LMIR: Why did the rights plunge in price and what did I do?

To say that I was not surprised by the plunge in price of LMIR's rights is definitely untrue. I did expect further weakness but the steep plunge downwards was unnerving, made worse by the spike in trading volume. Going by the number of comments in my blog, many others were similarly affected.

So, do we press the panic button and start frothing at the mouth? Nah, we should get really greedy. Hey, there is a fire sale going on.

Some asked me if I had any idea why the price was plunging. It is quite simple, really. Price of the rights plunged because:

1. There are people who cannot exercise their rights.

2. There are people who do not want to exercise their rights.

3. The number of rights which sellers have is greater than the number of rights which buyers are ready to absorb.

Now, should we ask why some cannot or do not want to exercise their rights? Do we ask why there are more sellers than buyers? Well, we could but I wouldn't bother. As an investor, I did my due diligence and decided that I like the REIT's numbers even more at the current price. So, accordingly, I buy more.

Needless to say, my overnight buy orders at 3.8c and 3.4c were filled. At lunch time today, I looked at the chart and Fibo lines suggested a strong support at 2.1c (150% Fibo line) and I entered a buy order which was subsequently filled. Could we see further weakness? Of course, we could and if we should, I see stronger support at 1.6c (161.8% Fibo line) and I have entered a buy order at that price.

1.6c is also somewhat magical because at an estimated annualised DPU of 3.26c, post rights and acquisitions, buying the rights at 1.6c would translate to a total cost of 32.6c per unit which means a 10% distribution yield.

LMIR: Sinking rights.

LMIR's rights sank today. It gapped down, touching an intraday low of 4.4c before closing at 4.6c. Is it going to sink further tomorrow?

Thus far, I have only discussed LMIR's rights issue from the perspective of its fundamentals. What about a TA? For seasoned and orthodox practitioners of technical analysis, they will say that it is impossible to do a TA on this counter with only three sessions so far.

As I am neither seasoned nor orthodox, I have in the past done TA on such counters. One that comes to mind is Sabana REIT during its IPO days. So, for anyone who might be interested, here is my TA on LMIR's rights.


Trading volume has been on the rise as three black candles were formed. This bearish tone is reinforced by the gap down in price today. Although price averted closing at the day's low, it did not close high enough to form a hammer. A hammer would see the lower wick at least twice as long as the body of the black candle. In this case, the body is twice as long as the wick. Further weakness in price would not surprise me.

However, Mr. Market is known to be perverse. Although an immediate reversal would be surprising, it is definitely not impossible. So, what would I do?

In such situations, we can only use Fibo lines to see where the possible supports and resistance levels are. Regular readers would also remember that I like to use two or more sets of Fibo lines to identify very strong supports and resistance. I have done that in this case.

I see strong support in the region of 3.3c to 3.4c where two Fibo lines approximate. That is where I have put in a buy order. However, it does not mean that the support would necessarily be hit. I also see a 138.2% Fibo line at 3.8c. I have also put in a buy order there. Again, it does not mean that the support would be tested. Fibo lines simply show approximate positions of important resistance or supports with no promise that these would ever be tested.

I bought into the rights at 5.6c last Friday and I bought more today at 4.6c. I have accumulated a significant position and unless price should hit those supports I have identified, there is little incentive for me to continue adding. For anyone who has yet to initiate a long position, I would say that the rights are at the right price for me as an investor (pardon the pun) as I see greater value now.

Related post:
LMIR: Bought some nil-paid rights.

LMIR: Bought some nil-paid rights.

I made my first transaction in the stock market since my return to Singapore. I bought some LMIR nil-paid rights at 5.6c each. Some might ask why not buy LMIR units instead as they are trading at 38.5c each cum distribution of 1.06c now.

At a conversion price of 31c per rights, getting nil-paid rights now at 5.6c means a total price of 36.6c. With an estimated annualised DPU of 3.26c, post rights issue and acquisitions, we are looking at a distribution yield of 8.9% and a very low gearing of under 10%. I think this is pretty attractive.

Now, if we were to buy the units at 38.5c and secure the 1.06c income distribution, our cost (to make a fair comparison) would be 38.5c - 1.06c = 37.44c. Compared to buying the nil-paid rights, it is a tad pricier (at about 2.3% more).

For anyone who would prefer to secure the said income distribution for any reason, the REIT goes XD on 16 Nov.

Last day of trading of nil-paid rights is 18 Nov. I will wait to see if I could collect more on the cheap.

Related post:
LMIR: Circular to unitholders.

Tea with AK71: A short break.

I have not been blogging for a few days. I did not even look at the stock market.

My portfolio is not a trading one. It is basically one that generates regular and reliable passive income. So, it is not unthinkable to just leave it alone while I take a short break.

I did receive a SMS from my broker today regarding LMIR's rights issue and how much I should transfer to subscribe to it. Other than that, I have been out of touch.

Where did I go the last few days? Here is a clue:

I might be blogging about my trip in my travel blog over the next few weeks. Look out for it. :)

Related post:
No change to my plan as I plan changes to my life.