Suntec Reit always had a strong foothold in Singapore. With its exposure in the retail and office sector, it provided me with the diversification that I need. In addition to that, Suntec Reit also has a good history of above average quarterly dividend payout. All these attractive factors made Suntec Reit an irresistable counter to invest in for the long term for both possible capital appreciation and bountiful dividend payouts.
However, not all was smooth sailing. It all started out due to greed. Having seen the promising rise in the share price of Suntec Reit, I committed the mistake of chasing after the share price and buy at an all time high of $1.35 in 2009. As I thought that the share price has more room to rise, it all turned out to be a wishful thinking of my part. It was proving to me that greed blinds, as at that point of time, all indicators have clearly shown that Suntec Reit was in a seriously overbought situation and a much awaited correction could hit anytime. However, instead of taking notice of all the signals presented, I took the plunge and bought it at the high price. Soon enough, Suntec Reit's share price took a turn, went south and remained below my purchase price for an extended period of time.
At that point of time, I saw much prospects in Suntec Reit due to the faith that the recovering economy will boost the retail and office sectors, which Suntec Reit had a part of the pie. Hence even though I am suffering from paper losses at that point of time, the good prospects and promising dividend payout gave me faith to hold on this counter.
Throughout these fourteen months holding this counter, there were ups and downs in its share price. Opportunities presented themselves for me to average down my purchase price, but I dare not increase my exposure in this counter. Luckily, the efforts and patience paid off as the share price steadily climbed northwards. This is especially encouraging with the announcement of the acquisition of one-third stake in MBFC, which will increase Suntec Reit's foothold in the Grade A office sector.
However, as time passes, risk-reward ratio seemed more and more unfavourable as share price continues to hit new highs since the crisis. This is aggravated by the fact that the quarterly results all these while have been rather disappointing, and its DPU had not improve all these quarters. Consequently, the indicators at this point of time is once again pointing in the direction of the overbought region, which gave me a sell signal. Therefore, all these made me come to the conclusion that it is time for me to realize my gains on this counter as fundamentals of Suntec Reit are becoming unattractive at this point of time.
My thoughts at that time: I was not too hesitant to realise my gains in this counter as its results for Q4 2010 has been rather disappointing. In addition, with the total gains of more than 20% from both capital appreciation and dividend payout, I am contented with the profits.
Lessons learnt: Do not be deluded by greed. Always remember the initial reason for the purchase of the counter. In the event that the fundamentals have changed, do not hesistate to realise the gains and channel the funds to more profitable areas.
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