Tuesday, May 10, 2016

Discussion on my China Merchants Pacific Holdings Maneuver...

This year, I have been making great judgment calls with other people's money but not my own.

The markets have been very bitter-sweet of late with offers being made to take a staple yield counter China Merchant Pacific Holdings private at $1.02 per share.

Unfortunately, I did not own this share in my private portfolio as I am still struggling to sock away savings without an earned income as of late in the face of multiple personal emergencies. I had initially wanted to get into China Merchants in a serious sort of way at the end of May when the bulk of my dividends arrive. This was sadly not to be.

In the end I was lucky that I have noticed that this stock has become very attractive as of late and as a follow-up to my Saizen REIT maneuver I shared a couple of months ago on this blog, I actually told my dad to farm almost all his proceeds from the sale of Saizen into the China Merchants counter because it was a great way to get consistent 7-8% yields at around 81cts then.

That maneuver really paid off today an we exited 80,000 shares today at around  $1.01.The pay-off has been significant in the face of the May sell-off because we can start farming it into other yield counters which are on the cheap which I have been monitoring of late.

To be fair, luck played a bigger role than skill. Ascendas Hospitality Trust was also rumoured to be about to be taken private as well when I sold the Saizen shares and if I had advised my dad to farm the money into that counter instead, we would be sitting on losses instead of gains. I  ultimately chose China Merchants because it was an equity counter instead of a REIT and thought that tolls would not be negatively impacted by the Chinese down-turn.

As usual, we do not have a habit of enjoying our capital gains, so over the next few weeks, we will be farming the capital back into SGX but I am no longer looking at buying just one counter.

Instead I am looking several equity and REIT counters rather than that one counter which I have so much conviction for.

One should not get cocky and start believing that he can get third time lucky.

Nevertheless, it is sad that SGX has lost a stalwart dividend counter which may never be replaced.

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