Monthly Review- October 2010

This month's performance has been a continuation of the rally in September. STI rose to a new 2-year high, closing above 3,200 during mid-October, before losing its momentum to end at around 3,140 for the month. My portfolio also posted its largest total cummulative gain since January this year.
Major events for the month included the listing of the two Mega-IPOs in SGX, namely Global Logistic Properties, owned by Singapore GIC, and Mapletree Industrial Trust, owned by Temasek Holdings. These two listings were viewed as great investment opportunities by both institutional and retail investors, hence their listing resulted in an influx of liquidity into the market, creating a support which drove the markets to higher levels.
As one of the retail investors interested in the IPO of Mapletree Industrial Trust, I subscribed MIT shares via ATM. This is the first IPO that I had taken part in the subscription process. Thanks to lady luck, I was successfully allotted to 1 lot of MIT shares at the IPO price. The debut of MIT was exceptional, as its first day gain was 29% above its IPO price! However, as the exuberance died off and the rationality of investors returned, the share price of MIT retreated to a more sustainable level. In the event the price dipped to around $1.03 to $1.05, which gives an approximate dividend yield of 7.0%, I will add on my holdings for this counter. However if the opportunity did not come before the IPO of its sister share, Mapletree Commercial Trust, I will sell this counter to buy MCT.
Consequently, as posted previously, I have sold all my holdings in Noble. I realized my gains as I think that Noble has a good run up in a short period of time due to favourable acquisition news and a possible correction may be in sight. In the event the gap in share price is closed at $1.80, I will buy into Noble again, as it is still a strong commodity counter with growth potential.
In addition, Mapletree Logistic Trust has announced a dividend of $0.0154 per share for this quarter. This is a slight increase compared to the previous quarter and it reflected the good management behind this counter. The dividend for the period from 1st Oct to 15th Oct 2010 will be announced later and the cummulative dividend will be paid together next month. One great news was my application for the excess units during the rights issue was approved and I ended up with no odd lots. I will continue to keep this excellent counter for its excellent dividend play as well as possible capital appreciation.
Furthermore, Suntec Reit has also announced a dividend of $0.02502 per share for the quarter. This was lower than the distribution in the previous quarter and its overall performance for the quarter was not spectacular. However the announcement that Suntec Reit will invest in one-third stake in Marina Bay Financial Center halted my thoughts of divesting in the counter, as I believe MBFC will be the future gem for Grade A offices and it has the potential to push Suntec Reit's performance to higher levels.
First Ship Lease Trust has also announced a dividend of USD 0.0095 per share for the quarter. With the proposed exchange rate of US $1: $1.2962, that equates to $0.01231 per share. This shows that the dividend payout after all the defaulting issues is sustainable. However, being below the expectations of many investors, the share price of FSL Trust suffered a great dip. With my current holdings and average price, the performance of FSL Trust has already been above my expectations, and I believe its dividend payout will continue to be sustainable and improve in the near future.
In summary, this month has been a good month. However it also seems like the market needs to take a breather from the rally. Possible upcoming correction in sight, but hope the correction is a mild one.

My Current Portfolio:

Lesson learnt: When in doubt to sell or hold, stay away from the market. Impulse buying and selling is one of the worse thing to do. Stay calm and rational to evaluate the pros and cons of buying or selling. Itchy fingers will result in heart-breaking circumstances.

Noble (19th May 10 to 7th Oct 10)

Noble has always been a strong commodity counter, and it has been consistently expanding its business in the region. However, the share price of Noble was way above my financial ability to purchase any meaningful number of shares previously. It was until the announcement of both bonus share issue and dividend payment which brought my attention to this strong counter, as any possible dilutive effects in the share price may present an affordable buying opportunity for me.

Indeed, after the bonus issue and dividend payout, the share price dropped to about $1.80 per share. With this opportunity presenting itself, I immediately snapped up some of Noble's shares. However, things were not in my favour after the purchase. After the dilution effect sets in, the share price of Noble undergone a period of high volatility. The share price was in the positive territory for a short period, then it plunged to a low of $1.54.

This period of volatility was a cause of worry as my investment in this counter has been in the red all this while. However, with my belief in the management and the business of Noble, I took this opportunity to add on my positions in this counter. Indeed, my efforts paid off as the price bottomed out and reverse into the positive territory. From then on, the share price of Noble climbed up gradually and steadily. It was further boosted by the good news of acquisitions of profitable businesses in the commodities and energy sectors.
With the continuous run up in the share price, I decided to sell off part of my holdings in Noble to reduce my holdings in the counter and average down my buying price. Initially my plan was to hold on the remaining lots for the long term. However as time passes and STI reached the 2 year high of 3,190 in the overbought situation, the worry of a substantial correction sets in. This is aggravated by the presence of a price gap between $1.80 and $1.84. There may be a possibility that the magnitude of the correction may extend to close this price gap. With this in mind, I decided to realized my gains after comparing the risk-reward ratio and the factor of time in this run up.

My thoughts at that time: I was rather reluctant to sell as I believe Noble still has room for growth and its fundamentals have not changed. However after comparing the risk-reward ratio, I decided to cash in the profits and not let greed take charge. In the event that my analysis of the closure of the price gap during correction comes true, I will definitely buy back this strong commodity counter for investment and portfolio diversification.

Lessons learnt: The differentiation between discipline and emotions of fear and greed is fuzzy. Setting unrealistic price targets due to greed and sticking to that "plan" is not being disciplined. Being disciplined or not, depends on the how the analysis was done and what was the buy and sell strategy.