Wednesday, June 11, 2014

2014 Portfolio Changes: UMS (11 Jun)

As of today, UMS share price took a beating, down more than 40% from its recent peak just a week ago. After price adjustment for its 1-for-4 bonus issue, it was further sold down when announcement came out that both the CEO and its key customer sold off a large part of their holdings. Investors' confidence took a hit, and it was clearly reflected in its share prices.

After some consideration, I have moderately increased my holding for UMS today at $0.56. Some analyst reports pointed out that the insiders' selling could be due to expectation that UMS earning was unable to be sustained. However, there is no basis that they can confirm this as the their hypothesis was based solely on the large stake sales, and there is no change to UMS fundamentals (yet).

Of course, some might conclude that the stake sales prompted a red flag as surely the insiders must know something that retail investors don't. To this, I want to say that there is no way that we will know (unless we are the insiders). Surely, there is risk involved and everyone has their own level of confidence. I chose to take calculated risk, and will exit if there is good reason to do so.

With uncertainty over the motivation of the major shareholders' sales, I would expect volatility in the short term.

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