Monday, July 26, 2010

LPI - rights issue, some thoughts

LPI or LonPac, has been a good run for me when I bought it at RM9.80 in 2009, missed it at RM8+ :(
Net return, inclusive of net dividends, is about 94%+/-.

I was alarmed when I read that LPI was proposing to do a rights issue of  1 for 10 (held before bonus issue) at RM7. Rights issue is a touchy subject for me, especially when there's no good rhyme or reason tied to it. Thus, I did some simple logic-based calculations to aid my decision to SELL before rights issue or HOLD and buy the rights issue. All criticisms of the calculations are welcomed - I aim to learn :D.

Stocks issued (current) = 138,723,000 shares

Net Assets Per Share (current)  = $6.54

Thus, Net Assets = NAPS * Stock Issued =  $907,567,482.90

Bonus shares: 1 for 2 = 69,361,500 shares            

Rights 1 for 10 before bonus, $7 per rights  = 13,872,300 shares

TOTAL Stocks Issued after Bonus and Rights =  221,956,800 

NEW NAPS = Net Assets / Total Stocks Issued after Bonus and Rights  $4.09

Rights issue  $7.00

% premium over NAPS = (Rights $7 / New NAPS $4.09) -1 = 71.19%

Current % premium = (Stock Price $17.86 / NAPS $6.54) -1 = 173.09%

Depressed stock price of $9 in early 2009, premium = 37.61%

Whoops - my earlier post had typos from my itchy fingers, added too many zeros to the stocks issued (current). My bad.

Based on the amended data above, the RM7 for the rights issue is worthwhile, given that it is a premium of 71.19% over the Net Assets Per Share based on the current issuance + the new issuance. Most other "good stocks" are way above the 70% premium of Price / NAPS, eg. PBBank, Nestle, GAB, DLady, Amway.

Any logical error with the above thinking - assuming the NAPS are not calculated too "creatively"?

Saturday, July 17, 2010

InvestorExpo at KLCC Convention Centre 17-18 July 2010 10am-8pm

By the numbers...
1. Reached by 9:50am (yeah yeah my watch is permanently 10 minutes fast)

2. Queued and filled-up form

3. 15 minutes later.. registered and got the "goodie bag"

4. Over zealous guard stopped me from going in, stating I've not registered, even though I kept telling him I did and showed him the "goodie bag". Blood boiling... told him to go check his own SOP and after he did, he relented.

5. Egads.. 20 minutes exploration and asking around.. that's it. 
Nothing incredibly interesting 
a. Mostly vendors giving talks about their own products in "seminars" (ahem ahem - edutainment or marketing), 
b. Alternative investments like wine collection (er.. i think alcohol + investment is a no-no for me, just like alcohol + driving heheh) & land banking
c. Some hot looking women though - I guess what works for car sales will work for "investments" too. I think it's a proven psychological thing - aroused males tends to take more risks, google it ;P.

By the way, anyone wants RM500 vouchers (I've got 2) for OSIM purchases of RM2,500 and above?

Wednesday, July 14, 2010

Tracking & Benchmarking Oneself

Hm.. I noticed it's been 6 months since the little interview article by Personal Money. During then, my 12 months' moving net worth growth rate was about 28%. For the past six months, it's been averaging 32% - heheh, now you know my total net assets ain't that much because it can be so high. I'm quite surprised as the financial market's been plunging and popping wildly. By the way, I don't count my 18 years old car, household items, computers and stuff that depreciates as Assets.

In my opinion, if I don't track, I won't be able to see, compare & know - making it nearly impossible to improve.

What about you - have started tracking your net worth and finding something interesting? Care to share?

Saturday, July 10, 2010

Value Averaging - Personal Money July 2010 Edition

Finally - a local write-up on Value Averaging. Hm.. those folks interviewed kept mentioning about "may need to have deep pockets" to implement Value Averaging properly. Gentlemen, you can marry Dollar Cost Averaging & Value Averaging concepts mar - thus, it becomes programmatic in terms of execution, $ allocation and yet doing value averaging.

If you are interested in Value Averaging, checkout 2 books:
1. Value Averaging: The Safe and Easy Strategy for Higher Investment Returns
By Michael E. Edleson, William J. Bernstein
A hardcore value averaging, DCA and tweaked DCA comparisons.

2. How to Make $1,000,000 in the Stock Market Automatically
By Robert Lichello
The title is a bit "lala land" but the concepts and formulas inside are golden. Look at TwinVest - a marriage of DCA & Value Averaging.

Personally, my best programmatic investment results were from TwinVest methodology - simple to use, simple to stick to and results, good. Mind you, TwinVest is just a Buy rule, you'll need to marry it to Sell rules too to be effective.

Properties: Hands-on learning Part 4 - S&P done & Legal for ING Loan ongoing

Finally, the S&P has been concluded. Gawd.. 6 months! This is the longest I've ever experienced and it's a freehold property. The good side-effect is that property prices have generally jumped about 20% without me coughing up any mortgages for 6 months heheh. I have to thank the vendor's legal beagles for this unplanned "profit".

Oh, I took ING's Fixed % offer of 4.85%. Due to the rising OPR (Overnight Policy Rate), I think i've taken a more "controllable" financing method than BLR -x.x%. I'll know for sure after several donkey years down the road ;P