Thursday, August 15, 2019

Recent Action - Vicom Ltd

In my previous post on "How Do You Prepare A Growing Warchest", I mentioned about how we can accumulate our warchest through a variety of ways.

One of the ways to do them is through the accumulation of defensive stocks which tend to be more resilient during period of uncertainties.

I was fortunate to have a few of these defensive resilient companies in my portfolio, which include the likes of Vicom, Starhill Reit and Netlink Trust when I started the year, each of them taking up a very large position in the portfolio.

I began to unwind each of them slowly, as I look to build up more warchest in anticipation of events like what we have today, with the divestment of Starhill Reit back in May at a (relatively so-so on hindsight) price of 75 cents and divestment of Netlink Trust back in Jun at a (relatively so-so on hindsight) price of 88 cents.

On hindsight, these are not peak-call divestment since both are still trading at this range today which technically means I lose out on their recent dividends payout, but overall it was still a good contribution to the returns of the portfolio and balancing the overall asset allocation of things.

This week, I began to unwind my positions in Vicom slowly, as the turbulent in the stock market especially HK situation means that I am looking to allocate my money in those sectors that were impacted and I think from a risk-reward angle there could be opportunities to put some money to it.

Vicom is an illiquid stock with not much transactions during the normal trading volume so I'll have to slowly sell them by batches but also watch out for the trading fees that are incurred to make sure I don't incur them unnecessarily.

I sold 500 shares at $7.15 (didn't get the full allocation I wanted) on the 8th Aug prior to our national public holiday, and further this week at a higher price that ranges from $7.14 to $7.19.

Vicom also went ex-dividend on the 16th Aug for a payout of 14.11 cents, but surprisingly the share price was very resilient this morning so I took the chance to further divest them at a range of $7.11 to $7.15. In pre-xd form, this means I am selling them at a range of $7.25 to $7.29.

Incredible! It seems like folks are buying into safe haven and wants to keep these defensive assets ahead of the turmoil.

In all fairness, I think valuation is fair at this price and the next 2 quarters result will be good so unless you wanted to re-allocate your cash for another purchase, it might be a good time holding on to it.

I started with 31,300 shares and as of noon closing today, ended with 8,500 shares left.

With these divestment, I am about 85% in cash after my reduced networth due to recent situation that happened back home. 

I am looking hard to allocate some of these cash into some companies which I have targeted, some of which includes HK Land, JMH, HRNet Group, Sembcorp Industries, banks and some others. You can see these companies have been beaten up quite badly in recent weeks for a reason but there could be potential opportunities as well.

I have already initiated a first batch position in HK Land a couple of days back so I am looking to see if I can get it lower than what they are trading today before building up my position further.

It is always easy to hear people say that they are waiting for prices to go lower but when it comes they either didn't take up a position or build up a position that are too small that it is negligible to the portfolio at best. There's always a risk when we build up a position that has yet to reach the trough but it also comes at a reward if your thesis proves to be right over the longer term.

Meantime, I guess patience is the key here when we have volatilities coming back from both our local and the US market but I guess from the sentiments many of the retail investors are happy to see some opportunities.

Thanks for reading.

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  1. Which of the 3 banks are you looking to accumulate?

    1. Hi James

      Likely to be either DBS or UOB at this point.

  2. I always short of cash when the market crash, pure bad luck perhaps

    1. Hi Daniel

      Don't think it's your bad luck, I think you might have better execution which is why you are looking to be always almost invested.

  3. 1.Were you will park the divested amount, just in savings account or is there any account which can generate small interest while waiting ? Multiplier have limit of 100K.
    2.which brokerage account you are using,is there any advantage if we become priority customer(Treasures) to any of the banks ?

    1. Hi Anonymous

      While waiting, I will just park them in DBS Multiplier and SSB account, I don't think the waiting part will be a long period as I typically allocate them pretty fast.

      And I am currently using Limtan but I think if you are a priority customer you might get some privilege on the fees.

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  6. Hi Brian,

    How long would you plan on holding hong kong land?


  7. Hi Brian,

    What would be good entry points for HRNet Group and Sembcorp Industries?

    Thank you!

  8. Hi. How do we buy hong kong land as it is in usd? Is our sgd converted to usd by our brokerage firm automatically?

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