Stocks

I have been tracking K1 Ventures for more than 7 years and had invested in the stock over the years. K1 Ventures is an investment holding company invested in diverse sectors such as finance, transportation leasing, education and oil and gas.

Those who are vested in this counter would know that this is an excellent stock which had paid out huge dividends over the years. Since FY05, it had consistently paid out dividends amounting to a total of $0.2275 per share.

If you had bought the share 7 years ago at $0.33 and hold on to them till now, you would have an incredible yield of 68.9%. Now, how many stocks in SGX are capable of giving this sort of dividends nowadays?

Voluntary Offer

Henceforth, I was pretty upset that GKB recently made a voluntary offer for K1 Ventures at $0.135 per share. For the uninitiated, GKB is an investment vehicle owned by Keppel Corp, CEO of K1 and BV Singapore. The consortium currently owns a combined stake of 62% in K1 and will own 100% on successful takeover.

The offer was so low that I didn’t even bother to think twice on whether to accept it. After all, if I hold on to the stock, over the next few years, I could potentially receive dividends well in excess of the current stock price, bearing in mind that many of the investments of K1 Ventures are riped for divestment.

I am no stock analyst but yesterday one of my readers emailed and asked about my views on the Ascendas Hospitality Trust impending IPO.

First of all, investors need to know that Ascendas Hospitality Trust is a business trust and not a typical real estate investment trust (Reit). In this case, about 80 percent of the assets will be in the business trust and 20 percent in the Reit.

To be honest, I am not sure how business trust works and normally if I don’t understand a business model, I would not invest in the company. This is not to say that Ascendas Hospitality Trust is not a good stock.

On the contrary, it can be a potentially good stock that delivers consistent yield for long term investors. However, I would not invest in such business trust because I will only invest in stocks with business models that I can understand. To me, investing should be kept simple and as a rule of thumb, you must be able to describe the business in one sentence.

Secondly, I usually do not invest in IPO. Most speculators or novice investors like to dabble in IPO. They might have made some money but I observed that many times, after the euphoria died down, investor’s interest in these IPO would also disappear, causing the prices to drop.

In 2010, I invested a fair bit of money in Thakral, one of the listed companies in Singapore. At that point of time, they declared their intention to change business focus and also proposed a significant dividend for the shareholders.

I did some research on the company and decided to invest, tempted by the declared dividend. Eventually, I did receive the dividends, but the stock prices fell in tandem. As the stock prices languished at that price, I sold my Thakral shares after a couple of months. Subsequently I did keep track of the stock price and company performance. For 2 years, the price remained at S$0.030.

Recently, due to the penny stock rally, I realized that Thakral had rocketed to S$0.040. I wondered if I had kept faith with Thakral, I would have made thousands of profits in one week. I don’t know if you ever had such investment experience but it sure pain like hell seeing the stock which you once owned rocketed by so much.

I sure am tempted to re-enter the stock market but still stand by my resolution to wait till the next stock market crash and then invest. Hopefully I can make a killing by then.

From 1st July 2012, the CPF Board will subject wrap fee charged for CPF Investment Scheme to a maximum of 1% per annum.

A wrap fee is an ongoing fee charged by financial advisors for providing bundled services such as advisory, brokerage and administrative fees. It is typically levied monthly or quarterly by liquidating a small portion of the investment. Currently, CPF members who maintain wrap accounts for their CPF Investment accounts are charged up to 1.5% annually by their advisors.

Since 2006, CPF board has been progressively implementing new measures to lower the cost of investment and enhance the quality of funds under CPF Investment Scheme. This new measure should bring cheers to retail investors as high costs may potentially erode investment returns over the long term.

Such development is in the right direction and will go a long way to encourage more Singaporean to invest responsibly using their CPF funds.

Under the CPF Investment Scheme, you may invest in CPF-approved unit trusts, bonds, endowment policies and gold products, after setting aside $20,000 in your Ordinary Account. If you wished to invest using your CPF Special Account, you need to set aside $40,000.

But before you start to invest your CPF monies, it is important to examine your risk tolerance and your financial situation.