Monthly Review- August 2011

This month has been the worst month of my investing horizon. At the beginning of the month, S&P ratings agency downgraded US long term debt ratings by one notch from AAA. As this is the first time in history that the biggest economic power in the world lost its triple A sovereign credit rating, it brought about a large scale panic in the markets. Global stock markets faced a plunge last seen in the economic crisis in 2008, which reminded many investors of the panicky market conditions at that time.
Sell down was fast and furious, and by mid August, all my unrealized profits for accumulated for the past 2 years were wiped out, and even registering losses in my portfolio. The damage has been huge, but thankfully nearing the end of the month, the market sentiment turned slightly positive as IMF announced that they will do their part to boost the jobs market when needed. This confidence booster helped the market claw back some of its losses at the end of the month. My portfolio also recovered from the loss to register a small unrealized profit. Nonetheless, for the month of August, my unrealized profits has decreased by a massive 70%!
There are no changes to my portfolio this month. Amidst the gloom and doom, the only positive news were the earnings report released by the companies and their declared dividends. Parkwaylife Reit has declared a quarterly dividend of $0.0237 per share. Parkwaylife Reit has been generating consistent returns, especially in times of uncertainties, it has proved to be a gem. In addition, in current times of high inflation, Parkwaylife Reit will be a great hedge as its rental income is pegged to the CPI. The quality of this counter can be observed in the great support in its share price. It is definitely the best performer in my portfolio for the month.
FJ Benjamin has also announced spectacular results, with soaring profits and higher revenue. With that, they had announced a final dividend of $0.0200 per share. This is in line with last financial year's distribution, indicating its sustainability. In addition, ST Engineering, Rotary and UOB Kayhian has also announced their respective interim dividend of $0.0300 per share, $0.0100 per share and $0.0050 per share. ST Engineering had a good quarter, but both Rotary and UOB Kayhian were not in a good shape. Profits declined quarter-on-quarter, and there were even downgrades on Rotary by some analysts. However, at this point of time, as I am not in need of money, I will just keep my shares for future dividends while awaiting for the tide to turn.
Last but not least, Wingtai has also reported a fantastic set of results. With a huge amount of cash at hand, Wingtai has declared a total dividend of $0.0700 per share. This announcement attracted a huge buy up by investors and traders, causing the share price to jump by 8.3% one day after the announcement. The huge jump has also caused me to missed the buying opportunity to average down the price of Wingtai that I am holding on to, as I have learnt not to chase after share prices. However, I will keep a lookout for any possible dips in the near future to average down as well as tap on the bountiful dividends.
In conclusion, volatility is hear to stay at least for the next couple of months, as the markets are jittery of the prospects of US and Europe. I will still hold on to my counters, and keep a lookout for the opportunity to average down or realize my gains/ losses.

My Current Portfolio:

Lessons learnt: In current times, buy and hold seems to be a waning strategy. Quick profits and strict loss cutting strategies seemed to be better options in these times of volatility.

Mapletree Industrial Trust (18th Oct 10 to 4th Aug 11)

Mapletree Industrial Trust has been a promising counter since the start. With its strong sponsor, Mapletree Investments, and the excellent performance its sister share Mapletree Logistic Trust has shown all these while when I was holding on to it, I believe that this will also be an outstanding counter to have.

I was lucky to be one out of the many who managed to get 1 lot of Mapletree Industrial Trust during IPO at the price of $0.93. During that period, there were many IPO listings in SGX, however, most seemed to underperform because soon after the hype, many of such new IPOs have their share price sinking to levels below their initial pricing.
Mapletree Industrial Trust on the contrary, stood out from the rest. Although after the initial hype in the first couple of days to hit a high of $1.19, the counter retreated to levels between $1.02 and $1.10 for a few months, it still remained above the IPO levels. This shows the confidence and the support investors have for Mapletree Industrial Trust.
Throughout the period that I was holding on to it, Mapletree Industrial Trust has been generating great returns for its investors. The dividends paid quarterly to investors rose from $0.0152 per share in 4th quarter 2010 to $0.0193 per share in 1st quarter 2011. This huge increase in payout further substantiates the capability of its management to generate great returns for its investors.
In July 2011, the share price of Mapletree Industrial Trust rose to $1.225, a new high since IPO. However, I was rather hesitant to sell at that point of time due to the news that there was a preferential offering of 2 shares for every existing 25 shares for all its current shareholders at a price of $1.06. In addition, the management has announced an estimated cumulative dividend payout of between $0.0309 to $0.0312 for 2nd quarter of 2011. As this has been a great counter, I was tempted to increase my holding and wait for the dividend payout. Therefore I decided to set a sell price target, if the target was hit before the XA period, I will sell it, if not I will just keep it and apply for the preferential offering as I believe after XA the share price will drop to below $1.20 due to dilutive effects.
However, patience paid off. After the XA period, the share price of Mapletree Industrial Trust dropped for a couple of days, and rose back to levels above $1.20 shortly. This gave me the opportunity to get the cumulative dividend payout, as well as profit from the capital appreciation. Thus, I made the decision to sell my single lot at $1.215.
My thoughts at that time: I was rather hesitant in selling this counter, due to its profitability all these while. However, I also have to factor in the risk-reward ratio. The counter has hit its recent high, and the possibility of a downtrend seems higher than a continual uptrend. Therefore I decided to act on it and sold it with a total gain of 34% from both capital appreciation and dividend payout.
Lessons learnt: Many times, the share price of a counter is not reflective of its fundamentals, especially in times of global economic uncertainty. I am glad I sold it and realized my gains, as the global market went into a selling frenzy almost immediately after. Do not let greed blind you. Once the target is reached, sell it, because if the global economic conditions turn, no matter how strong the fundamentals of the counter is, it will not be spared.