Monthly Review- April 2013

This month marks the beginning of the release of first quarter earnings results.  I believe whether "Sell-in-May-and-Go-Away" materializes or not depends partly on the performance of the companies for the first quarter, as well as the macro environment.

So far, earnings has been average.  However, for the month, the star performers are Singpost and Mapletree Commercial Trust.  Singpost has been rising and making new highs to end off the month at $1.290 per share.  Mapletree Commercial Trust has also broke up its resistance to end off at $1.465 per share.  On the other hand, Far East HTrust had declined gradually to $1.130 per share.  Luckily based on technical analysis, I had sold 9 lots at $1.175 per share to decrease the average price of my holdings earlier. 

In addition, I have purchased 3 lots of FE Orchard this month.  I decided to buy this property and hospitality counter because it is one of the few counters in my watchlist that is still below book value.  Hence being undervalued, I believe it has more upside.  Besides, FE Orchard has just undergone restructuring from its previous status as Orchard Parade Holdings, I believe the restructuring will be beneficial to the company and it will be better able to concentrate and manage its core business.  Furthermore, recently it has announced a dividend payout for the last quarter at $0.0600 per share.  This is a bonus for me as I did not expect any dividends to be declared by this counter at this period.  Nonetheless, more is always welcomed!

As announced earlier, I had sold my holdings in SMRT.  I am glad I bit the bullet and made that decision, as by the end of the month, the share price of SMRT continues to dip further into the red.  With the sale, my current unrealized profits rose by approximately 10%.  How the coming months are going to be for the stock markets, only time will tell.  For now, I shall just wait for any upcoming dividends.

My Current Portfolio:

Lessons learnt: Stay disciplined.  I always need to remind myself to stay disciplined.  Emotional investing is my biggest enemy for now.

SMRT (26th Apr 12 to 1st Apr 13)

SMRT was viewed as a strong defensive counter when I first bought it, as it is seen as the main monopoly of Singapore's public transport system, especially for the MRT system.  This attracted me because with the view of the growing population in Singapore, which results in possible increase in ridership and hence increasing revenue, dividends were expected to remain stable.

 

 

The opportunity came when SMRT was removed from the STI components, which led to a drop in its share price to an attractive level due to the selling by major funds.  With this, I bought 3 lots of SMRT for possible capital appreciation from recovery as well as stable and consistent dividend.  The first few months were fine, though with the volatility in share price, it hovered around my initial purchase price.  As my initial plan to purchase SMRT is for its dividends, with any capital appreciation as a bonus, I am not too affected by the fluctuations. 

However, it did not take long for things to take a hit.  A series of breakdowns of SMRT trains, especially some which occurred during the peak hours, frustrated many commuters and these resulted in the interference of government bodies.  More stringent checks and fines were imposed for transport companies failing to meet certain standards.  In addition, cost pressures from labour and operations began eroding profits of the company, while the stagnating fares did not help to alleviate these issues.  All these started to cause a strain in the finances, with cut in dividends as the first sign of trouble.

As observed from the chart above, since October 2012, the share price of SMRT has been falling.  This was aggravated by the profit warning issued last month.  The price of SMRT broke down below the support of $1.575, which mean that any further decline could only find its next support possibly around the $1.20 region based on historical prices.  Hence when the share price drop to my stop limit, I decided to learn from my past experience to bite the bullet early and sell all my holdings at a loss.

My thoughts at that time: Although I harbour the thought that share price could recover, as fundamentally this is different from First Ship Lease Trust and Rotary because public transport definitely has the support in revenue.  However, with all the government policies on transport operators recently, it may be hard for SMRT to regain its glorious past as the dividend gem.  Hence I had to take the hit before conditions worsen.  Even if it recovers to higher pricing later, as per the case of Rotary now, I shall have no regrets and move on due to the unfavourable conditions now.

Lessons learnt: Be disciplined, and sell when stop loss is reached.  Do not fight against the market, because as a small investor, there is no way I can fight against the market and prevail.