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!