A Case of Winning and Miss Opportunity
I know I am suppose to be on hiatus but I felt I had to write about this.
While everyone is looking at Saizen REIT, First REIT and Jumbo IPO, I will be telling you about 2 "Unknowns" and how it has affected me.
Firstly I must say the post by AK about Saizen Reit is very good. The post by Brian on First Reit was a very good piece of analysis. As for Jumbo IPO, I really like this analysis from investment moats.
Anyway back to the unknowns...
The first one was a case of being too particular with the dollars and cents and missing out.
Have you heard of Zagro Asia Ltd?
One of my friend that I was trying to tell this story to last night ask me, "Zagro WHAT?"
This company is one that manufacture and distribute healthcare products for livestock, poultry, aquatic animals and crops.
If you are scratching your head, I can understand. Yes, these companies exist.
To cut the story short, my screening caught this stock and I went deeper into it. I found that it has a great balance sheet, profit margin, ROE, etc.
But its NCAV is 0.220 and the price was 0.245 (at that time) during Sep. Therefore thinking that there is room to drop another 0.005 to 0.01, i decided to place this stock on my watchlist.
I have been trying to get it in Oct but in vain. Eventually, on 3 Nov, before announcing the 3rd quarter results, the stock decided to delist itself at 0.300.
I cannot believe I missed such a great opportunity. Sometimes, I really wonder if we should really be so stubborn on our value investing views - especially for the Singapore Market.
On the contrary, we can always tell ourselves - other opportunities will come. (An update is that the minority holders think this is a low ball offer and will vote against it. Read it at value buddies forum.)
The 2nd case is on - not being stubborn on value investing views, or as AK say "Casino" portion.
This is on Sapphire Holdings Ltd. It was bought up initially by a friend and my mind was "Sapphire WHAT?".
This company, as described by the website, engaged in the mining services business and investment holding following its recent plan to exit the steel business.
BUT it is no longer in mining business as well after a $150 million write off.
It is going into infrastructure building - buying a China land transport builder company (Read Here).
Basically it financials is very bad. If without prompting by my friend, I will have ignore it.
In short, I bought it at 0.084 as a turnaround company stock and hoping for a bit of luck - AND ALSO A SMALL POSITION.
To me, its very weird why such a small company is able to acquire such a big company with at least $400 million order book. My view is there are external forces at work - things we don't know.
Buying this stock is against my principals and a very big risk.
But its not like I never did these risk investing before - the strategy is to go in with a VERY small position WITH STOP LOSS PRICE and readily to accept ALL LOSE as well.
Anyway now the price is at 0.115 as of 3 Nov and I am glad my risk investing took off.
Finally this is not a post about which stock is good and which is bad. It is also not about telling you to buy any stock.
It is to point back to my previous post of "Unknowns". Do not be afraid of them. Rather find out more about them before you commit. Make calculated risks "bets".
PS: if you intend to invest in any of the stock above, please do your own due diligence.
T.U.B : nice piece on sharing your "unknown", I think I might know your friend too! ;-)ReplyDelete
Thanks for reading and commenting. Yes... both of us should be talking about the same friend.Delete
thanks a lot i try to do my best!ReplyDelete
I have been reading your blog and you have been having very good posts. Keep up the good work!Delete