I did some trimming today on the portfolio and the 3 casualties are the above.
I have sold some of my Singtel not too long ago. This is probably my last 1000 shares. The main reason being a 4.8% yield is not a hard hurdle rate to beat. I can probably funnel the recepts into something similar yielding yet with the same risk profile.
Singtel do have a few headwinds, and I really don’t like selling it like this since in times of trouble you should be buying instead of selling.
It still got a pretty good story to it with a 6.9 million population. Not just that but regional affluence and population increase will also drive it.
Yet in the mean time it does have much headwind. Optus is facing intense competition as well as Bharti in India facing declining revenue. The problem with telecom is that intense competition on 4G front requires substantial capital investments. Even with that, you wonder whether they will lose out to Vodafone and the dominant Telstra.
Optus is important because it makes up 1/3 of Singtel’s free cash flow. Optus, no matter how you put it, was a bad investment by Singtel.
Asia Enterprise Holdings
This is a good stockist which have been facing challenging conditions. Since its yield have fallen a fair bit, and stock price remains high, I decide to take profit to streamline the number of holdings.
Global Investments Limited
Here is a 10% yielder that probably a few people will ask me why I sell. Such high yields should be something I should hold.
Alas, Global Investments Limited is a listed fund whose manager STAM makes the decision to build a portfolio of assets. They own 2 aircrafts which they lease and a stake in a listed aircraft leasing company call Fly Leasing plus a lot od debt and equity instruments that are high yields.
2 reasons for selling. One, they will sell off the 2 aircrafts and there are no clear plans to replace them.
Second, when probe to reveal more about their underlying, there is not much revealed. Its ok if its business you and I understand, but most of them are floating rate collateral lease obligations that are probably complex instruments similar to items that bring down the US financial system.
It became the case where my friends and I spend most of our efforts trying to tally up each item to see if they can pay that 1.5 cent dividend. Currently, there seem to be a shortfall.
Hence the sale. Good yield, probably not knowing enough of it, better be a bit safer. I may regret this if the underlying asset turns out to be lower risk than the market expected.
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