NOL: Moving average envelope.

NOL suffered heavy selling today and touched a low of $1.71 before closing at $1.73. Such an intense sell down could see a follow through the next day.

However, it is interesting to see that despite the heavy selling pressure, we still have the potential for a positive divergence to form. Much would depend the price action in the next session.

The lower range of the moving average envelope should provide some support at $1.68 in the event of further selling down. Any recovery in price could see gap cover at $1.82. The way I look at it, anyone who is still thinking of shorting NOL at the current prices should think twice.

I would probably add to my long position by purchasing at $1.68 if it should be tested as support. Downtrends are rivers of hope.

Investing in REITs: A flawed strategy?

I have been told by some that my strategy of investing in REITs is a flawed one. I am also sure that there is no paucity of investment blogs out there saying that one should avoid REITs as they are always hungry for funds and are likely to go hat in hand to unitholders regularly or indulge in private placements.

If I were to be in the mood, I would pen short comments to correct what I feel are bias thoughts. Of course, if the writer should be downright rude, I would return measure for measure. There is always room for discussion and even room to disagree. However, I take a very dim view of bigotry and bad behaviour.

One of the catalysts for the above paragraphs is an article I read in The EDGE regarding Olam's raising US$600 million through selling of more shares. This, I have no doubt, would dilute the interests of minority shareholders.

To the people who would avoid REITs but would invest in companies like Olam instead, I wonder how is Olam different in such an instance? Raising funds to buy more income generating assets sounds like a strategy for growth which any REIT might pursue.

Personally, my investments in REITs have done very well in the last two years with the exception of Saizen REIT but we know why that was so. If we are making money in our investments, we must be doing something right. However, we have to remain vigilant to ensure that our investments remain in good health. This is true whether we are invested in REITs or companies.

Olam International said to raise US$600m in share offer: Update
Monday, 06 June 2011

© 2011 - The Edge Singapore

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GLP versus ProLogis.

I was just reading an article in The EDGE and wonder what this would mean for GLP and its shareholders:

"GLP was listed on the SGX last year after it acquired the Japanese and Chinese portfolio of Prologis with the Singapore Government Investment Corp. (GIC) in 2008.

 "Last December, GLP had to clarify that it did not disclose during IPO that a non-compete agreement with ProLogis was due to expire this February as the deal requires GLP not compete with ProLogis in Japan while ProLogis reciprocally does not compete in GLP’s core market of China.

 "The clarification was made in response to a report in The Business Times that the prospectus for GLP’s initial public offer last October did not specifically disclose that the non-compete agreement was expiring in a couple of months."

Question. Was the non-disclosure misrepresentation on the part of GLP during its IPO? This is especially grave if the information omitted could have serious consequences for GLP's shareholders. I learned in business law many years ago that misrepresentation by omission is just as grave as misrepresentation through the giving of false information.

From a purely business perspective, I wonder how things would pan out in the next few years as ProLogis becomes more aggressive in its pursuit of growth in Asia. Is GLP up to the challenge? It did buy ProLogis' assets. I liken this to Akira asking an OEM to produce its products. Obviously, the OEM is the party with the knowledge and the production capabilities. If the OEM were to offer its products directly to the market, it could do so with an in-house brand and at a more competitive price. Consolation? Akira has a more established brand name but see what good it did for Akira? Did GLP have enough time to establish a strong brand name?

Of course, I am just thinking aloud here and playing the Devil's advocate. I am throwing the floor open to anyone, vested or not vested in GLP, to share any pertinent thoughts on the matter.

Prologis to double Asian holdings after biggest REIT deal
Saturday, 04 June 2011

© 2011 - The Edge Singapore

Related post:
GLP: A falling dagger?