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LMIR: There and back again.

Monday, February 17, 2014

I have not done any contra trades in a long time. Well, I did one today and lost some money in the process. Good heavens! What has happened to me?

Well, you might remember that I made a decision last week to buy some units in LMIR at 40.5c a unit. It was motivated by the fact that price had fallen significantly from when I sold a big portion of my investment in the REIT exactly a year ago and how distribution yield was an estimated 8.6% at 40.5c a unit. Arguably, it wasn't expensive.

Unfortunately, things went awry and based on the latest results, the annualised distribution yield is only 5.53%.

I always try to look ahead to see if a business could do better and I surmised that LMIR could see a higher DPU in the following quarter which could push annualised distribution yield up to 6.51% (based on unit price of 40.5c) at least.

However, even 6.51% would miss the 8.6% distribution yield which I estimated and which was an important motivation for me to add to my investment in the REIT.

Since the expectation that came with adding to my long position in the REIT was not met, I should logically think of selling. So, after chewing on this over the weekend, I decided to sell what I bought last week, booking a contra loss of a few hundred dollars in the process. Another fee paid to Mr. Market.

LMIR has done passably well as an investment for income in the last few years and it has been good to me. It is still one of my top 5 investments in S-REITs and my remaining long position is still very much in the black. However, whether LMIR will remain a relatively good investment for income will depend on its future performance.

There could possibly be a better time to increase my investment in the REIT.

Related post:
LMIR: 4Q and FY2013 results.


INVS 2.0 said...

Ouch. LMIR is my third largest holding and I bought a bulk of them during 0.45 and 0.47...

Talk about sinking my feet into the quick sand and can't get out. :(

AK71 said...

Hi INVS 2.0,

Well, I have not divested completely. I have merely sold what I added last week because my expectations are not met. :)

My remaining investment in the REIT is still pretty significant and is part of my core investments for income. It will only be divested if LMIR shows that it is no longer able to generate meaningful income for its investors.

For me to add more, however, LMIR must show me that their income generating ability in S$ terms will strengthen in future.

veronika said...

It is good that you blogged about your losses. More importantly, how you dealt with it.

All TA and other forms of analysis cannot result in gains all the time.
There are 4 seasons a year.
There is day & there is night.

For your readers:

I bought LMIR at 0.53cts... much too late into the game...
too bad.. in life there will always be winners & they cannot exist without the losers.

Am I upset?.. nope!

AK71 said...

Hi Veronika,

Indeed, there is no one person who wins all the time and never loses. Even Warren Buffett has lost money before. So, losing is also part of the journey. :)

You seem to be dealing with your long position in LMIR very well. That is good. :)

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