Investing in ComfortDelgro and locking in gains.

I was accumulating at close to and under $2.00 a share amidst very bearish sentiments, having decided that ComfortDelgro's balance sheet was robust and that its dividend was sustainable even if the entire taxi business was shut down.


The last time I bought more at under $2.00 a share was in 1Q 2018.






It should be quite clear that my decision to invest in ComfortDelgro was mainly for income but, of course, I am not averse to doing a bit of trading either.



So, if I were to sell some of my investment in ComfortDelgro, what prices would I sell at?

Ideally, we want to sell at prices we would not buy at and not at any price Mr. Market threw at us because we did not have a choice.

When I shared my incomplete analysis of ComfortDelgro many months ago (see related post at the end of this blog), I said that a 13x PE ratio would bring us close to crisis valuation and that when Mr. Market was feeling more optimistic, the company was valued at about a PE ratio of 20x.

So, we would not be wrong to think that somewhere in the middle we would find ComfortDelgro's approximate fair value.






Off the top of my head, using EPS of 15c, we get the prices of $1.95 (13x PE) and $3.00 (20x PE) a share.

Therefore, down the middle, at around $2.47 is what should be a pretty fair price, using these assumptions.

Remember that I also used an EPS of 14c which I estimated in a scenario in which the taxi business remained challenged.

With this, we get the prices of $1.82 and $2.80 a share which gives us a middle or fair price of $2.31.







So, depending on what we believe to be the case, selling ComfortDelgro at between $2.31 to $2.47 a share looks to be a reasonable decision.

Of course, then, selling any higher than $2.47 a share would be sweet.

As the share price rose, the MACD, a momentum oscillator in charting (i.e. TA) struggled and churned but did not form a higher high.

Another momentum oscillator, the RSI, tangoed with the overbought line.







So, although the share price rose, the momentum oscillators suggested that Mr. Market was hesitant to buy at higher prices.

This contributed to my decision to take some money off the table.






I reduced my exposure to ComfortDelgro by almost half at $2.47 a share and locked in approximately a 25% gain.

It has been a while since the last time I traded in stocks.

Yes, I have been pretty lazy as a trader in my retirement.






I will most likely hold on to my remaining investment in ComfortDelgro for income unless Mr. Market becomes even more bullish.

If Mr. Market should go into a depression again, reducing my investment in ComfortDelgro, I will have more funds to take advantage of such a situation.








ComfortDelgro is no longer the undervalued proposition that it was when I was accumulating.

Related posts:
1. Analysis of ComfortDelgro.
2. Massive shorting of ComfortDelgro.

Averaging down and don't invest in this stock!

Reader says...
... Singtel, average down from entry at $3.62 till $3.33, average cost is about 3.44.

I only started buying stock about 6 months ago, and having using this approach.






I decided an entry price, normally at 52 weeks low so I got a margin of safety, then average down if the stock keep dropping and stop when the stock moving up.

What is your opinion of this average down approach?






One down side I learnt so far is if the stock run up after my entry price, then I will not be able to accumulate much as only nibble small amount (3k-4k) at the start.

It happened with my ST Engineering, Sheng Siong and First Reit.

The stock took off after my entry and have no chance to buy since then as I tried to chase.






Also, what do you think about stock with low transaction volume?

Should we avoid those as it might not be easy to sell with low daily volume ?

AK says...

If the price on a good investment goes lower, it is better value. ;)

As for less liquid counters, I don't see a problem if we are investing for income. :)






See what a CFA and investment guru told me about Old Chang Kee when I blogged about investing in it in 2011?

"I love eating Old Chang Kee. However, the stock is quite illiquid and has very little volume. One look at the bid ask spread tells me a lot about the counter.

"So as much as I love Old Chang Kee, it is somewhat considered close to a penny stock to me. Therefore I can't invest in it."

See full comment and also my reply in the comments section of:
http://singaporeanstocksinvestor.blogspot.sg/2011/10/old-chang-kee-initiated-long-position.html






Have a plan.

Everything remaining equal, stick to the plan.

Ignore the noise. :)

$71,000 alternative or bogus investment?

Reader says...

I have been very sad and disappointed with these alternative investments that we had ventured with stupidity.

Like the Chinese sayings goes, for really good deals, "there is no such golden duck jumping around on the street". In other words, there is no such good deals.





If that is the case, why is our government still not educating people well about alternative investment, seeing a lot of them got their fingers burned due to such dodgy business.

We invested into alternative investment by XXXXXXX Holdings and got engaged with an agent from XXXXXX Solution Management Pte Ltd, a vendor of XXXXXXX Holdings contracted to do sales and marketing for their alternative investments products.





In total I have $71K invested.

We only received $10K and no payout since Nov 2016.

I wanted to report to the police many times, wanted to engage a lawyer to sue them for breach of contractual agreement and not paying up per contract.

But I was advised against this by the agent saying that law suit cases will delay the process to get back some money from these investments.





I had requested from the agent to share with us the list of investors that had been affected and maybe we can write some letters to MAS, the newspapers or to the police to warn the public regarding such scams and cheats, but the agent refuse to provide.

She said it was not a scam or fraud, just bad investments.





Sometimes I believe we need some authorities to know and take action on our behalf or at least for general public to be aware of such companies and be cautious about investing their monies with them.

Appreciate your advise and anyone who can enlighten my worries.

AK says...

I believe I blogged about XXXXXXX before.

Unfortunately, there isn't much you can do apart from seeking legal advice and let the law take its course for whatever it is worth.





I believe there is little MAS can do to help you either because these "investments" are not regulated.

I feel your sadness and I hope you will be able to recover some capital.

Read related post at the end of this blog and know what questions to ask when offered such "investments". Read its comments section too.





Related post:
Invest $10,000 and get 24% yield!

FRS by 35 and $1 million in CPF account.

Reader says...
I have been an avid reader of your blog and inspired by your way of handling the cpf monies.

I have followed certain methods and have done my own research on the cpf system.





I am 33 yr old now and have drafted a goal of hitting the current frs on my special account by 35.

There is a shortfall of 50k to frs and it shld be done in the next 2 years.

I have max out my ma.





I live a simple life and dun demand for luxuries.

And if i can be gainfully employed till age 55. I hope to also hit above 1mio for my cpf acct.






My concerns are as i am somewhere further away from retirement age, my risk of cpf policy changes are higher compare to urs.

AK says...
Welcome to my blog. :)

If there should be changes to the CPF system and there have been changes over the years, if they are reasonable, I welcome them.

We have to believe that the government have the interests of Singaporeans at heart and that they are competent.

If we don't believe this, then, shun the CPF.





As for your plan to take full advantage of your CPF membership, it sounds like a good one.

Keep at it and you would have a cornerstone in retirement funding in your golden years. :)





However, remember that the Top Up to your SA (allowed till age 55 and as long as it is lower than the prevailing FRS) will enjoy income tax relief only for the first $7K per calendar year.

As it sounds like you are topping up more than $7K per year in the next 2 years to hit the prevailing FRS, you want to be aware of this especially if income tax relief is important to you (i.e. you are in a high tax bracket).

Gambatte!





Related posts:
1. $1 million in CPF by age 65?
2. A cornerstone in retirement funding.

Timing the market and getting best prices?

Reader says...
Is has been awhile since my last email.

I wasn't dare to take the big move to go ahead into investment.





I know very little about Mr.Market. which I decided to be so call "safe" to put majorly of all cash in bank.

Which I know I know, is very wrong.

I monitor Mr.Market for awhile and didn't act on it. facepalm.





I started to look into low risk investment such as REIT.

I am still get lost when i try to follow your blog from the start.





I know is a lot to ask but could you advice me information/link I can look into.

Maybe can share with me how to see a good entry price, any index I could by buy monthly?

AK says...
Unfortunately, I am not allowed to give specific advice and, so, I won't.

I am not very good at timing the market and getting in at the best prices myself.





Read more, learn about valuation and you should have an idea of what are fairly good prices to pay for investments but remember we cannot always get it right.

It is a lifelong learning process.





You can start by reading the books I have listed in my blog's right side bar under "Food for thought".

You might want to read this too:
http://singaporeanstocksinvestor.blogspot.sg/2013/10/3-points-in-stock-investing.html

Which type of insurance for parents and why?

Reader says...
What do you think of the idea of getting insurance for own parents who are in their late 50s and still healthy?

My parents do not have insurance coverage.

I'm planning to get for them a hospitalization insurance + term life w/ critical illness.






I view it as a protection against my financials should anything happen to them.

Because at the end of the day i'm probably be the one who is footing the bill should any mishap happens.






Thinking along that line, i'm thinking if i should actually profit from the demise of my parents. As a form of investment from the lump sum payout from term plan =X

What would you do?

AK says...
Life insurance are for people with dependents.

If your parents do not have dependents anymore, they only need Medishield Life (H&S) or a private shield plan if they can afford it.





If they are Singaporeans, they should already be covered by Medishield Life.

If C or B2 wards in government hospitals are acceptable, they do not need a private shield plan.

As for critical illness (CI) coverage, it is to provide us with a sum of money for our living expenses in case we are hit with an illness that prevents us from working and making a living.

H&S expenses should be covered by a H&S plan mostly and not by a CI plan.






If we no longer depend on income from employment and are able to retire comfortably, I don't see the need for a CI plan (especially when they are so expensive for seniors).

Please read related posts too.





Related posts:
1. Insurance weakened a family's balance sheet.
2. Do your parents have enough insurance?
3. Why do we need critical illness coverage?

Crowdfunding and nudist beaches.

Reader says...
I found your blog when googling crowdfunding in sg.

Feeling very anxious because of Capital Springboard which never pay investors.







Although I am not one of the investor, I have money in another crowdfunding.

I am wondering how safe it is now and I would like your opinion on this which a friend introduced to me...

AK says...
Firstly, you are not an investor but a money lender.

You have taken on the money lending role of a bank here and have assumed all the risks.

Read my blog again and if this is still not clear, read it again and again until it sinks in.

See related post at the end of this blog.







Secondly, the higher yields might be very tempting but did you question why are they so much higher?

You said a friend introduced you to crowd funding.

Is he working for the crowd funding platform or did he receive any benefit as a introducer?








We would do well to remember that altruism is a rare commodity in our modern day world.

You should also not believe everything you read and that includes blogs.

I am not suggesting that there is any wrong doing on the part of your friend but we don't want to ask barbers if we need a haircut.








"Only when the tide goes out do you discover who's been swimming naked." - Warren Buffett

There are nudist beaches in the world.

So, it is not so surprising to see crowds of naked swimmers.





This is not the first and it won't be the last.

Related post:
To make 20% per annum, we could lose it all.

"This is getting embarrassing."

Some readers might find this shirt which I have just washed and put out to dry familiar:

If you are one of those readers, you must have been following my blog since 2011! (See related post at the end of this blog.)

Back then, I blogged about the t-shirt and how it was at least 26 years old.

By now, it is 33 years old.






I wore the shirt out recently when I bumped into someone I had not seen in years.

We chatted a bit and I could tell that he kept looking at my shirt.

Finally, he said something which surprised me:

"I really cannot hold it back anymore but that shirt is so old and it looks old too."

He said something else.






He was pretty diplomatic but it was obvious that he thought it was embarrassing.

To be fair, he was not the first person to say something like that about the shirt.

The shirt has turned yellowish in places and its collar is out of shape.






OK, actually, if I were to be totally impartial (or brutally honest), the shirt looks like a sack that has seen better days.

I think it is time I give the shirt away to the rag and bone man.

Some might say I should have done it years ago but the shirt is so comfortable.






This reminds me of why Warren Buffett got a new car.

He got a new car because his daughter told him:

"This is getting embarrassing — time for a new car!"






Some of us are not very good with things like that and we should listen to people who are better at these things.

Live and learn, I guess.

Related posts:
1. Evolution: "lobster taller than small girl , ak's t shirt older than evo!"
2. Ak says good bye to another old friend.

Sound approach to investing for income?

Reader says...

I am a Singaporean student who is interested in building up a dividend portfolio.

I like to seek your advise whether it is viable to reinvest dividends into shares of the same counter, as the commission seems too expensive to do so.





Is there any way which companies can give out share in place of dividends?

Will this be a sound approach to building a dividend portfolio?






AK says...

If we are investing for income, we want our investments to be able to pay dividends in cash. 

Sometimes, companies might ask if shareholders would like to receive their dividends in cash or scrip (which means new shares)?

If there is an opportunity for arbitrage, then, for the income investor, taking the dividends in scrip might make sense.






And I mentioned it before:

"Many S-REITs have DRPs (or DRIPs), Distribution Re-investment Plan. Some readers asked me if I would take part in these plans.

"My answer is that I invest in S-REITs for income. So, I would usually take the cash distributions unless there is a chance to benefit from arbitrage which happened once before for AIMS AMP Capital Industrial REIT and some might remember that I blogged about it."

For those who are interested in this:
http://singaporeanstocksinvestor.blogspot.sg/2013/05/aims-amp-capital-industrial-reit.html






Always question how is the company generating cash and ask if the dividend being paid is sustainable.

Otherwise, we could be investing for growth or it might be a value trap or it could even be a scam (or maybe I am just talking nonsense here).





As you are new to my blog, you want to read this blog:

http://singaporeanstocksinvestor.blogspot.sg/2015/10/invest-for-income-and-ignore-two-ms.html

If we would like to invest the dividends we receive from our investments, there is no hurry to do so unless Mr. Market is in a big depression.

If we don't need the money, save the money.

Build up our war chest.

And pounce when opportunity knocks.





I know that patience is sometimes the hardest thing. 

I know because I am human too.

http://singaporeanstocksinvestor.blogspot.sg/2013/02/little-book-of-value-investing.html

Related post:
Sit with all that cash and do nothing?

Stronger personal balance sheet and cash flow statement.

Reader says...
I need to spend more time to learn more about investment and not wait till it's too late.

I find it inspirational to read your blog and it motivates me to invest more to be like you.





I have some savings every month and would like to seek your advice on how I can manage it to optimize the very little amount and still be able to grow it further.

1) Reduce my housing loan with the bank in Jan 2020

2) Transfer money to SRS to reduce my income tax contribution for 2018

3) Put aside for my savings account

4) Put aside money for trading





Should I divide my savings evenly among the 4? And since the money in SRS cannot be withdrawn, do you think I should use it to trade?

AK says...
Welcome to my blog. :)

I am glad that you have realised the importance of investing for income.

I believe that you will thank yourself in your golden years. :)





For sure, unless we are born with a spoon made of some precious metal in our mouths, we need to save money in order to have money to invest with.

OK, I know we can also borrow money to invest with but not everyone can sleep well investing with borrowed money.

Indeed, I have a blog on how to have peace of mind as an investor and you might want to read the related posts at the end of this blog.





You have to know that I am not a financial adviser and I am not allowed to give specific advice to anyone.

As a blogger, however, it should be safe enough for me to talk about things in general and you have to make your own decisions.





1. If interest rates go much higher and is even higher than the 2.5% we earn on our savings in the CPF-OA, it makes sense for us to pay down our home loan, especially, if we don't know how to safely invest our savings for much higher returns.

2. Use the SRS to reduce income tax payable only if you have maxed out your CPF-SA. With the CPF-SA, you earn 4% to 5% per annum. 

If you decide to do this, remember, only the first $7K of top up (per year) to the SA will enjoy income tax relief. 







If you have more to contribute, let it flow into your SRS and you could use the SRS savings to invest for income (but dividends cannot be withdrawn until age 62 together with the SRS savings).

See: SRS: e-book and analysis.

3. We always need an emergency fund and a war chest. Having more money saved up is a good idea.

4. Of course, you should think about investing for income.





Which one you do and in what proportion depends on what is more important to you.

If you feel that some measure of financial security is more important while retaining flexibility, then, you should concentrate on #3 first, for example.





It doesn't take much to have a stronger personal balance sheet and cash flow statement.

It does, however, require a lot of discipline.

Related posts:
1. Peace of mind as investors.
2. Top Up SA, MA or SRS?
3. How much in Emergency Fund?

Dislike QAF's CEO and investing in QAF.

Reader says...
What is your view with QAF now and what do you think about their management?

Heard some negative comments on their current management, especially about their CEO background.

AK says...
QAF is related to the Salim group in Indonesia. They have a tight grip on the business. Some don't like this kind of family controlled businesses.

I try to stay objective.






QAF did pretty well until the downturn in the pork business in Australia and that is a cyclical commodity business which means things should look up again eventually.

QAF does have a strong balance sheet and should be able to weather the downturn.





Having such a large majority stake in the business, it is in the interest of the insiders to make sure the business does well and continue to be the major beneficiary of a steady and meaningful dividend payout.





Many years ago, some people also told me horror stories about Old Chang Kee's CEO but it has turned out to be one of my best investments.

Most people are attracted to gossip and that is why tabloids do well.





We should only have to concern ourselves with whether the business is able to deliver what we expect from our investment.

Everything else is just a distraction.

Related post:
QAF's earnings downs but...

Frasers L&I Trust and 21 European assets.

My investment in FLT made more than a year ago has done quite well so far and I would have been quite happy to have them keep the status quo.

Of course, that is not how things work in the real world.





FLT is proposing to buy 21 properties in Europe from its sponsor, most of them German and the rest are Dutch.

Germany is Europe's strongest economy and that is one reason why I invested in IREIT Global so many years ago.

So, to me, that is a reason to like FLT's proposal to invest in German properties.

The properties are 100% occupied, are mostly freehold and mostly come with some form of built in rental escalation.

The proposed acquisitions should make FLT more resilient overall, having less concentration risk in terms of geography as well as tenants.

Of course, the most important question to be answered is how is this going to benefit us as retail investors from an income perspective?

After all, it is reasonable to assume that we are investing in FLT for income.





From FLT's presentation, the deal is likely to be yield accretive and NAV per unit is likely to creep upwards too.

So, income investors should approve.

However, it would depend on how the deal is funded and this is key.





We are not talking about buying 1 or 2 buildings here, we are talking about increasing the portfolio value by some 50%.

For a portfolio that is valued at more than a billion dollars, 50% is a big deal.

Even after taking on more debt, there is going to be a big shortfall.

So, there has to be equity fund raising which, of course, is a private placement and/or a rights issue.





Regular readers would know that I very much prefer a rights issue because it would allow retail investors like me to participate in the fund raising exercise as well.

The number of units in issue is going to increase by a third or so to help fund the deal.

There will be both a private placement and a rights issue.

Find the details in the EGM announcement on page 66: HERE.

As long as the deal allows retail investors to participate in the equity fund raising and as long as it is DPU accretive, I am happy enough for now.





See announcement: HERE.
See presentation: HERE.

Related post:
FLT and CRCT.