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Monday, 13 February 2012

My infinity returns via dividends in Nera Telecoms (well, almost!)


I started building my stake in Nera Telecoms during 2003. 

After 8 years of patient holding and receiving average 10% plus dividend yield annually, I’ve finally got my investment back in full last year.

It wasn’t one of my more successful “investments”. It was a “trade” gone wrong as the stock price has never done anything remotely ballistic for the past bloody 8 years… The reason I’ve kept this “mistake” for so long is because of this fun concept: infinity returns.

And I was so looking forward to receiving the dividends this year so I can gleefully declare I’ve earned my first infinity returns via the dividends route!
 
My cost of capital in Nera Telecoms was returned backed to me via 8 yearly instalments of dividends. Therefore, technically speaking, my existing stake in Nera Telecoms is “free”.

Future dividends / zero cost of capital = infinity returns!

And just when I can smell success, my candy is snatched right from my nose... ST Engineering is looking to take Nera Telecoms private for a song!

It’s not a done deal yet; but I won’t waste time whining or sulking, especially on things I can’t control.

I rather focus on what I can control: find another horse to ride.

As for what I can influence, I’m doing it. LOL!

Nera Telecoms minority investors, you may want to read this persuasive post from our fellow vested comrade Hyom. 


Why is Nera Telecoms not one of my better “investments”?

Simple. Do you prefer to get your capital back in 8 years or in 2-3 years? 

And how do we get our capital back in 2-3 years? Growth! Or to be precise, a doubling of the stock price after we have bought it.

Once that happens, I can sell half my stake and put the cash back into my opportunity fund; while the remaining 50% invested will be my “free” stake to ride any further upside.

Market goes up; I happy! Market goes down; I got dry powder!

I much prefer infinity returns via the growth route over the dividends route. Thank you very much!

And you thought I am plugging for the dividends play! Hee hee.

I am a Growth and Income speculator. Growth comes first. I consider dividends a consolation prize. No fish; prawn also good!

Now you understand why I’m not so upset with my potential “loss” of Nera Telecoms. I’m an equities man-whore. There will be other fishes in the ocean!

4 comments:

  1. Wah. Even though you call yourself a Growth speculator, how many dividend-oriented investors can have a stock pick like Nera and hold it until their capital is fully recovered? Many of them picked REITs who paid good dividends during good times and asked for the money back during bad times.

    If not for Nera, I didn't know you are such a good investor. I bought Nera much later. Don't ask me when because you put me to shame.

    ReplyDelete
    Replies
    1. Hyom,

      I've paid my fair share of school fees...

      Started as penny stocks punter thinking the percentage capital gains are more sexy than boring blue chips. Earned a lot; lost just as much. LOL!

      Now I go easy on the penny stocks. Strangely, I've yet to own a blue-chip stock. Maybe one day... I guess that makes me a mid-cap Growth and Income speculator? Nah! Why limit myself wth "labelling"?

      Yes, the wrong REITs or Trust can be a dividend trap.

      Sadly, the highest multi-bagger I've got to date are only 3 baggers. On hindsight, I should have bought back some old shoes I've sold away. Ha ha!

      Silly me. It's OK to eat "turn-back head" grass!

      Delete
  2. 8 years? Very faithful and patient equities man-whore ha

    ReplyDelete
    Replies
    1. Opps!

      There goes my reputation!

      That's why it's not one of my more successful... She stickier than I thought!

      LOL!

      Delete

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