Saturday, 22 December 2012

Nera Tel offer - Independent Board's view

I received the circular from Nera Tel's independent board of directors this week.



The view from their appointed advisor was that the $0.49 offer was fair but not compelling. In this regard, it is recommending that the shareholders reject the offer. The independent directors also supported the recommendation for shareholders to reject the offer.



The key shareholder, Eltek, was selling as part of its directive to divest non core assets, hence may not be waiting out for the best value - what crap. Wouldn't they be compromising the value to their shareholders?

The offeror, Northstar Group, is a private equity fund manager based in Indonesia and backed by TPG, a US-based Private Equity firm. US Private Equity firms have been setting up base in Singapore with a view of increasing exposure to the SE Asia region. Obviously they see tons of value at $0.49. Private Equity managers will only invest if they can get an eventual overall return of at least 2x or an IRR of at least 18%-20%. Northstar does not intend to revise the offer price but it is also unlikely a bidding war will happen as Northstar has already gain 'majority control' of the Company.

As Nera Tel has no debts, there are plenty of ways to "extract" value through leveraging. I am just wondering whether they are able to do that without buying out the minority shareholders like me. Probably they will try to increase the debt at the company level and pay out dividends to shareholders if they managed to privatize the company. They will hope to create value by restructuring the company and business, re-incentivised the current/new management (as in Courts Asia or Amtek's case).   In the event that they can't privatize the company, i hope they will continue to pay out the dividends if the company continues to be cash flow positive as it also benefit them.

Let's see how it pans out in the coming days but I will not accept the offer as well as the offer is really not valuing Nera Tel at the fair value. The offer will expire on 8 Jan 2013 at 5pm.

Tuesday, 18 December 2012

Starfish SRS Portfolio update

Finally back from a prolonged period of travelling. I will do a quick update on the Starfish SRS portfolio

Far East Hospitality Trust

Good to see the Trust making hotel acquisition - Hotel Rendevous in Singapore. Hopefully it will add more yield accretive and interesting portfolio hotels in future.



M1



Every time i look at this counter, my heart ache comes back. hahaha... Starhub is still doing very well! I think the lesson learnt will be to add on M1 instead of "switching out" of Starhub! 



Nera Tel

Some readers asked me if they should accept the "offer letter". My view is this, if you intend to accept the offer, you might as well sell into the current market at the same or better price. In this way, you will get the money back faster. You should only "accept the offer" if the current market price is trading below the offer price. You should not accept the offer if you think the offer price is too low and an insult to your intelligence.


The previous buyout ended with a victory for the Minority shareholder. It will be interesting to see if this offer will end up in the same situation. I don't think the minority shareholders are impressed by the offer on the table.

Perennial China Retail Trust

Pleasantly surprised to see the stock finally moved from my entry price! The entry post at 50c on Sep 22 was here.


What should be the "right strategy" for my SRS portfolio?

I know i shouldn't be trading and "rebalancing" this portfolio too actively. I have traded UOB and Keppel Corporation in the post here and cut losses on STXOSV, Cache Logistics and Suntec REIT in the post here.  Frankly i think i shouldn't be 'trading' my passive income portfolio. This portfolio should be to generate passive income for my retirement.


A few interesting stocks previously mentioned.

Courts Asia - has done pretty well from my post here!  




Religare - Hit a high of 89c from my earlier posting

Saturday, 8 December 2012

UOB & Keppel Corporation & Dividends Received in November

UOB

The investment in UOB turned out to be better than expected. My earlier post is here. It closed at $19.73 yesterday. I have decided to exit the position as it has already reached my original target and i am travelling for another week. You may want to do a trailing stop if you have also entered the position. Frankly i shouldn't be trading by SRS portfolio but the price is looking too tempting not to exit and create some "dividends" for myself.


Keppel Corp



I have also decided to exit my position in Keppel Corporation. Not sure if this is a wise decision.

Dividends Received for Nov

The SRS portfolio received the following dividends:

Starhill - $111 
Cache Logistics - $107.20 (already divested) The link is here.
Suntec - $117.50 (already divested). The link is here.
Interest - $1.64

Happy SRSing.


Saturday, 1 December 2012

China Fishery Group - Not again?!

Sorry for the fans of China Fishery. It is one disappointment after another for the company. The latest results created a disappointment among investors and the latest bad news was regarding its illegal fishing rights in Russia. The news article is here.


The above chart is the weekly chart of China Fishery Group. Here are my original entry and exit postings and my afterthoughts. It is always heartening to have some "anonymous" reader who warned me about the Russian fishing rights even before the news broke out. (Read the comments section in the entry posting). The link to that particular comment is here. Don't know who you are but thanks :)

Lesson 1 - Analysts

The incident also brought to mind another lesson which i shared previously. The analysts don't get it. (Maybe most analysts don't get it, to give credit to the better ones). At the time of my purchase, i think many analysts were shouting for a Buy. (not sure why the previous picture on the analysts targets are missing from my earlier post.). You have to make your own decisions and not rely too heavily on analysts.

Lesson 2 - Cutting Loss

It also demonstrate the importance of cutting loss quickly when deep in your heart you know you have made a mistake. My loss would have snowballed from a few hundred to a few thousands if i have stayed on in that position. Ouch. So my sympathy with those who still holding on. Hope the Company will repay your faith in them and that the dividends they paid are not robbing Peter to pay Paul

Lesson 3 - Learning how to short

If we open our horizon a bit further, actually this is not a bad stock after all. It is actually trending downwards and we can take a short positions on it when it broke the critical support at 84c. So instead of saving a few thousands by cutting loss early, the question i should ask is perhaps, why didn't i earn that few thousands dollar by shorting the stocks through CFDs? If you want to trade for a living (sorry this comment should fit better in my trading blog), then learning how to short a position is perhaps another skill set to be picked up so that you won't go hungry during periods where stocks are trending down.

I will leave these thoughts with you. It is a great weekend and have a good rest. :)
Related Posts Plugin for WordPress, Blogger...

Google Analytics