Monday, January 27, 2014

2014 Portfolio Component Change (27 Jan)

Readers of my blog may be aware that I initiated my 1st changes for the year on my portfolio just last week, although I had planned to minmise changes to existing counters invested from previous years where possible. Seems that my plan is hard to adhere to, as I have made another change today. I have divested AscendasHT and added Select Group to my portfolio.



Over the weekend, I learnt more about AscendasHT's stapled securities structure, and decided that it is too complicated for me at the moment (Warren Buffett has the belief that investors will do best to invest within their circle of competence). From what I understood, stapled securities consist of both a REIT and a Biz Trust, but the structure of the stapled securities can differ from 1 to another. For example, CDL HT and AscendasHT are both stapled securities, but CDL HT's assets are structured within the REIT which means that they have to abide by the REIT's regulation of paying at least 90% of their net income as distributions. In contrast, AscendasHT has most of their assets structured into their Biz Trust component. Technically, the trust can decide not to pay the projected distribution.

With the help of DJ index falling more then 300 points last Friday, I was able to get Select Group at my entry price of $0.38. I have been montoring the stock for a while which is usually illiquid with low volume.

I first came across the stock in another blog (The Young SG Investment), which has written a pretty interesting review, went on the do some checks on its financials:

 
 
 


Turns out, the company is in a pretty good financial state with growing income, cash and reducing debt. Based on the last year's dividend of $0.025, Yield is 6.5% which is quite high among similar industry.

As such, I have taken the risk to add it to my portfolio with expectation that the company might maintain their dividend. Of course, this might turn out otherwise. But if the yield can be maintained, I foresee further upside on the price.

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