Sunday, March 2, 2014

Profit taking on my share investments

Recently I liquidated my remaining k1 Ventures shares in my CPF Ordinary Account. Total profits, including dividends and capital gains, amounted to $1,400. This represented a total return of 13%  in 3 years. It could have been more if I had not pared down the investments since last year. As of now, I am not vested in any stocks.

The intent of investing my CPF monies was really to divert a portion of my CPF monies from the Ordinary Account before HDB wiped out the monies for settlement of my HDB purchase in 2010. I wanted this investment to be a buffer in case I got retrenched from my job and still need to service my housing loan. With no income, this investment could then be liquidated and used to pay the HDB monthly installments for at least one year. This buffer was important for me as I am the sole breadwinner.

Three years later, I am glad that the nightmare scenario of losing my job did not happen. But nevertheless, I decided to sell off all my k1 Ventures. Firstly, my financial situation has improved substantially due to higher income and advancement in my job. These developments contributed to significant cash savings for me. So this buffer from my OA account is not needed. Secondly, on a macro level, I think Asian economy is flooded with too much "hot money" right now and the danger of a bubble in the stock market is too real to ignore. I will rather not take the risk of having my CPF monies stuck in this counter, so I decided to sell off the stock.

The company itself has a track record of paying good dividends and this was one of the key factors that made me invested in this counter. Nonetheless, the weakness of this stock is the liquidity. The daily trading volume is so low that you risk not being able to sell off your investments if you need the cash. The second trigger point for my liquidation of this stock was when the management tried to buy over the company at a price way below valuation. I had entered this counter at $0.166 and they actually wanted to buy it over for $0.135! Luckily the offer was rejected by the minority shareholders but this episode has changed my view on the management.

Overall I believe my investment call in k1 Ventures was correct back in 2010. I don't know whether I made the right decision to sell now but at least I made some decent profits. Hope to make more money from my stock investments in the course of my wealth building journey.

Magically yours

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