Sunday, November 30, 2008

Stock transactions and portfolio summary Nov 08

BUY (CASH)

NIL

SELL (CASH)

NIL

BUY (CPF)

NIL

SELL (CPF)

NIL

Dividends

Singpost: $625(FY 08, quarterly dividends of 0.125 cents/share)

CPF

NIL

Summary

In Nov 08, I did not trade and only received $625 dividends from Singpost.

US rallied 7.7% and STI 6% for the past week making some to think that it may be the beginning of a bull rally. I personally think that fundamentals have gotten worse and it is still a tad too early to look for bargains.

I have been looking at REITs lately and found that at the peak of office rental this year, grade A office commands about $17 psf, compared to about $4 psf during the Sars period. The office rent has gone up more than 400% over the past 5 years. If we were to be pessimistic and factor in the over supply of office spaces, REITs have to fall another 40% from current levels to justify the expectations of rental fall.

I will be expected to exceed my monthly target of $1000 investment income upon receiving $9,310 SPH and $200 DBS dividends in Dec. I will give a brief summary of my realized gains in end Dec.

I have about $12,000 of free cash waiting for more opportunities to enter the market. As mentioned last month, my next entry point will be when STI is below 1400 points, while I conserve more cash.

10 comments:

Jay said...

Hi, My name is Jay and I stumbled across ur blog by accident as i was looking for singapore blue chip funds. I must say I'm very taken in by ur posts. I too am interested in all sorts of financial instruments and would like to extend a hand of friendship toward you. You can contact me via my email at jammingjester@gmail.com. Look forward to speaking with you bro. Take care and God bless...

musicwhiz said...

Hi SG Bluechips,

Just wondering if looking at companies (instead of REITS) may be a better idea as REITS have limited growth opportunities during economic downturns (debt is tight and equity is hard to raise with depressed unit prices). Most companies can still maintain some measure of growth while paying dividends (assuming cash flows are healthy).

In the meantime, you investment in SPH can also provide a very decent yield.

Regards,
Musicwhiz

KaiShan said...

I am kind of shocked! Your portfolio is way focused on two major positions. I would have thought that you would have maintained a much more balanced / benchmarked portfolio.
- Kai

Sgbluechip said...

Hi MW, I agree that REITS does show lesser potential of capital appreciation in view of current crisis. In fact, there is a huge number of office projects due for completion from now to 2012.

At times like this, I would prefer to conserve a comfortable amount of cash and invest into solid fundamental companies that would emerge bigger, stronger and richer after this crisis.

Sgbluechip said...

Hi KS, do read my investment philosophy here: http://sgbluechip.blogspot.com/2008/05/my-investment-philosophy-and-portfolio.html

My aim is to invest in fundamentally strong companies and slowly diversify into other industries whenever there is good buying opportunities. Steady and hefty dividends are a god send in such investment climate.

I do not even have to worry about retrenchments as my dividends can tide me over if I were to lose my job.

With good cash flow streaming in from my equities investment, I pacified my emotional aspect of selling low now. ( I wouldn't sell as I know I can get good dividends anyway)

At times like this all asset classes will tank. I prefer to invest within my circle of competence and slowly branch out while studying individual stocks.

Do take note that my portfolio had performed better than the STI ETF over the same peroid of time.

A portfolio approach where an investor diversify across different asset class and regions may not yield the best results if he does not know what he is doing.

dan said...

hi , i stumbled on your blog when looking for more info on divd payout.hope u dun mind if i asked. To my understanding SPH this time round has a special 0.1 tier tax and 0.09 tier tax, but this special tier tax of 0.01 is there ani special requirement to receive this? or just a bonus from the company? sae if i were to buy todae m i eligible for this 0.1 + 0.09 divd payout?

thx in adv

Marvin said...

hi, notice that you are negative on REITs. Doesn't a rental collapse affect the rents for Paragon and the SingPost Building as well? If rents fall by 40%, what is the impact on earnings per share for SPH and Singpost?

Maybe you can consider sharing such analysis in your blog.

Sgbluechip said...

Hi Dan, the only requirement is that you have to be a shareholder of the company to receive it. There is no other conditions attached. However, take note that SPH will go XD on Monday.

Sgbluechip said...

Hi Marvin, valid point. However, take note that Paragon is a fully paid up asset and does not have any interest or financing liability. The rental yield of 10% is perpetual cashflow to SPH. Even if rent falls another 30%, the yield is till 7%.

Singpost building is also of similar asset nature. (Do correct me if I am wrong)

REITs on the other hand are highly leveraged assets and a few such as Allco and a Japanese REIT has already collapse. K-Reit and Frasers have also sought/are seeking emergency funding from their parent companies. They may have to force sell their buildings to meet margin calls or refinancing obligations.

I am not negative about REITs, just that I feel that there is more room for them to fall.

Kay said...

For Singpost, the rental and property related revenue only consist of around 6.8% of the total revenue if I'm not wrong. The bulk of the revenue still comes from their mail business. The impact on their EPS should be rather small.