Author: Investment Moats

REIT Fee Structure 2

The Edge has more coverage on REITs restructuring which we talk about in June. (See article here) In the last article, it talks about having REITs pegging their fees to performance of share price and dividend per share, which Cambridge, Starhill Global, Ascendas REIT and Aims Amp is doing. This week’s focus centers on the opinion of Patrick Lecomte, the executive director of ESSEC Business School’s Advance Master in Financial Techniques and Financial Engineering. Two things that concern international investors about Singapore REITs There are two things that most concern international investors about S-REITs. The first is whether the...

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Knight Capital: A prelude to electronic trading Armageddon?

This morning I hear the news of Knight Capital, a market maker and electronic executer for many large clients such as Vanguard, Fidelity and TD Ameritrade, which are the no 1 in funds and brokerage in US, suffered a $440 mil trading loss due to a software glitch: As one of the leading market makers in U.S. stocks, Knight is among the firms that are critical to smooth, orderly trading. Market makers match orders from buyers and sellers and often provide liquidity by stepping into the market themselves. The speed at which Knight has unraveled has been particularly unnerving...

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Secular Bull and Bear Market comparison

Looks like we are still far off from PE point of view. Almost all PE gets to the 10 region. It also depends on your how you compute the PE. The PE in 2009 did get down to nearly 12 for S&P 500. Currently, it looks very close to 1901 to 1920. These charts are from Crestmont research, and they do have a comment to make of the PE used: The driver of secular stock market cycles is the inflation rate–toward or away from price stability. That causes significant changes in the level of P/E, the multiplier of earnings...

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Actuaries don’t buy whole life insurance and ILPs

In fact, they don’t buy a lot of insurance! Actuaries are well trained professionals who help insurance companies balance the risks of insurance product versus an effective value that consumers will be willing to pay for it. Actuaries mathematically evaluate the likelihood of events and quantify the contingent outcomes in order to minimize losses, both emotional and financial, associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. – Wikipedia So what do most actuaries buy to insure themselves? An old...

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Reaching for higher yields–be aware what you wish for

In this world where your fixed deposit rates are close to zero percent, it is easy to reach for REITs and business trust yielding more than that. Recent IPO of Ascendas hospitality trust and  outperformance of almost all REITs may have been the direct result of this. There are a few things to take note when reaching for higher yielding instrument. Yield is to compensate for the Risk borne In finance, you often hear risk versus reward. If you put in a larger amount of risk, you should demand more reward. Many like these REIT because they have yields...

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The Economic Moat of Amazon

Warran Buffett always remind us that many of his long term holdings in Berkshire Hathaway were bought not at the cheapest price. In fact, chart wise they would have looked expensive. However, the great thing about the businesses he bought is they have features that make them able to earn great cash flow for a prolong period. So much so that such a good company he is willing to pay fair or even moderately above fair value for it. Such companies should typically have high Return on Assets (ROA) or Return on Equity (ROE). Not only high, but a...

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Shares Investment Conference 2012

The organizers at Philip Capital and Shares Investment asks whether I could put out a word for them. Shares Investment is an annual conference held in Singapore, bringing distinguished guests to speak. This time around they got Jim Rogers and Mike Bellafiore. Jim Rogers should be familiar to most as a contrarian,  commodities and gold bull. The daily program is as follows: "The World Tomorrow and How Jim Rogers Sees it" – Keynote speech by Jim Rogers "Will The Bumpy Trend Continue For The Commodities Market?"  – Avtar Sandu Panel Discussion: "2013 – What Happens Without A Euro? (Jim...

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First REIT Q2 2012 Results

First Real Estate Investment Trust (First REIT) announces their second quarter results. Presentation slides [here] and results [here] Results are as expected with almost no surprises: Revenue increase due to contribution from Sarang Hospital in Korea First REIT touts their growth structure that increases in tandem with inflation. The Indonesia hospitals have a base escalation ( 2 times % increase of Singapore CPI, capped at 2%) + variable escalation (which is in Indonesia dollar currently weakening vs SGD). For Singapore and Korea units they have a fixed based rental but annual increment of 2%. This means that rampant 5%...

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Disrupting Financial and Insurance Planning

Recently there have been much talked about proposals to shift from commission based financial planning to fee based financial planning. We have heard a lot of propaganda that it will not work well in our context. I will like to give a little bit of my thoughts on this. I am quite certain the majority of the people will not go for fee based. Commission based Financial & Insurance Planning Is Filled with Economic Bias A commission based insurance advisor has to sell in order to get paid. There are economic bias to it. What is economic bias? This...

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Viewquest, MyRepublic gaining acceptance. Pressure on M1, Starhub and Singtel

  As a techie, the news from the ground is that My Republic and View Quest do not throttle your connections. Their speed is much closer to what they advertised. And they have responsive customer service, with active feedback at popular tech forum Hardwarezone.com.sg What they are attacking are what M1, Singtel and Starhub have been letting the users down: disappointing speed, reliability and customer service. With the NBN, the playing field have been leveled. The barriers of entry have come down. And when there is no content provided by the ISP, speed, reliability and customer service are the...

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Frasers Centrepoint Trust Q3 2012 Results–Looks well managed!

Frasers Centrepoint Trust (FCT) announced their latest result. This for me, is one of the ways to tap into some of the best REIT managers in the region. For starters, FCT has a great asset enhancement and rental management such that they do not ask for a lot of cash call (rights issues), yet was able to generate progressively better Dividends per share. Another good example are their good work in turning over Allco REIT from shit to FCOT with much better results (see report here). Review FCT official results [here] and slides [here] The key recent driver for...

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The telecom operator’s fourth wave

Telecom operators have been having a good time earning from voice and sms in the last 10 years. Profits and Revenues are great. The current data wave may not be kind to the telecom because they couldn’t charge consumers by how much they consume like voice and sms. The next wave, as explained in this GigaOm are the Value added services (VAS) and Over the Top service (OTT) This fourth wave will reduce the barriers of entry and the telecoms may not be the ultimate winners. Based on the strategy chosen, the operators will likely fall into three major...

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Dividend School:How much dividend your stock pays and when

Investors new to stocks often ask what Is the best way to find out how much dividend a stock pays per year.  The most accurate answer is to check the past history of dividends declared by the stock at www.sgx.com Navigate to Company Disclosure > Corporate Action. Say you are looking at KREIT’s past dividends declared. You will typically get a few kind of corporate actions under this section. Some are dividend declaration (mark by the red rectangles) and some are rights issues. To identify the full dividend declared in 2011, add up the dividends declared in the Particulars...

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SPH’s falling newspaper circulation and why Buffett is buying newspapers

Singapore Press Holdings announced their Q3 2012 results yesterday. Net Profit for the quarter down 10%. this was largely due to lower Net Income from Investments Net Debt edges up. Net debt to asset is now 16% from 13% a quarter ago. This is largely due to investing in new Seletar land for shopping mall development Operating Cash Flow, Investing Cash Flow largely negative due to higher receivables and investments in new Seletar land venture Fall in newspaper circulation I went for a three week reservist training not too long ago and as I usually do not buy the...

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The Dividend School: Profit, Income, Cash Flow and Dividend Analysis

The Dividend School is a series of tutorials aiming to gear investors focusing on dividend stock investments to start dividend investing from scratch. Investors will acquire a solid grasp of the necessary skill set to plan, create and maintain a dividend portfolio as well as holistically analyze dividend stock investments. Introduction The life blood of dividends comes from the earnings and cash flow generated by the business. Many investors new to this would have been confuse by the terms thrown around: What is the difference between income and cash flow? What is EBITDA and Free Cash Flow? Which metric...

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