Genting SP: When is it safer to buy?

On 25 Feb, I wrote the following about Genting SP:

"Genting SP continues to weaken as expected. The highest it got to this week was 98c to give stale bulls a chance to reduce exposure. Closing at 91c today hugs the lower limits of the Bollinger bands. The downtrend seems ready to continue as the MFI continues to decline indicating reducing buying momentum. In the unlikely even that the price moves up in the next session, resistance is at 98c.

"Looking at the weekly chart, we see a precarious situation. Price is hugging the lower limits of the Bollinger bands and the MFI continues to decline just like in the daily chart. However, what is important is that it has closed below the rising 50wMA which is at 92.5c. If price is unable to recapture this support level to close at or above 92.5c in the next session, which is the last trading day of the week, the chart would look very ugly. The ultimate downside target would be 74c, a support level provided by the rising 100wMA. Although there would be intial support at 80c, such a potentially huge fall in price would be too tempting for short sellers to ignore."

Today, Genting SP continued its downward slide, closing at 84.5c.  Momentum oscillators such as the MFI and Stochastics show that the counter is oversold.  The MACD plunges deeper into negative territory.  Longer term MAs are descending with the exception of the 200dMA which now acts as resistance in the event of any rebound.  This is at 98.5c. 

The MFI on the weekly chart is not oversold yet while the MACD is on the verge of plunging below zero.  On a weekly basis, there is a strong suggestion of more downside as well.  Trying to make some money from this counter by punting on the long side is going to require a lot of courage and luck at this juncture.  Having said this, the downside would probably be reaching an inflection point in the near future. 

The proximity of the rising 100wMA and the 200wMA to each other would provide a very strong support at 74c and 70c, respectively.    For investors who really like this counter for some reason, they could consider accumulating then, especially if the MFI and Stochastics indicate heavily oversold conditions by then.

First REIT: This one is for keeps.

You might have experienced deja vu before.  

It has happened to me countless times.  

Psychic?  

Maybe but sometimes, things just fall into place in the strangest ways.

Today, I received a payment voucher from my broker on income distribution from First REIT.  

This is not a very glamorous REIT but I count it as one of the strongest in my portfolio.  

The generous distribution put a smile on my face.

Then, I wondered if I should blog about First REIT, using it as an example of the type of REIT we want to have in our passive income portfolio.  

I got home, checked my blog and found two comments from anonymous readers, both stating that they do not like REITs.  

So, that made up my mind for me.






I first bought some units in First REIT in 2007 for an average price of 75c per unit.  

Through good and bad years, it faithfully distributed income to unitholders every quarter:

In the first year, it distributed 7c per unit for a yield of 9.33%.

In the second year, it distributed 7.62c per unit for a yield of 10.16%.

In the third year, 2009, it distributed 7.44c per unit for a yield of 9.92%.

Throughout the years, First REIT did not have to raise funds from unitholders as its gearing remained conservative at slightly more than 15%.  

The management did not act irresponsibly, expanding recklessly during times when credit was easily available.  






Its NAV today is about 98c per unit.  

It is still trading at a discount to NAV although, at today's closing price of 82.5c, not excessively so.  

At the current price, the yield (assuming a distribution of 7.5c per annum) is still a respectable 9%.

You might remember that I said I bought more units of First REIT at 42c during this last crisis.  

I have received the full distribution of 7.44c per unit for the year 2009.  

This translates into a yield of 17.7% (this plus a capital appreciation of almost 100%)!  

In five and a half years, I would have recovered my capital (everything remaining equal).  

This one is for keeps.





First REIT, I believe, is a powerful example of what makes a good investment in REITs for the purpose of passive income generation.  

Let us leave out the units I bought at 42c as that happened under extraordinary circumstances and is unlikely to be repeated.  

Considering just the units I purchased at 75c, it is more than likely that I would continue to receive 10% yield per annum.

Human beings like to classify things, organising things into groups.  

This is not a bad thing in itself but having a system of classification helps us to think more readily in general terms, making quick generalisations in the process.  

This encourages economy and masks differences, differences which could potentially separate the gems from the trash.  

So, next time, if you see what seems to be a heap of trash and think of passing it by, think again. 





Related posts:
High yields: Successes, failures and the in betweens.
Seven steps to creating passive income from the stock market.
High yield portfolio.

The same three counters.

Healthway Medical touched 17c, the initial resistance identified yesterday with the MACD indicating a return of positive momentum.  However, that the price closed unchanged despite increased trading volume indicates that many holders are making use of the upmove to lighten their positions.  A rising MFI shows increasing buying momentum and this is some way from being overbought, suggesting that there might be more upside.  17c is still the resistance to watch.  17.5c is the XR eventual target, the equivalent of the CR eventual taget of 19.5c.

Golden Agriculture closed at 53c, supported by the 20dMA.  This pullback is on the back of lower volume, suggesting that the decline is due to weaker holders being shaken out and not due to any drastic distribution activity.  However, with the MACD forming a bearish crossover with the signal line and the Stochastics continuing its decline, we might see the 100dMA being called upon to act as support yet.  I would accumulate then.

Saizen REIT formed a rare white candle today as price closed at 16.5c with a relatively surprising large buy up in the last trade of the day.  The rising 20dMA and 50dMA have merged to form support at 16c, suggesting that this is probably a very strong floor for the counter.  MFI has formed a higher low, marking sustained positive buying momentum.  MACD marks a return to positive momentum and the Stochastics has turned up as well.  Is this the beginning of something more interesting for believers of Saizen REIT or is it another red herring?  Time will tell but my investment in Saizen REIT is informed by my FA and I am holding with conviction. 

Initial resistance is at 17c, a recent candlestick support turned resistance.  Ultimate resistance for the week is provided by the descending 100wMA at 19.5c.

Golden Agriculture: Accumulate on weakness.

Golden Agriculture drifts downwards as price moves sideways, supported by the 20dMA.  Low volume is observed with a slight declining bias.  So, there is a chance of the 20dMA support breaking which would see the rising 100dMA providing support at 50c.  I would buy more, closer to the 100dMA.  I would also pay attention to the MFI and Stochastics.  If these are in the oversold territories then, I would buy even more.