2/2/2017 Major Position Movement

Assume I am addressing my stakeholders of JC Fund, I will mention the following.

Today, I made a major switching of position by selling 20 lots of OCBC at S$9.44 and buy into 26 lots of Company M which was mentioned in previous post. Hence, my total holdings in Company M will become 33 lots.

I sold 20 lots incurring a position loss of S$9k+. The reason of selling is twofold. I saw the impairment issue of EMAS Chiyoda which means DBS is going to write down further losses. I am sure DBS has already catered for this under NPL. I am just not confident of the quality of the loans, the O&G positions are just a small portion of banks’ portfolio. The larger portion belongs to the property developers and construction companies. To add salt to the wound, SME loans will further deteriorate in the next 2 years.

My OCBC original position consists approximately 30% of my portfolio which is overexposed in the finance sector. I want to reduce the holdings to a comfort level of 10%. The 26 lots of company M which I switched to will generate approximately S$14k of dividend. This will cover my loss and have a margin of safety for my entry price. My downside is covered.

I think back, maybe I should switch out slowly.

Only time will tell whether this move is right or wrong. Let’s reflect this again.

09/02/2017 Reflections on my actions
JCProjectFreedom ocbc 090217

From the previous post, I did not think deeper and on a hindsight, it is a rash decision. Emotion is at play. Looking at the above chart, OCBC today is at S$9.71 range. I believe eventually this will close up higher to S$10 and I will not incur any losses at all. There is an additional factor which I have ignored. There will be the final dividend which will amount to 20,000 x ~S$0.2 = S$4k. All in all, my this move is equivalent to a loss of S$14k.
Yes, the future company M’s dividend should cover this loss.

What I could have done is to wait a while longer for OCBC to rise, get the dividend and immediately switch to Company M. Well, if I am that accurate, my net worth should be a few folds more than now.

The switching out from OCBC is about to breakeven. Hang in there.

The price went past breakeven point. The switching works. Now Mr Greed is in the hot seat. I sold 5 lots already. By mid of April, I will sell down more.

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