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Friday, 17 February 2012

A tale of 2 M&As - Nera Telecoms and C&O Pharma

First of all, I’ve to say my thanks and appreciation to a young blogger at this blog called KT Wealth – aka “Cookieguy”.


C&O Pharma

I came to know about this S-chip called C&O Pharma from his blog early 2011.

This stock looks promising for an M&A play as Sumitomo had just bought into the company. I don’t copy and buy. I “borrow with pride”. I placed this S-chip under my stay tuned watch-list.

When C&O started to climb from 35 cents to 40 cents in high volume last July 2011, I piggy-backed on board at 42 cents (market moved faster than me) and continue to buy on the way up to 49.5 cents – when news finally broke that Japanese Pharma Shionogi was taking C&O private at 50 cents.

At 49.5 cents, the arbitrage profit is “only” a few hundreds; but hey! Money is money!

All in all, I made around $11,000 for this swing trade – not bad for 3 months of “non-work”.

I took $3,000 of the profit and went for a 2 week vacation around Greece and Santorini Island.

I happy like bird.


Nera Telecoms

This “investment” was a trade gone wrong. And I’ve been holding it for 8 years… But the good news is that at the take-over price of 45 cents, I would make about 25% in capital gains plus a 2 bagger from the dividends collected over the years.

Nera Telecoms is one of my 3 main core holdings making up my 50% equities position vested in the market. So the potential dollar amount gains are much higher than last year’s C&O Pharma M&A trade!

Yet, I am not exactly thrilled…


Context is everything! 

Why one M&A I happy, the other M&A I not so thrilled?

Let me illustrate by sharing this property en-bloc story that happened in Queenstown during 2009 - HUDC Gillman Heights.

Despite the challenge of the minority dissenters (went all the way to High Court), the majority of the residents got what they wanted – en-bloc windfall!

Or so they thought. You sell high; but you have to buy high too. Remember the ballistic rise in property prices from 2009 to 2011?

All of sudden, this “windfall” can only afford smaller condos at locations further away than Queenstown from the city centre… Talk about inflation!

For C&O Pharma, the M&A happened just before the October 2011 “correction”. Wonderful!

But for Nera Telecoms, this ##@!#^$*% M&A happens now in mini-bull market. Buttocks!

Even if I got my “windfall”, what can I buy that’s value for money in SGX now?


Bull market rally or bear market rally?

If I believe it’s a bull market rally, I would close my eyes and buy high, and hope too sell higher. 

But since I believe this is a bear market rally (and it will probably go higher and higher), I rather be patient and fearful when others are greedy.

OK, I’ll take the cash from Nera Telecoms and probably rotate it into another asset class that’s less co-related to equities (if I can’t find another equity horse to ride). 

Start planning for 2013 after the 2012 US Presidential elections?

China is not the only country that “massages” their statistics ;)


P.S.  In case you forget, my trading time frame is 6-18 months.

13 comments:

  1. Wah, you got balls man! 3 core holdings make up 50% of your position? So concentrated. But with such a concentrated portfolio, when you are right, you really make good money. Since NeraTel was one of your core holdings, it must have really been very good to you. 2-bagger just from dividends and 25% capital gain. You make me jealous.

    Sigh. I really regret I did not treasure Nera in the earlier days. It is like I did not treasure a fine girlfriend in the old days, then she ran off into the arms of another man and finally now that I want her back, she is going to marry another man. Gone for good. Sad :(

    ReplyDelete
    Replies
    1. Hyom,

      Wait, I go bathroom and check.

      Phew, the 2 ding-a-lings are still there. LOL!

      It's not so bad. See it this way. Old one don't go away; new one don't come ;)

      The trouble is I go for the low maintenance ones. Now all those in the market are "eat oil heavy heavy".

      I'll pass.

      Delete
    2. And have deep scars ;)

      CW8888, I loved your reply to the question how to find multi-baggers?

      It's so down to earth, so real, and so practical!

      Theory I can also sing better than others... LOL!

      Delete
  2. I have one core holding making up 50% and i got screwed last year despite many gains on others. :)

    Good for you though !

    ReplyDelete
    Replies
    1. Hi Cory,

      I'm sorry to hear that. I guess it cuts both ways...

      I wish us well for 2012!

      Delete
  3. i'm i reading correctly?

    cut your profit (good trade) short (3 months) and hold your losses (bad trade) long (8 years)?

    ReplyDelete
    Replies
    1. Coconut,

      Went AWOL and first thing you came back is to poke me. I like!

      The 3 months C&O swing trade is one of my proudest swing trade. Like Texas hold'em poker, as more cards were flipped open each round, the more I average up. And all the way up till 0.495 cent when the take over price is 0.50 cents. Hey! 0.005 cents per share is still money ;)

      I played the hand well. I did not cut short the trade; the round ended and I left the table :)

      As for Nera Telecoms, that's why I admitted it's a trade gone wrong. You are so right. It was 8 year ago... I was still on my recovery path to re-invent myself to be an equities man-whore mah!

      I could have pretended it's was a well designed dividend play since day 1. But why lie to myself? I guess I got lucky!

      You did not read my older post on Nera Telecoms for the context:

      http://singaporemanofleisure.blogspot.com/2012/02/my-infinity-returns-via-dividends-in.html

      After mingling with you, I am slowly beginning to see what you mean when you say:

      Lose money does not mean it's a bad trade

      Win money does not mean it's a good trade

      Nera Telecoms falls into this category. Although I doubled my money in 8 years, there were many other stocks that doubled in less than 3 years...

      Not man-whore enough :(

      LOL!

      Delete
  4. haha awol. but i didn't poke you, i mean what i say. and i say what i know.

    ya, that trade what ceo you did very well, but to be proud you had plant the seed of destruction.

    my point is, good trade you cut too soon. bad trade you hold too bloody long. there are much much more room to improve, so don't be proud. trading is a relative and not absolute game.

    ofcos that goes to me as well.

    ReplyDelete
    Replies
    1. Thanks Coconut!

      My emotional clock has been reset back to neutral.

      Yesterday is gone. Now I sleepy. Tomorrow is a new me!

      Sweet dreams!

      Delete
  5. my buddy also know, speaking in hokkien "you win win how much? you lose lose how much?"

    i drill it in his bloody brain haha.

    ReplyDelete
    Replies
    1. Your buddy good BUDDY indeed!

      We need people to tell us how it is sometimes. Keep us grounded.

      If my head gets too big, I'll be mistaken for alien! How?

      LOL!

      Delete
    2. yes, seems like he is the only one can tolarate me. i drill him so that he can poke me back. we did that ever since we are young.

      i'm a leader to him, just him haha, he is my only blind follower, he can listen to me talking about trading and other related subjects for hours and hours repeating the same thing over and over again haha.

      where to find?

      Delete

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