Yesterday I came back home to received a news that Peter Lim, after failing to secure Liverpool decided to buy a hospital – Thomson Medical
He made the general offer worth $513 million after his private firm Sasteria bought a 39.34 per cent stake in the company from its founder and largest shareholder, Dr Cheng Wei Chen and his family. Dr Cheng and his family sold their shares at $1.75 apiece for about $202 million.
This represents a 62% premium above the last traded price. I think those people that have been queuing 1 cent below to get the right price should be kicking themselves now.
I have reasons to be sad as well. I blogged about Thomson Medical having a good businss and a likely appreciating dividend. The problem is that I waited too long to buy into the stock and the price jumped to $1.
By then I was waiting for the stock to fall back from its highs to get in again, but it just never came. If not I will be sitting on a nice profit now.
A lot of friends told me don’t cry over this and really I think I got past that stage already. Its important to see if there is some lesson learnt:
- Value investing revolves around uncovering good companies at value prices and it is difficult to discern what is undervalued and how strong the economic moat of the business is. But it is nevertheless fruitful if you manage to find such gems.
- Why fret over 1 cent or 2 cent to get the right price if you know that at both prices, it is still undervalue? The problem with that is whether it really is undervalue, that’s where good skills comes in.
- Technical Analysis provides you with a good entry point but at times like this you get suck into a psychological zone that you are buying something overpriced but you fail to realise that price have reached a whole new level and previous price targets and support do not matter anymore. When the grounds change you need to change with that as well.
I would probably spend my weekends sulking about this. But really congrats to the folks who bought at 50-60cents!