2018 - The Year In Review

So 2018 is finally coming to an end, and it has been a pretty trying and eventful year filled with ups and downs for Mr. Market as well as myself.

Personal

• Getting (legally) married - Have not done my customary marriage yet
• Attending a couple of workshops to learn more on trading/investing 
• Drew down on half of my portfolio
• Bought my own home, moved in and then renting common rooms out for income
• Recently my wife had been hospitalised on Christmas Eve, and then discharged on Boxing Day. Thank goodness for having a hospitalisation plan and OCBC Cashflo card.
• And of course, the birth of this blog.

Market
On the broader market, stocks all around the world has been getting trashed and volatility is still high. The drops recently presented once again another opportunity to pick up stocks at a bargain and I hope our fellow investing community has picked up some.

Portfolio
As with many out there, my portfolio value overall was not spared either, although I am still in the green based on the price of the position I have taken up.

(1) I added 10,000 units in Alliance Mineral Assets Limited in 1Q2018, which unfortunately was not bought at a better price.

(2) I drew down on my portfolio, selling Cache Logistics, CapitaMall Trust, Fraser Logistics and Industrial Trust in 1H2018 mainly to fund my home, which also helped me to lock in a small amount of realised profit from capital gain. (I also briefly bought and then sold APTT in 1Q2018 after having second thoughts about its prospect - thank goodness).

(3) I then ended the year by subscribing to Cromwell European REIT's rights issue, managing to snatch up 2000 units to treble my position. I am expecting to earn between $190 - $210 in distribution for the full year of 2019 depending on the performance of the REIT and the exchange rate.

If I include this drawdown towards my home, my portfolio has dropped ~58% in value from  4Q2017 to 4Q2018. Take the drawdown out of the picture, IMO I have weathered the storm to my expectation (-15% YOY) - it could have easily been much worse (see APTT for instance). This does not include the dividends collected.

Oh, and by the way, I recently registered myself on StocksCafe so you can reach out to me over there too. Pretty useful portfolio management tool.

Moving forward
I have reasons to believe Year 2019 will be a better year ahead for investors - Corrections are healthy to keep valuations more in checks you know. At the very least, I believe 2019 will be a better year for myself, mainly due to optimism towards Alliance Mineral Assets Limited, especially now that the merger with Tawana is completed and the new management team has taken over (in ASX, the merged entity is trading with stock ticket A40).

A useful source to follow up on news or sentiments by other retail investors of Alliance Minerals is here.

Additionally, one of the sector I am keeping a close eye on is the Semiconductor Sector, which is known to be a cyclical sector. I believe they will probably continue to face headwind and bottom out in 2019 and already I have some stocks on my target board.

Other than that, I foresee difficulty in entering the market (save the rare moments like rights issuance) as 2019 will probably weigh heavily again on my finance as my wife and I will continue to return borrowings and trying to plan the customary marriage towards start of 4Q2019.

Plans for Self-improvement
I have been reading up on technical analysis during this year. Not much progress has been made as I am still trying to catch balls at how to use it. The biggest reason for me to pick TA up would be to compliment my ability to adding positions of stocks at better price.

I also hope and plan to earn some extra money from trading and some side gigs as the income

And last but not least, I hope to contribute more useful reads to the community when I am not just documenting my progress as an investor.

Here's to wishing everyone a Happy New Year and fruitful 2019 in advance!

Cromwell European REIT - Got all the rights unit I applied for!

So I managed to get all the excess rights unit I applied for on Cromwell European REIT! As a shareholder having a measly position of only 1000 units from the IPO, I was entitled to 380 rights unit. I applied for 1620 excess rights units and got them all.

This brings my total holdings to a grand total of 3000 units - still small but significantly larger position. I estimate this bringing up indicative dividends up by about... 2.3x - 2.5x while they are distributing 100% of distributable income up till end of FY19 (as per their policy shared in prospectus back then).

* Calculated based on 1 EUR = 1.57 SGD

This came as a pleasant surprise for me as I do not expect to get all 2000 units. My last rights issue purchase was for Cache Logistic Trust, and even that was oversubscribed by about ~100%. It seems that this particular rights issuance was only ~5% oversubscribed.

Despite the increasing interest rate environment, DPU-dilutive effect of the purchase and the need to focus on paying off my borrowings or building up my emergency funds, I felt this was too necessary of an opportunity to pass up. It is icing to the cake that I get to pay $2 instead of $30 in commission to re-build my income portfolio. Heck, if I was in a better financial position, I would apply for a few thousand more excess rights units.

With that, although the this quarter has yet to come to an end, I update my portfolio for 4Q2018.

	Income Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
1	Cromwell European REIT	3000	0.667*	2001	13.80%
	Growth Portfolio
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
2	Alliance Mineral Assets (AMAL)	50000	0.25	12500	86.20%
	Cash and other Assets
	Counters	Units	Market Price (SGD)	Overall Value based on market price (SGD)	Allocation
3	Warchest	1	0	0	0.00%
	Total SGD			14501	100.00%

* Calculated based on 1 EUR = 1.57 SGD

 Wishing everyone a Merry X-mas (or otherwise Happy Holidays) in advance!

Are Business Trusts bad?

Shockwaves are still reverberating from Asian Pay TV Trust's crash down after announcing the large cut in their dividends. A lot of investors out there have steered clear of it and never bought into it in the first place; some others have bought in by acceptance of risk-for-reward either before or after the crash. I bought it in a past, and sold sometime soon after getting 1 quarter worth of dividends (net gain of $150 - I lost pocket change in capital loss).

I recalled how it was in essence Macaquire passing on debt by marketing the IPO of APTV, after unsuccessful attempt to divest. (Link here)

This incident also made me thought of Hutchinson Port Holding Trust, another counter I had been monitoring since a couple of years ago. Yield seemed nice at that point but the outlook and the share's performance just seemed abysmal.

This left a bad taste in my mouth based on observing the destruction of shareholder values. Then I had a thought, a wandering question in my mind:

"Are Business Trusts bad?"

This piqued my curiosity and of course, I have to cross-check and verify this.

There are some business trusts currently listed in SGX and I will be touching on them in my write-up.

Singapore Listed Pure Business Trust
Accordia Golf Trust
Ascendas India Trust
Asian Pay TV Trust
Dasin Retail Trust
Hutchinson Port Holdings Trust
Keppel Infrastructure Trust
Netlink NBN Trust
Religare Health Trust

There are also stapled securities that are a hybrid of Business Trust and REIT. My article will not be covering them beyond listing of the listed trusts. (3-Dec-2018 - just added CDLHT - thanks Relac 1234!)

Singapore Listed Stapled Securities (REIT + Business Trust)
Ascendas Hospitality Trust
CDL Hospitality Trust
Far East Hospitality Trust
Frasers Hospitality Trust
OUE Hospitality Trust
Viva Industrial Trust

What is the difference between REIT and Business Trust? They seem similar and they have "Trust" in their name, causing confusion in the distinction between them. I tabulated a summary of some of the key differences between them as well as share the structure of Business Trust and REIT.

	REIT	Business Trust
Business	Involved in Real Estates	Can operate in any field
Gearing	Up to 45%	No borrowing limitations
Distribution of Profits	Paid from accounting profits. Min 90% of taxable income in dividends (to stay tax-exempt)	Declared out of Surplus Operations Cash flow. No minimum payout.
Management of Entity	Separate entities for: - Ownership of Assets - Manager running operations	Owned and Run by Trustee-Manager
Change of Trustee-Manager	Min 50% unitholders to remove manager	Min 75% unitholders in favour to remove manager

 

Source: SGX

Source: SGX

So have shareholders benefitted from investing in business trust in general?

At the very least, there's not many in which investors who have participated in their IPO and still held on have benefitted, and where there is, the net benefits have been marginal (to be fair, there is a couple of them like Dasin or Netlink which are still early days to be judged as good or bad). Here's a summary of their performance and charts since IPO. (Note - in my summary, this is a bit outdated; Current Price was as of 25-Nov-2018.)

* Additional Note - HPHT declares dividends in HKD and my summary has also converted them to SGD although there will be slight inaccuracies in the conversion.

Summary of Business Trust Performance

Source: Yahoo! Finance

The results are shocking (at least to myself) - I feel bad for the IPO participants who have held on.

• RHT emerges as the only true winner if you participated in their IPO. 
• While it is early days for Dasin Retail Trust and Netlink Trust, there is some gain to be had overall
• APTT and HPHT are guilty as charge of wanton destruction of unitholder values
• The remainders are generally lackluster, and only saved or partially salvaged by dividends.

Digging into the share performance and finding out the root cause to declines or raise will make for good case studies to build up one's knowledge base and improve our decision making as investors.

A closer look at the charts shows that in certain scenario, one can either average down (as investors of the business trusts who are still holding on) or enter (as investors who have not taken position yet) to benefit from investing them. Kudos to investors who managed to right-time, go in at those key points and made returns.

So what is the verdict?

Unfortunately, I feel my questioning of the benefit of investing in business trusts remains valid, although deciding to do this write-up has better built in me ability to assess the business trust on an individual basis. At the very least, the rewards most of them has got to offer do not seem in-line for the risk they expose the investors to. For APTT, I do hope this is the turning point to be worthy of being in one's portfolio.

Readers, what are your view towards Business Trusts? Feel free to share your view!

Thanks for reading.