Regular readers know I have smallish investments in a few property developers and in a blog in late 2019, I said:
"Based on market value, together, they probably account for a sizable chunk of my investment portfolio."
Yesterday, I saw PREH's stock price spiked up and looked for an explanation.
I got this:
"Perennial Real Estate Holdings Limited (the "Company") notes the increase in the price of the shares of the Company on Singapore Exchange Securities Trading Limited in the course of trading today.
"The board of the Company (the “Board”) has been notified that certain of its substantial shareholders are reviewing the options in relation to their holdings in the Company.
"The Company understands that a decision has yet to be made by such substantial shareholders and there is no assurance that a transaction will take place.
"Accordingly, shareholders are advised to refrain from taking any action in respect of theirshares in the Company which may be prejudicial to their interests, and to exercise caution when dealing in the shares of the Company. The Company will update shareholders in due course when it becomes aware of any material developments."
Source:
PREH Voluntary Announcement.
I have added to my smallish investment in PREH in the past, averaging down my cost.
Still, this investment is suffering a paper loss.
With the spike in the stock price, the paper loss has significantly reduced.
I do not intend to add to my investments in property developers as I explained late last year.
"For a retiree like me, I feel that is enough exposure to property developers.
"For sure, I do not know when value would be unlocked and this unknown makes limiting the total investment exposure to 10% of my portfolio or lower sensible."
I also said:
"... the ability to generate a meaningful recurring income stream has always been an important consideration for me.
"It has become more so as I grow more settled into my early retirement."
If there is going to be an offer to take PREH private, I hope it is a fairly good price as PREH is trading at a huge discount to NAV.
To be realistic, I could still end up losing some money here.
Who wants to pay a higher price if they can pay a lower price?
Even though PREH is undervalued, if we are buying on the hope that value will be unlocked, it is more speculation than investment.
In speculation, being lucky is probably more important than being clever.
Related post:
AK's exposure to property developers.
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41 comments:
Hi AK,
I bought a little for speculation but has since sold at a loss.
Seems like Perennial Hlgs is going to be out on a cheap. Guess moral of the story is having heavyweights with major holdings doesn't necessarily translate to value for us at low prices, rather they are the ones getting great value in times like these.
Also, hope you would consider posting in FB again, more interactions this way :)
Hi keng,
Substantial shareholders do not aim to enrich minority shareholders.
If minority shareholders make some money by following the moves of substantial shareholders, it is just something that happens by the way.
The rich gets richer not by enriching others.
We make some and we lose some.
Hi keng,
Facebook was nasty to AK.
Why the change of heart, I wonder?
Anyway, I rather like things as they are now.
Less for me to do.
I don't need Facebook. ;)
I agree, just post here. Thanks, take care,
Hi Ok,
Thanks.
I will do just that.
Stay safe. :)
Won't be surprised if this ends up similar to the CES shenanigans. :(
Hi Laurence,
I have much respect for the substantial shareholders of PREH.
I hope they do not disappoint.
Well, I can always hope. :)
Hi AK,
I am in the same situation as you.
My share was converted from Perennial China Retail Trust which was paying good dividend.
Perennial has been a value trap for many years paying little dividend and share price keep going down.
Most of the people holding this share expecting privatize will happen when company prospect and share price is in favor for the major share holders to do it.
Business man is all about money, they will take advantage of recent low trading price to offer then looking at NAV.
I Hope for the best and be prepared for losses.
Rf
Hi Rf,
PREH is one of those stocks which we might buy in the hope that value would be unlocked given enough time.
Luck plays an important part in such a situation.
As for PCRT, I made some money selling my investment back in 2014.
Well, that's life.
Make some, lose some.
Reference:
PCRT: Full divestment.
Hi AK,
There is bound to be one of such incidents encountered by the small investors. The gist is to spread the eggs into various baskets so that one will not be much affected by the matter.
WTK
Hi WTK,
We would have to be sure that it is diversification and not "diworsification."
Credit goes to Peter Lynch, of course.
Having said this, if we stay within our circle of competence, we should do better.
Credit goes to Warren Buffett, of course.
Hi AK, I have sent you an email. I need some advice on my CPF usage...
Hi Miracle believer,
My email account was disabled in November 2018.
Anyway, I cannot give any financial advice. ;p
You could read some of my past blogs which I linked in the right sidebar of my blog.
Go to the box titled "Wealth Creation: CPF and SRS."
You would have to go to the web version of my blog to see the sidebars.
They don't show up in the new mobile version of ASSI.
Hi Ak,
Okay... Don't advise me...
I was thinking to transfer OA to SA for a higher interest rate. And I have linked my brokerage account to CPF acc too though I have invested in some good companies for long term growth.
Am I allowed to buy stocks after the move from OA to SA? What kind of stocks, ETF, REITs, or gold do you think I should look into to play safe and have better growth?
Thank you.
Regards,
YL
Hi YL,
CPF-SA money cannot be used to buy stocks, ETFs or gold.
Since the Global Financial Crisis, the investment options available for CPF-SA money have reduced drastically.
I believe that the options available now are only a few unit trusts which are considered safe by the CPFB.
You should be able to find the list in CPF's website.
Having said this, it would be difficult to find risk free and volatility free financial products which would pay a guaranteed 4% return yearly.
For me, CPF is a safety net and CPF-SA is the ultimate safety net.
Reference:
CPF-SA savings 10 years from now.
Further reading:
A lazy and fool proof way to investing for income?
Thanks, AK, stay safe and take care!
Hi YL,
Yes, we must all take care and keep everyone safe. :)
Hi Ak,
Just wondering if you have fully divested Sembcorp Ind? I have lost faith and confidence in its business and management. I have been holding it for 5 years and consider cutting losses once and for all. Any opinion on this? Thanks.
Regards,
Qiongster
Hi Qiongster,
The last time I did anything to my investment in SCI was in 2015.
See:
Sembcorp Industries: Partial divestment.
I still have a smallish investment in SCI which is nursing a paper loss.
The cyclical part of SCI's business is down longer than expected.
It is very unfortunate.
Of course, if it is cyclical, then, it should come back up one day.
If it is structural, then, reducing exposure even at depressed prices might be the sensible thing to do.
Do you believe the downturn is cyclical or structural?
Hi Ak,
Thanks for the enlightenment. I have the answer. The downturn is cyclical and I reflected on why I bought in the first place. To ride on their growing utilities and renewable energy business. Will continue hold long term.
Regards,
Qiongster
Hi Qiongster,
Thanks for sharing. :)
Always good to have a plan. ;)
Reference:
Have a plan, your own plan.
https://www.businesstimes.com.sg/companies-markets/sembmarine-to-raise-s21b-demerge-from-parent-sembcorp
AK,
What do you think about the demerger of semb marine n semb corp industries? Are you still vested in Semb Corp Industries? And will you be selling the Semb Marine shares given upon demerger?
Hi Nobody,
Yes, I still have an investment in SCI.
Things have been bad for oil and gas for way longer than expected and that has impacted SembMarine really badly.
So, after this rights issue by SembMarine, it seems that SCI shareholders will be paid dividends not in cash but in SembMarine shares.
I don't know how many SembMarine shares I will be given but I would probably hold on to the shares because oil and gas is a cyclical industry even though the down cycle has gone on for longer than normal.
Reference:
Sembcorp Industries: Partial divesetment.
Dear AK
So you said u are going to hold on your sembmarine shares show that you are confident of oil recovery, Am I right?
So i think i will hod to mine as well. thanks fr sharing as usual.
v.t
Hi Unknown,
I would probably hold on to the shares but I might change my mind.
So, please don't base your decision on what I say here in my blog.
My understanding is that the slump in oil prices is cyclical.
However, if the growth of alternative forms of energy should accelerate, then, it could spell the death of the oil and gas businesses.
I have been wrong before and I could be wrong again.
Another comment on rights, SCI and Sembmarine: HERE.
Great Singapore sale, offer by Hopu is 0.95 vs RTO price in 2015 was $1.3353.Heavy discount to NAV of $1.6. Is a fire sales.
GIC and Temasek are part of the Hopu fund.
https://www.reuters.com/article/hopu-fundraising/hopu-investments-raising-2-5-bln-fund-to-tap-demand-for-china-exposure-sources-idUSL8N1O432W
https://links.sgx.com/FileOpen/Press_javascript:void(0)Release.ashx?App=Announcement&FileID=617871
https://links.sgx.com/FileOpen/Press_Release.ashx?App=Announcement&FileID=617871
Hi am, The offer of $0.95 offer in cash is made yesterday. Will you accept the offer?
Hi RF, Ok and John,
Thanks for the update, at 95c a share, I would actually make a capital gain.
So, it is good news for me and I will accept the offer. :)
Thanks, ak. I think the offer is almost confirmed as they just need a bit more to get 90%. I will also accept. As it is Above my purchase price of avg $0.77 purchase in 2017
Hi John,
I am glad.
It is a good outcome, given the current circumstances. :)
Hi AK,
What will happen if I don't accept the offer as mine still at a loss at $0.95 ?
Any chances of price revision upwards ?
Also, what would happen if I am still holding the shares after delisting ?
Thanks
MS
Hi MS,
If you do not accept the offer, you will probably end up being a shareholder of a privately held company.
You might want to consult your stock broker for professional advice on this.
Thanks AK. By not accepting is does it increase the chances of price revision upwards in your view ?
Hi MS,
Unless we are a relatively big or influential investor, I doubt we will move the needle by opposing the exercise.
Noted, thanks AK. Small shareholder always at their mercy.
Hi MS,
We are small fish in a big ocean.
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