Eagle Hospitality Trust: His plight and my philosophy.

Since my last blog on Eagle Hospitality Trust, I have not looked at it.

I am looking at it again in response to a reader.

The reader who invested in Eagle Hospitality Trust left me a comment but requested that I do not publish it so as not to reveal his identity.

He bought into Eagle Hospitality Trust at 70c a unit this year in July, thinking that he got a pretty good deal.

He bought more when the unit price declined to 66c a unit later in October.

That time in October, he invested for his children using the money in their savings accounts.

When the unit price plunged later on in the same month, he looked on in horror.

Imagine his consternation as the unit price went on to hit new lows soon after.

The massive wealth destruction in such a short time would make any grown man cry.

It must have been horrible.






When the reader bought more at 66c a unit in October, he was unaware that Eagle Hospitality Trust's insiders were already paring down their investments in the Trust in August.

He is more vigilant now.

He has been closely following the news since the Trust's unit price crashed.

The following is the reason why he wrote to me.

Apparently, on 3rd December 2019, Compass Cove Assets Limited which is wholly-owned by Norbert Shih Hau Yuan, sold 35 million units at 52 cents per unit in a married deal, in the process ceasing to be a substantial unitholder as his stake became less than 5%.*









The reader was hopeful when Eagle Hospitality Trust's unit price rose from the depths but he is now in distress once more.

He believed that the Yuans would stop selling their stakes in Eagle Hospitality Trust.

With this latest news, he doesn't know what to believe anymore.

It seems that Norbert Yuan has taken full advantage of the recent recovery in Eagle Hospitality Trust's unit price to sell a rather big chunk of his remaining investment.

From here on, any further sale on his part need not be reported as he has ceased to be a substantial unitholder.

Will the selling continue?

Of course, henceforth, there is no way the reader or anyone of us, for that matter, will ever know.






Obviously, my blogs on Eagle Hospitality Trust last month did not provide the reader with any comfort.

So, why write to me?

What can I say to comfort him now?

Why did I not invest in Eagle Hospitality Trust?

Will I ever invest in Eagle Hospitality Trust?

Is there something wrong with the Trust?

Is that why AK is not investing in it?

Well, to be perfectly honest, I don't know if there is definitely something wrong with the business.

However, I do know that I feel uncomfortable about what has happened which caused the unit price to crash.

I don't know if I will ever feel comfortable enough to invest in the Trust but usually if I am uncomfortable with what the insiders do, it will take a lot to change my mind.

I am not an insider and I don't know more than what has been made public.

For my own sanity, I am just staying out of something I am doubtful about.

Yes, when in doubt, I should stay out.

(If you have yet to read my past blogs on Eagle Hospitality Trust, they are hyperlinked at the end of this blog.)






Here in ASSI, please remember that I am only talking to myself about my perspectives on things.

I am not making any recommendations.

I am as fallible as anyone else.

Please read the disclaimer at the end of this blog page.

What readers do after listening to me talking to myself is up to them.

I will say that if an investment is causing us to lose sleep, we are probably overly invested or using money we should not be using to invest with.

Don't let investments drive us insane.

It isn't worth it.

Trust me when I say we cannot put a price tag on peace of mind.

It is absolutely priceless.






Finally, this blog is not just about Eagle Hospitality Trust.

It is more than that.

I like to think that it is about philosophy which we can apply to all other investments we make in life as well.

Don't let something like this haunt us.







Related posts:
1. Is Eagle Hospitality Trust worth it?
2. Eagle Hospitality Trust: Financial engineering.

Also recently published:
1. Accordia Golf Trust: A 60% premium?
2. Accordia Golf Trust: Offer must be way above valuation.

*See Eagle Hospitality Trust's SGX announcement: HERE.

Accordia Golf Trust: Offer must be way above valuation.

Accordia Golf Trust rose 10 cents or 16.7% to close at 70 cents a unit in the last trading session.

A friend who read my last blog on Accordia Golf Trust called me to ask if $1.20 a unit is realistic?

What did I say in reply?

Well, I do not know if it would happen but I think it is not an unreasonable price.

I told him the best test is to try and sell the golf courses in the open market and see how much potential buyers are willing to pay.

This was one of the ways I used to determine that Saizen REIT was undervalued so many years ago.






For example, in a blog on Saizen REIT 5 years ago in 2014, I said:

"I am inclined to believe that Saizen REIT's properties are worth much more since they managed to sell a property in May at 19% above book value and another one in August at 12.8% above book value. 

"This suggests that the book values of the REIT's properties are rather conservative."

Mr. Market will always pay what he feels is the right price for an asset at any particular point in time.

Not sure if valuations can be trusted? 

Mr. Market has the answer. 

This could very well be the same for Accordia Golf Trust.






If we recall, earlier this year in April, the Trust sold one of their golf courses at above valuation too.

"The consideration of the Divestment is JPY 200,000,000 (approximately S$2,415,751).

"The valuation of the Golf Course as at 31 December 2018 conducted by CBRE, the independent valuer commissioned by the Trustee-Manager as part of its annual valuation of its golf courses... is JPY 27,500,000 (approximately S$332,166)."

Full announcement on Accordia Golf Trust's website:
Divestment Of Village Higashi Karuizawa Golf Club.


You might want to read that again.

The consideration was jaw droppingly above valuation.

It could be the case that the book values of other golf courses in the Trust's portfolio are rather conservative as well.








However, to be realistic, when selling an entire portfolio, it is usually more difficult to command a big premium compared to selling the properties individually.

This was certainly the case with Saizen REIT.

Nonetheless, a compelling offer has to be one that is substantially above the NAV.

Otherwise, there is no reason to accept the offer.

Related post:
Accordia Golf Trust: 60% premium or $1.21 per unit?

You might want to read this:
My investment portfolio or investment philosophy?