I have been monitoring First REIT for sometime after exiting it for a tidy profit a while back. First REITs had been consistently giving out good dividends. Its yield was relatively high compared to the other REITs and it also had a very low gearing of 15%. During the recession, the price dipped quite a bit but slowly recovered and I decided to lock in some profits and sold my entire stake in it.
The reasons for exiting it are mainly twofold. While it is a healthcare REIT, it does not really have a parent company to back it up. That is unless u consider Lippo to be its parent. The other thing that weighs heavily on my mind is that majority of its assets are based in Indonesia. There are thus country risks involved. And that is perhaps the reason why it is trading at a seemingly more attractive valuation than the other REITs counters. Personally, I did not want to hold something that was overly exposed and narrowly focused. And that was why I decided to exit it. A stock is cheap for certain reasons and the same applies to First REIT. It reminds me a bit of various s-chip shares I had held over the years because it was cheap when compared to its peers. Remember Unifood and Pfood?
The decision I took then was to start investing in blue chip companies and avoid stocks that were of a higher risk. And that will remain my strategy at least for the time being. I hope to liquidate my small cap stocks slowly and transfer them to bigger and better blue chips. Of course, we are in the midst of an expansion right now so I will perhaps wait a little longer before I start refocusing my efforts.
Though I was tempted to enter into First REiT recently, I shall resist it for the moment.
Ahhh FF! The ever problem of the emotions talking. Is there a way to silence em when it comes to investing? heh
ReplyDeleteYeah I felt the same way a couple of days ago with Singtel.
Oh btw, would you care to swap links? My blog's at therichkidwannabe.blogspot.com.
I've linked you already btw as I like your posts and have been reading for quite awhile now.
Merry Christmas FF and happy holidays =)
Cheers,
~K
Hi FF,
ReplyDeleteI am increasing my exposure to First REIT. ;)
If you ever need to think so much and have to resist yourself from entering then that stock is not for you. Remove them from your watchlist as it is causing you too much stress.
ReplyDeleteYou need just to remember this. You buy but someone sold. You sell but someone bought.
Hi Kay,
ReplyDeleteI have added you into my blogroll =_
AK71,
I guess that as long you do not overcommit into one sector or one REIT, First REIT is still a pretty good counter to hold. Unfortunately, my capital is limited so it does not really make sense for me to take on this kind of risk.
CW8888,
True. The stress from holding a small cap and a blue chip during recession is really different. Small cap, you do not know whether the business will go bankrupt. With blue chips, you can sleep a little more soundly.