Over the last eight weeks, I have taken the initiative to divest my investments in Capitaland and reinvest the returns into Wilmar, Olam and Oceanus.
I have come to view investment in property counters to be difficult in view of the fact that earnings are typically masked by large sum of revaluation gain. With the spectre of property price controls locally and in China, I decided to get out of this counter completely.
My investment in Wilmar has been less than timely as I currently suffering from a small paper loss but I firmly believe that I should be able to reap some benefits when the prices of oil seeds stablized at a profitable level for the manufacturer. I am starting to understand Wilmar business and I believe scale is of utmost importance in such an industry albeit a bit similar to OEM contract manufacturing where Foxconn emerges the clear winner. Wilmar do dabble recently in property development in China,but I believe this a side issue and will not be its major focus.
As for Olam, I basically took the opportunity of a bad analyst report that drive down prices to acquire it at a more reasonable. My timing is not perfect though. I particularly like Olam for what they are providing eg soft commodities against the spectre of increasing world population and rising comsumption patterns.
I made small investment in Oceanus (a counter which I investigated and reject previously) as I believe the price is now reasonable and the business model of
shifting to processed abalones make more sense to me. In any case, I am still hedging my bet on this one by making only a small investment at this stage.
All in all, I have built a portfolio of commodities related companies over the last 2 months by divesting away my property counter (Capitaland)
I am looking forward to receive dividends from the following this month:-
UOB Pref Share
OCBC Pref Share