When I shared my full year results end of last year, I mentioned ARA Asset Management's offer of $1.78 a share and how it translates to 35% to 78% capital gains for me if the offer is to be accepted.
At the time, I had a fixed deposit maturing and ARA Asset Management's share price was at $1.71. So, I decided to plonk the money from the fixed deposit into their stock.
It looked like it would be a sure win, an arbitrage opportunity, and I would get a 4% "interest rate" so to speak within half a year or so.
At the time, I knew some shareholders thought $1.78 was too low a price and I knew there was a possibility that the offer would not be accepted. No issues, I thought. I could keep the investment and receive 5c dividend year after year which would give me a yield of around 3%.
However, at the back of my mind, there was a very small voice which asked if I really want a much larger position in ARA Asset Management and with a yield of only 3% to boot in case the offer is rejected by shareholders?
That voice did not go away
Today, I decided to accept a yield of about 2.6% from Mr. Market. After costs, it would be a bit lesser. I closed my "ARA fixed deposit" and received what is very good "interest income" for a 2 months fixed deposit.
I thought of this position as a "fixed deposit". So, like a fixed deposit it should behave.
I still retain my original investment in ARA Asset Management. What I divested was my more recent "investment".
Related post:
2016 FY passive income non-REITs (Part 2).
PRIVACY POLICY
Featured blog.
1M50 CPF millionaire in 2021!
Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.
Archives
Pageviews since Dec'09
33,682,617
Recent Comments
AK71 commented on sold alibaba for 51 gain: “Hi SgFire,Taking profit is never wrong. Gong Xi Gong Xi. :)”
AK71 commented on dbs share price to stay higher for: “Hi jeff, Apologies for the slow reply.I remind myself that…”
SgFire commented on sold alibaba for 51 gain: “Hi Ak, took profit on baba and sitting on profit with…”
jeff commented on dbs share price to stay higher for: “Hi Ak, im new to investing the banks now are rather pricey,…”
jeff commented on dbs share price to stay higher for: “hi ak,Im new to investing, however now the banks are very…”
AK71 commented on dbs share price to stay higher for: “Hi Yv,Huat Huat 2025 to you too! :)”
AK71 commented on dbs share price to stay higher for: “Hi bunny,Nope. Not adding.Last time I added was before they…”
AK71 commented on dbs share price to stay higher for: “Hi Deet,I am somewhat busy and might be late in looking at…”
AK71 commented on dbs share price to stay higher for: “Hi Unknown,As long as you have the shares when it goes Cum…”
AK71 commented on dbs share price to stay higher for: “Hi zhenling,That can either be a good or a bad thing.…”
AK71 commented on dbs share price to stay higher for: “Hi KK,That would be more accurate. Thanks for this.”
Yv commented on dbs share price to stay higher for: “Dear AK, Happy HUAT Year to you. Hoping to equally good…”
bunny commented on dbs share price to stay higher for: “Morning AK, would you still increase the holdings to DBS…”
Deet commented on dbs share price to stay higher for: “Hi AK, Thanks for talking to yourself!I'm eagerly…”
Unknown commented on dbs share price to stay higher for: “Hi AK, thanks for the sharing. I am new to stock. Do you…”
Unknown commented on dbs share price to stay higher for: “Hey AK, I am new to stock. Do you know if I were to buy DBS…”
Get this Recent Comments Widget
ASSI's Guest bloggers
- ENZA (3)
- EY (7)
- Elsie (1)
- Elvin H. Liang (1)
- FunShine (5)
- Invest Apprentice (2)
- JK (2)
- Jean (1)
- Kai Xiang (1)
- Kenji FX (2)
- Klein (2)
- LS (2)
- Matt (3)
- Matthew Seah (18)
- Mike (6)
- Ms. Y (2)
- Raymond Ng (1)
- Ryan (1)
- STE (9)
- Serejouir (1)
- Solace (13)
- Song StoneCold (2)
- TheMinimalist (4)
- Vic (1)
- boon sun (1)
- skipper (1)
Resources & Blogs.
- 5WAVES
- AlpacaInvestments
- Bf Gf Money Blog
- Bully the Bear
- Cheaponana
- Clueless Punter
- Consumer Alerts
- Dividend simpleton
- Financial Freedom
- Forever Financial Freedom
- GH Chua Investments
- Help your own money.
- Ideas on investing in SG.
- Invest Properly Leh
- Investment Moats
- Investopedia
- JK Fund
- MoneySense (MAS)
- Next Insight
- Oddball teen's mind.
- Propwise.sg - Property
- Scg8866t Stockinvesting
- SG Man of Leisure
- SG Young Investment
- Sillyinvestor.
- SimplyJesMe
- Singapore Exchange
- Singapore IPOs
- STE's Investing Journey
- STI - Stocks Info
- T.U.B. Investing
- The Sleepy Devil
- The Tale of Azrael
- TheFinance
- Turtle Investor
- UOB Gold & Silver
- Wealth Buch
- Wealth Journey
- What's behind the numbers?
My ARA Asset Management fixed deposit adventure.
Friday, February 10, 2017
Subscribe to:
Post Comments (Atom)

Monthly Popular Blog Posts
-
I spend a lot of time thinking. Some say I am a thoughtful person. However, some say I think too much. We are all wired differently, right? ...
-
This morning, I sold half of my investment in Alibaba for a 51% capital gain. It has been a long time since I last did any trading and this...
-
I have said for many months that interest rates are likely to stay higher for longer. Higher for longer interest rates are good for not only...
-
Been a while since my last blog post. I have been busy with many things at home and I have not been looking at the stock market. The last ti...
-
Following my last blog post on a reader's predicament and an earlier blog post in which I said people are naturally attracted to large n...
- Tariffs to cause 'short-term bumps,' Trump economic adviser tells Fox Business - 4/3/2025
- Oil sinks nearly 3% after Trump announces sweeping new tariffs - 4/3/2025
- Hyundai Motor says no plan for price hikes in US for now - 4/3/2025
- Japan's Nikkei plunges to 8-month low on Trump's tariff shock - 4/3/2025
- 'Nations that treat us badly': Trump's tariffs on China, EU and other trading partners - 4/3/2025
All time ASSI most popular!
-
A reader pointed me to a thread in HWZ Forum which discussed about my CPF savings being more than $800K. He wanted to clarify certain que...
-
The plan was to blog about this together with my quarterly passive income report (4Q 2018) but I decided to take some time off from Neverwin...
-
Reader says... AK sifu.. Wah next year MA up to 57200... Excited siah.. Can top up again to get tax relief. Can I ask u if the i...
-
It has been a pretty long break since my last blog. I have also been spending a lot less time engaging readers both in my blog and on Face...
-
I thought of not blogging about my 2Q 2020 passive income till a couple of weeks later because Mod 19 of Neverwinter, Avernus, just went liv...
2 comments:
This is a wrong way to do risk arbitrage....
You should at least estimate the chance of the deal getting rejected and the subsequent loss vs the chance of the deal passed and the gain....
Hi redponza,
So cheem. Would you like to comment on how such an estimate could have been done?
Post a Comment