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Marksman's Investment Corner is currently on a short break - expect activities to pick up from July 2018 onwards!

Update 01-09-2018: Looks like my break took more time than expected... Things has been pretty busy over the last few months on a personal front, but are slowly settling down and I can look to get a bit more posting done on Marksman's Investment Corner once again. :)

Monday, April 30, 2018

Reflections - My performance investing in Cache Logistic Trust

Recently I liquidated my position in Cache Logistic Trust (SGX: K2LU), with approximately 13.4% realised returns over the past 2.25 years (when simply dividing the overall gains by total principal sum invested). This gives me 5.95% annualised return. On paper, it is nothing to shout home about, but if I break it down to track each batch of units I purchase, I think I can give myself a pat on the back. :)

Breakdown based on per batch purchased

Units purchased
Purchase price per unit
(include comm)
Period held (years)
Yield on cost
Overall gain from distributions
Remarks
3700
0.903
2.25
7.64%
17.20%

1500
0.859
1.75
8.29%
14.50%

2300
0.634
0.5
9.92%
4.96%
Rights

Why I bought into Cache Log Trust
- Interest in developing income portfolio and hence passive income
- Interest in raising overall dividend yield of the income portfolio



Comparison to SPDR STI ETF
While I'm doubtful I would have considered purchasing SPDR STI ETF back then (objectively different style of investing), for curiosity sake, I compare my performance to if I had bought SPDR STI ETF instead.
  • At sale of my holdings in Cache Log Trust,  SPDR STI ETF is going for 3.60 per unit.
  • I assume I put similar amount as the period when I added to my position in Cache Log Trust.


Units bought
Purchase price per unit
(include comm)
Period held (years)
Yield on cost
Overall gain from distributions
Annualised Capital Gain on cost
Overall Gain from Capital Gain
Annualised Overall Gain
Total Gain
1140
2.976
2.25
4.95%
11.14%
9.31%
*20.95%
*14.26%
32.09%
450
2.937
1.75
4.63%
8.10%
12.91%
*22.59%
*17.54%
30.69%
410
3.553
0.5
2.98%
1.49%
2.64%
*1.32%
*5.62%
2.81%

* - denotes I have not subtracted the commission from selling SPDR STI ETF

If I calculate my annualised return in the manner I calculated the 13.4% total and 5.95% annualised return for Cache Log Trust, I would have gotten 16.8% total and 7.4% annualised return instead after deducting commission for selling.

Often spoken about is how most investors tend to underperform the market - this is where such a case is demonstrated. Haha. It also demonstrates how a bull market may outperform high-yield stocks.

To be honest though, given my original intended holding period was much longer for Cache Log Trust, the results might be different. Let's revisit this reflection in a few years?

What could have been done better
To be honest, I bought the company for its indicative yield without sufficient studying of the corporate actions and its effects.Yield was indicated at high 9% range after price had dropped from $1.00 so I thought it was a bargain back then. I had not realised share dilution has happened from the private placement. I am just thankful the rights issue (especially the excess rights) has allowed me to recover some capital gain instead of selling on a capital loss.

For the first batch of units I purchased, if I had done my due diligence for the private placement back then, my entry price would more likely be 0.86-0.87.
  • I may have decided to purchase slightly more units (probably 3900-4000 instead of 3700). 
  • That might also have increased the number of units I got from my rights issue.
  • Assuming first batch's entry at 0.865, this would increase my capital gain by at least 110 - another 1.8% total gain and 0.8% annualised gain, closing the gap but still underperforming when compared to SPDR STI ETF.
Additionally,  back at the start of February 2018, there was an opportunity to sell off at 0.865 after ex-dividend, so that is another 4.3% total gain and 1.91% annualised gain. With this additional gain on top of better entry price, I would have beaten SPDR STI ETF, with 19.5% total gain and 8.66% annualised gain.

In Closing
Hindsight is 20/20, but at least I recover from any capital loss there is. Evaluating my performance and reflecting on my shortfall, this is all part of my lesson learnt. Got some work to do on improving my entry and exit for future purchase.

2 comments:

  1. Hi Marksman,

    This is part and parcel of learning. With each knowledge gained you will become a better investor.

    Cheers!

    ReplyDelete