's standards but that seller's remose etc etc started flying around my head.

Never done this before, but feels good taking profits. ^-^

AK71 said...

Hi SnOOpy168,

I hope you know clearly why you partially divested. It shouldn't be "because AK71 did it too". That doesn't count. ;p

If our reasoning for buying and selling something is sound and if the facts we based our decisions on are correct, then, nothing else should matter. :)

SnOOpy168 said...

Seriously, I am hoping that it will hit 0.60. Maybe one day. Your post did remind me of the pre-rights days, where the price band is also around 50c++ range

Trying to learn about not being to attached to my investment counters. This is not a cut-loss order. So, I am going to reward myself with a new toy, while eyeing elsewhere to recycle this capital.


AK71 said...

Hi SnOOpy168,

Well, there is always hope. :)

I am not averse to falling in love with my investments as long as they are still worth the loving. Hahaha... ;p

Congratulations on your gains and soon to be acquired toy!

SnOOpy168 said...

Said too soon. The seller of the "toy" was no show. Subsequently replied to my whatsapp that he overslept, and with no follow up phone calls. Guess I am not fated to buy from him, nor is he keen to transact.

Lets see of the "sell in May & go away" thingy is true for this year

AK71 said...

Hi SnOOpy168,

Look on the bright side. You saved some money. :D

AK71 said...

betta man said...
Hi AK,

Lippo mall has a slew of bad news recently.

Price has crashed from $0.40 to $0.325 at point of writing. I was lucky to sell off all my holdings in LMIR at $0.39 in Mar 18, making a profit in the process. I understand that all investments are good investments at a good price. As at 31 December 2017, LMIRT has reported having S$ 0.322 in net asset value. I am thinking of buying into LMIR again should the price hits $0.30.

Appreciate if you could talk to yourself on LMIR.

Taking the above bad news into consideration, would you consider investing in LMIR should the price falls to $0.30 ?

AK says...
Hi betta man,

I think you might remember that I sold a big chunk of my investment in LMIR many years ago.

I have the impression that you have been following my blog for many years. :)

Since then, I have not added to my investment in LMIR even as its unit price declined.

I am OK with holding on to my remaining investment in LMIR as it is virtually free of cost but to add, given the mediocre management, it has to be at a lower price for yield to expand a lot more.

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