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31-05-2024, 02:18 PM
hi ghchua,
Do we believe that Towkays prefer less lumpy businesses than the lumpy ones they found themselves in? Or maybe it is only OPMIs that don't like volatility?
I think Towkays embrace volatility and are used to it. If they want less volatility through investment properties, there is a choice to declare dividends out of the listed entity and invest the monies on their own property ventures. It is not different from an OPMI doing equity investing, earn some money from it and then use it to buy an investment property on their own.
Between retaining capital to invest via the listed entity AND paying out capital to invest on your own, i will always favor the latter. So, this is what I mean by "red flag" in my personal checklist. Of course, not all companies that invest in "non core" investment properties are bad. But this "red flag" check has saved me lotsa heartaches I suppose.
Do we believe that Towkays prefer less lumpy businesses than the lumpy ones they found themselves in? Or maybe it is only OPMIs that don't like volatility?
I think Towkays embrace volatility and are used to it. If they want less volatility through investment properties, there is a choice to declare dividends out of the listed entity and invest the monies on their own property ventures. It is not different from an OPMI doing equity investing, earn some money from it and then use it to buy an investment property on their own.
Between retaining capital to invest via the listed entity AND paying out capital to invest on your own, i will always favor the latter. So, this is what I mean by "red flag" in my personal checklist. Of course, not all companies that invest in "non core" investment properties are bad. But this "red flag" check has saved me lotsa heartaches I suppose.
I am not a certified financial advisor and so nothing of what I say should be construed as financial advice. Please consult a certified financial advisor for advice instead.