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?

Of primates and their diet!

The title of this blog post belies the gravity of the subject on hand. Before we go into the subject proper, a bit of background information is necessary for the uninitiated.

Some might know of an infamous cbox owned by LP, the blogmaster of Bully the Bear. LP is a very decent sort of chap and is always concerned about people, having their best interests at heart. LP is also G.O.D. (Gorilla of Design) in his realm (i.e. his blog and cbox).

G.O.D.? Yes, LP is able to decide on how things look, how emoticons should be abbreviated and how abbreviations would turn out in his cbox. Most of the time, he is a benign G.O.D. but he is fully capable of dishing out caustic remarks and more. He also has the ability to excommunicate any recalcitrant cboxer and eradicate spamsters! Now, that is power!

In the zoo that is LP's cbox, there are larger primates of the gorilla class and smaller primates of the spider monkey class.  I am sure there are also baboons, orang utans and, maybe, a Yeti or two. The primates of different sizes represent investors and traders of different financial means.

In the cbox, we also refer to Sabana REIT as banana REIT just for fun. I cannot remember who started it but it was probably by some disgruntled investor who bought into the REIT at $1.05 a piece thereabouts. Some have referred to it as an expensive banana.

Regular readers would know that I blog about Sabana REIT regularly, starting from its IPO days. However, I only initiated a long position at 92.5c a piece, weeks before it started trading CD with a maiden DPU of about 3c. This was where FA and TA married nicely. FA identified a good undevalued buy and TA gave some hints as to when to buy. If only I am so consistent every time.

Last night, someone whom I believe to be of gorilla class in LP's cbox told me that I was being "suan" (Hokkien for "teased") by a fellow blogger. I went to read the blog post and I share LP's opinion that the blogger was most probably trying to warn spider monkeys to behave like spider monkeys and not behave like gorillas. So, a gorilla might be able to eat a few kgs of bananas in one sitting, a spider monkey could suffer from heartburn doing the same thing or worse! This is generally good advice, of course.

Then again, I have met spider monkeys with great appetites. They could eat a lot of bananas and not grow fat, avoiding the complications of over-eating. Some might say that the complications could come much later in life. Well, this could indeed be the case.

What do I think? Personally, if I have identified something which I believe is a winner, I would go in big. By this, I mean building up my position in the company to be at least 10% of my total portfolio. I am also not averse to building it up to be 20% or more of my total portfolio.

I remember a time when my portfolio size was much smaller, ST Engineering and SPH were the lion share of my total portfolio. In mid 2009 to early 2010, Healthway Medical, Golden Agriculture and Saizen REIT formed the lion share of my total portfolio. How did I do? Quite well, I believe.

However, the recent triple disasters to hit Japan dealt a blow to my investment in Saizen REIT which by that time was about 40% of my total portfolio. 40%? Yes, I liked the fundamentals and I liked the turnaround story which did finally pan out by end of May 2011 with YK Shintoku's CMBS fully repaid.

Unfortunately for me, the triple disaster wrecked a picture of recovery, technically and fundamentally. Informed by TA, I partially divested my investment in the REIT and suffered a small loss. This is a pitfall of a strategy of concentration as compared to diversification. Potential rewards are greater but the level of risk would be proportionally higher. So, we have to stay nimble as circumstances are fluid. This applies to all primates, from gorillas to spider monkeys.

In conclusion, if a spider monkey sees a gorilla wolfing down bunches of bananas and if the spider monkey wants to eat just as many bananas, it could. If it did, I would not say that it would, for sure, suffer from indigestion since it could be a spider monkey with a huge appetite although it might. I would say that it could suffer from malnutrition because it might not have seen what other food the gorilla could be eating as well. Primates are, after all, omnivores.

Oh, if anyone is interested to know, my overnight buy order for more Sabana REIT units at 92c was filled this morning.