Wednesday, 23 July 2014

Why I divested Nam Cheong & Swissco this week?

Nam Cheong – Divested partially Nam Cheong after share price hit a high of 0.47-0.48 range few days ago. This is more than 45% swell since six months ago. Nam Cheong is one of my major shareholdings and one of my favourite stocks that I know really well. The hardest thing to do with a stock you are so familiar is “To sell it”. Yet, I believe one single most important lesson in successful investing is the ability to become emotional detach when the need arises. “If you love a stock, the stock will not love you back.”  

The primary reason of selling partial of Nam Cheong, is to take profits at my targeted price (quite irresistible in this case at >40% return) so as to fund acquisition of other potential stocks. The action is also my strategic attempt to mitigate risk via active diversification of my portfolio. In any case, I continue to be confident of Nam Cheong bright future and still hold a handful of its shares in my portfolio. More importantly I will have no regrets even if Nam Cheong share price continue to rise going forward!

Swissco – Divested Swissco completely at 0.495 earlier this week. If you also read my earlier post on Swissco “Swissco - Share Price Surge 20%, you will remember that I predicted that Swissco current price will be diluted below existing price, after the acquisition of S&E. Apparently EGM held had approved the acquisition yesterday. Swissco share price had since dipped from a high of 0.50 this week to current day 0.45. It also proved that my sell position at 0.495 is correct.

I started holding Swissco shares in 2011. In the last three years, I am so engrossed in work and totally ignored investment actions. It was only until earlier this year I sold off my 50 lots of Swissco that I bought at 0.32. Sell price was 0.38 and recorded 19% return with a profit of 2.9k. Later on, price dropped and I bought in 20 lots at 0.34. I then sold at 0.435 to register a 28% gain with profit of 1.8k. When price fall again, I bought another 20 lots at 0.405. Finally I sold off entire stake at 0.495 earlier this week. I profited another 1.6k at 22% return.

Total profits stand at 6.3k excluding dividends, is definitely very pleasing for me. But if I look back, if I were to keep my entire 50 lots at 0.32 initially until now and sell at 0.495, I will have profit 8k and incur less trading fees and less hassle of buying and selling! Sounds stupid of me and now you probably wonder why the “Smart Investor” does not trade!

Of course the whole intention of me buying and selling is to have a lower risk by holding on to lesser shareholding of 20 lots rather than 50 lots and also to have more cash at specific time to acquire potential stocks. My trading actions also arise when I feel that there is a mis-match in price levels.

I will talk more about what I buy with the available funds in my next post. 

Related Posts:

Nam Cheong - What you need to know before investing in it?

Nam Cheong Barging Forward - Accom Work Barge Orders & Shares buybacks.

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