As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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Monday, 6 June 2016

Noble : 1 to 1 Right Issue @ $0.11 (2)


Read? Noble : 1 to 1 Right Issue @ $0.11

Hope this email finds you well.
Wish to ask you for your opinion on Noble Group. I believe you have held the stock for a long period and are still holding onto the stock now. Do you regret not selling it back then?
With the company in such turmoil now, would you still subcribe to the rights offer and hold onto the stock? If yes, why yes?
Appreciate your kind advice.
 
----------------------------------
 
CW8888:
 
Either we have Stop-loss or we have the Ball to play till the end of the Game. If we lose, we lost 100%! But if we win; we will win N x 100%.
 
So we have to decide whether we have the Ball to play this type of Game or quit the Game sooner with Stop-Loss!
 
Uncle8888 has big ball so don't anyhow follow him!
 
Now here is the Maths for the above silent reader to decide for himself.
 
 
Purchase price : $1.10
Right issue: $0.11
Cost of right issue as premium paid to stay in the Game = $0.11/$1.10 = 10%
 
The cost of the premium is 10% of the original purchase price.
 
Market closing of Noble before announcement of right issue = $0.30
 
Original Breakeven:
 
To breakeven on his purchase price of $1.10, Noble will have to recover by 267%
 
Average Down:
 
Let assume he subscribes fully for his right issue
 
Average price after 1 to 1 XR = ($1.10 + $0.11)/ 2 = $0.61
 
Average down by -45%
 
New Breakeven:
 
Theoretical price after XR = $0.30+$0.11 = $0.205
 
To breakeven on his new investment cost (purchase price of $1.10 + right issue of $0.11), Noble will have to recover by 195%
 
 
What did you see after XR subscription?
 
267% vs. 195%
 
 
Average down vs EPS
 
Average down by -45% and EPS down by -50% after XR
 
 
Decision
 
 
Knowing that after the dust has settled; the Founder Chairman will be out. A new Noble chairman most likely to be nominated by CIC to take care of its own interests and a new CEO may be nominated by CIC if the current two Co-CEOs can't make it.  Don't forget Noble is still a global trading power house. CIC will not let it fail.
 
The Past is not the Present. The Present is not the Future.
 
Is 10% premium paid too much of good money to throw after bad money to stay in the Game or to take more than 70% to 80% cut losses to re-invest?
 
Oh .. the greatest relief is I have sold!
 
Which?
 
 
 
 
 
 
 
 
 
 
 
 
 
 

16 comments:

  1. That was my generation childhood saying: Want to play don't scare. Scare don't play!

    ReplyDelete
  2. CW,

    That's the realty of "investing" and trading that many don't talk about - except you.

    All those beautiful excel files showing the theoretical effects of compounding X% annually, are like the benefits illustration of wholelife insurance - just an "illustration"...

    Very sobering when all we are hoping for is to DOUBLE our investment returns just to BREAKEVEN.

    To play the "big balls" game, we have to ask ourselves - how many 2 baggers have we got in the past?

    If not careful, we can be like IMF and EU - keep throwing money at Greece until we reach our capitulation point to finally let Greece go...

    ReplyDelete
    Replies
    1. Yeap! The Greatest relief is letting it goes! Phew!

      Delete
  3. Ya!
    How many i still not willing to let go.
    Some like KOH BROTHERS since IPO.
    IPC let go at the wrong time.
    That is > then 20-25 year ago, irrc.

    ReplyDelete
    Replies
    1. Cut losses at late stage into cash holding can't do much to repair deep losses so it more of emotional relief.

      It is best for us to seriously practice portfolio management, money management and risk control right at the start of this investing Game and to avoid falling into this shit hole. Boat will not sink fast due to a few small holes but one large hole will definitely sink it!

      Delete
  4. Ya man!
    Retail investors like us better to have many river or port boats rather than one ULCC.
    IPC & KOH are little river boats for me during my newbie days.
    Aiya!
    Actually a lot of things in the market, i am still new to.
    Very "problematic" to learn leh!

    ReplyDelete
    Replies
    1. temperament,

      That's why you are still around and surviving!

      Markets change; we adapt. You definitely not Panda or Koala Bear ;)


      When our self-inflicted wounds can amount to 20% to 50% losses, there are more important things to focus on than to be distracted by some measly transaction costs...

      Focus on Effectiveness first - are we doing the RIGHT thing?

      Then we focus on Efficiency - doing THINGS right. (The leaner, quicker, cheaper mantra)

      Delete
  5. Don't talk so loud and proud. Look at Ezra and you will know that mathematic cannot work against the market. Good Luck.

    ReplyDelete
    Replies
    1. No need good luck as I am prepare to lose 100%.

      Practice portfolio mgmt, money mgmt, and risk control. This is what we as retail can control. The rest of it leaves to Mr. Market to fight it out.

      Losing is part of Game. But, still many people think that coming to the stock market is bao jiak to get that compounding return. No such thing.

      I have two zero baggers and one wipe off 90% but I am still winning so it is nothing new if another one goes bust! Does it sink the boat? Certainly not!

      Delete
    2. Well said.
      Putting money in the money is very easy.
      Anyone can do it without battling an eyelid
      The principles behind why you put money into the market each time must be thought through very carefully.
      i know, i know.
      It is easier said than done.
      Principles, Principles, Principles.

      i think i am quite sure our greatest WB has had some zero baggers too, if you bother to google.
      After all we are humans.
      We do need Lady Luck or God Blessings (depend on your believe).
      Having an EGO in the stock market will one day finally kill you.
      Preparing to accept the consequences of your actions will see you survive the next round.
      And remember, in the stock market unlike in the boxing ring, there is always the next round for you to battle.
      It's a battle for a lifetime man.
      Shalom!

      Delete
  6. Multi-baggers and zero-baggars?

    Do you think it is the same attitude or different attitude that lead us to multi-baggers and zero-baggers?

    Stop-loss, trailing stop and cut losses?

    Some people like to quote just one example of how bad can it be but fail to quote other example.

    Look at osim right issue in 2008. UNWRITTEN right issue 0.055 to raise S$6.5 million when share price was at the trough. Whoever subscribed fully laughing with XXX multi-baggers to the bank.

    Nobody can predict the future. We NEED to practice risk control and doesn't sink our boat till no return with a few bad decisions. Keep averaging down? No! No! No! This is how people die in the stock market with no return!

    ReplyDelete
  7. The Rights Issue is underwritten in full by Citigroup Global Markets Singapore Pte. Ltd., Goldman Sachs (Singapore) Pte., J.P. Morgan (S.E.A.) Limited, Morgan Stanley Asia (Singapore) Pte. and UBS AG, acting through its business division, UBS Investment Bank. DBS has also appointed DBS Bank Ltd and the Underwriters as joint lead managers of the Rights Issue. DBS' largest shareholder, Temasek Holdings (Private) Limited ("Temasek"), has agreed to subscribe for up to one-third of the Rights Issue through a sub-underwriting arrangement. This includes Temasek taking up its rights entitlement of 27.6%. The Directors of DBS intend to take up their entitlements under the Rights Issue in full.

    The Rights Issue price of SGD 5.42 per share represents approximately 45% discount to the last traded share price of SGD 9.85 on 19 December 2008 and approximately 35% discount to the theoretical ex-rights share price of SGD 8.37 per share.


    ReplyDelete
    Replies
    1. No need to explain so much lah.
      i stupid how come so many BIG BIG GUNS stupid too?
      We are all investors and speculators at the same time.
      Are there any rejected NIL PAID RIGHTS in the market?
      Very tempting after your whys you want to speculate.
      OOPS i mean investing, investing.
      Sorry!
      i had speculated successfully once in market rejected NIL PAID RIGHTs
      Shalom!

      Delete
  8. In the market, examples are many. So it always Half Full or Half Empty view! It is like that

    ReplyDelete
    Replies
    1. Ha! Ha!
      All durians look alike.
      Open up then you are sure.
      Even for the experts no 100 %

      Delete
    2. Ya!

      We can shake and smell the durian and check the brownish spikes. Still bo chun!

      Open up the durian; poke the flesh and taste it!

      Delete

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