Friday, July 1, 2016

Recent Action - Ho Bee Land

This will be a quick update to the portfolio as I made another divestment, this time Ho Bee Land for 22,000 shares at a price of $2.13.

I started accumulating Ho Bee during late last year and even more earlier this year with the thesis of a strong recurring income play, particularly in the UK where they have geared up to buy one after another in quick succession. Based on the recurring income alone, they should be able to pay dividends of up to 7 cents to its shareholders which is what they have been doing in 2015. At current closing price of $2.13, this represents a decent yield of 3.2% for the shareholders.




The Brexit event turned out to be one of the factors that influenced my decision to divest the company at this point as there will be more uncertainty towards both how the UK and EU will operate and function in the future. For a start, the sterling pounds are getting hammered which means that for every 10% sensitivity downside to the currency, Ho Bee earnings will be impacted by 3.2% respectively. In terms of balance sheet, Ho bee has a natural hedge against the assets it owned ($1.3 Billion) by borrowing in pounds as well ($1 Billion), so the NAV would get less affected.

For those who are looking at long term play, property developers like Ho Bee or CDL, who are affected by these events, could turnaround and provide an opportunity for them to grow their exposure in the UK by having a cheaper pounds sterling. The investment horizon has to be far because these are not events that you can forget a month or two. In fact, the whole procedure of the UK negotiating the exit clause with the EU will take years to solve, so a lot of uncertainty will be in play here.

Given that they only yield 3.2% at the moment, and with the ongoing uncertainty clouding the picture for the company, I chose to exit my position at this point as first I needed a greater returns on investment on my capital and second a greater margin of safety should my thesis was incorrect. At this time, I just feel that the risk outweigh the reward at this point.

The divestment at $2.13 means that I netted a 14% gains (including dividends) on this investment on a time span of 6 months. They are not as great as what I was expecting but given the climate I'll take it for now.

I'll continue to save the proceeds into the warchest portion, which has now grown to 44% as of writing. This will only be deployed when I have identified an ideal opportunity to go in.


26 comments:

  1. Not bad for 14% returns. Impact from Brexit is not felt yet. Stock prices are still going up and down due to uncertainty.

    ReplyDelete
    Replies
    1. Hi SR

      Thanks!!! I'm pretty disappointed actually with how things turned out in the end but i guess that's life. The UK people are more impacted by this event.

      Delete
  2. Replies
    1. Hi SI

      I actually had to use the weekends and another 2 days after the Brexit event to make this decision. Definitely not impulse selling :)

      Delete
    2. Hmm...

      Impulse or not does not depend on time taken ...

      Just like duration between buy sell is not the most important difference between traders or investors

      Implusive means no deliberate considerations ... Lol doesn't matter time lol.

      I think think for 1 month, in the end I say "wa Lao, qingcai la" and click sell. Still implusive

      Delete
  3. B,

    See that you been busy trading stocks. Good to earn, but maybe all ur earlier reasoning n detail analysis on why to buy stocks is no longer as IMPT judging from the duration of ur buy and sell.

    So r u a long term value investor or a trader?

    ReplyDelete
    Replies
    1. Maybe being profitable is more impt than choosing btw being a trader or investor :)

      Delete
    2. Hi Rolf

      Thanks for asking. That's actually a very important and interesting question that I seldom gave a lesser thought of. I guess if i have to answer i am neither really both but just a normal amateur trying to reach my goal at the age of 35. That's all where my focus is and I built upon it with the strategy.

      So the duration will not be an important consideration in my investing. If tomorrow someone offers me a TP i am comfortable with regardless of what the reason or thesis is, I will gladly sell all my stake in that assets.

      Hope that clarifies :)

      Delete
    3. Of course this is true? :-)

      But it also mean u do not even know who exactly u r n what exactly is ur strategy? Maybe u can see the true successful investors of today w exceptional track records (not traders), do they jump in n out n still be successful over long term? Most r very consistent in their beliefs.

      Delete
    4. Hi Rolf

      You are right.

      It doesnt matter whether or not I am a successful investors like you said. I am probably not. Maybe I am just lucky so far these 6 years i am investing so far.

      But i disagree about not knowing what my strategies are. I clearly knows where I am otherwise I wont be where I am today. I am definitely not as good as people around the blogosphere, but i am doing just fine so far.

      Delete
  4. Hmm, so ironic to the earlier post which wrote:
    "This is a slow build up play where you get to buy the business and ignore the share price and over time it'll do well. But if you are expecting a firework, you may be disappointed by the development."

    ReplyDelete
    Replies
    1. Hi Anonymous

      Thanks for pointing out.

      I can explain my thoughts there when I wrote that.

      When I build position in Ho Bee, it was on the premise that the UK properties are providing them with a catalyst, solid foundation and reasons for the share price to move upwards over time.

      A very important event has taken place and this will have a very big fundamental decision to the thesis. Whether or not you are in the camp of Brexit will be beneficial to the UK or not, there will be an impact to Ho Bee and things will turned out differently from the original thesis I have.

      Hope that clarifies :)

      Delete
  5. Hi B,
    I am talking to the unknown guy actually. :-)
    I have lots to reason back but it's not necessary n I respect u n ur blog. Always.

    for ur info, last 6 yrs even quite an average or even below average can earn a lot of money be in stocks, in job, or in business! in fact I seen more pple earning more in work than in stocks. So maybe it's not a true good reflection.



    ReplyDelete
    Replies
    1. Hi Rolf

      Oops sorry my bad this time.

      Yeah you are right. These 6 years there is a lot of easy money floating around so most people should make decent profits over the last 6 years.

      And thanks for your kind words as always :)

      Delete
  6. Hi B,

    Congrats on your profit on selling HB. Good to book in the profit in view of the uncertainties in Brexit.

    Cheers,
    Farmer.

    ReplyDelete
    Replies
    1. Hi PIf

      Thanks for your words. If it runs from here, I might look very stupid suddenly hahaha

      Delete
  7. Hi B,

    For several yrs now we know each other, I always like and respect u for ur efforts and ur sincerity n transparency. But differences in styles is inevitable for different opinion. Still, trufully, u r just one very nice guy around n ur family n pple around u will ge tri benefit from ur honesty n kindness.

    ReplyDelete
  8. Good or bad, only time will tell. Anyway i am keeping all my Ho Bee intact. Brexit is just noise in the long term.

    ReplyDelete
    Replies
    1. I think so too.

      All the best for your holdings :)

      Delete
    2. I think so too.

      All the best for your holdings :)

      Delete
  9. 44% in cash seems very heavy, seems like u are timing the market big time

    ReplyDelete
    Replies
    1. Hi Felix

      Doesn't matter to me. When things are not as attractive I rather go cash and when things are attractive again, i can go in big time.

      This strategy seems to.be working for me big time since i started "investing". Wait, did i just mention investing?

      Delete
  10. Nice.

    My own thoughts are probably more similar to rolf n b than they can imagine.

    Sometimes your beliefs change and you find out more about yourself along the years.

    I surprised myself with my gold views of late also.

    ReplyDelete
  11. Hi B,

    Lots of interesting conversation here.

    From what I read, most probably you believe in it fundamentally when you invested in it.

    But the Brexit is most probably a super major event that change your thoughts and so you no longer believe in its fundamentals any more.

    At the end of the day, most probably you can't sleep well at night if you continue to hold them? Haha...

    Anyway ho bee currently in my watchlist that's why I revisit your post here.

    ReplyDelete
  12. Hi B,

    Lots of interesting conversation here.

    From what I read, most probably you believe in it fundamentally when you invested in it.

    But the Brexit is most probably a super major event that change your thoughts and so you no longer believe in its fundamentals any more.

    At the end of the day, most probably you can't sleep well at night if you continue to hold them? Haha...

    Anyway ho bee currently in my watchlist that's why I revisit your post here.

    ReplyDelete
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    ReplyDelete

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