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I learnt a painful lesson from this counter, and paid a heavy price for it. I should have been more decisive when I detected something is not right with this company, but I either chose to ignore it or refuse to face it. What can go wrong with a counter that is trading way below NTA, PE of < 5, profitable every year and have load of cash? If something is amiss with this company, it would have been uncovered by the auditors long ago since this company was listed for so long already. I was dead wrong!
This is one of the counters that I hold for a long time, since 2005 to be exact. I attended every AGM and follow every announcement. I was bought over by all the promises the company gave and truly believes that the BODs are honest and hardworking people. In my mind I am painting a beautiful picture that one day this company will grow to be a big and profitable organization and people will realized how undervalued this company is and I will be grinning by the handsome rewards. What a joke! Now I fully understand the famous saying, “love your stock but don’t fall in love with your stock.”
I should have realized that something is wrong when a cash rich company is not paying any dividends for years. I was really annoyed by fellow SH at each AGM who keep on grilling the BODs for not paying out dividends. In my heart, these people are so shortsighted.
While not paying dividends to SH is still “acceptable”, continuously raising money in the market via right issues should have raised a big red flag. The reasons given by BOD for these actions is to preserve or raise cash for plant expansion, for new products development, for adding new production lines etc… it sound so damn convincing to me.
And then one fine day in Mar this year, a long term ID tender his resignation abruptly. I was alarm, but it is still not enough an impact to upset my love for this company. However, the next day after this ID announced his resignation; my beloved company once again announced another big right issue and priced it at a big discount to the last traded price! The stock price crash the following day. It breaks my heart and I started to realize that I am taken for a ride. My sweet dream is turning into a nightmare. After some soul searching, I decided that enough is enough. Few days after this rights announcement, I wield my sword and in one swift decisive move I chop off this rubbish at 4.1c, completely. Strangely, I feel more relief rather than pain. A burden is now off my back, I do not have to hope for a hopeless hope anymore.
I thought I got it cheap each time I average it down at lower price. It is a steal, I thought, only that it is the company that is stealing my money. Wise WB said: “It is better to buy a good company at a fair price than to buy a fair company at a good price”. This is so wise, so wise…..
Now that this is behind me, I really feel very relief and lighthearted. I tell myself that I would rather miss a boat than to hit a rock.
Even despite this, I still know of friends who are die- hard fan of CP and are still holding on to their dear shares. I wish them well.
Just sharing this with fellow investors and I hope you can learn a thing or two from my mistakes.
This is one of the counters that I hold for a long time, since 2005 to be exact. I attended every AGM and follow every announcement. I was bought over by all the promises the company gave and truly believes that the BODs are honest and hardworking people. In my mind I am painting a beautiful picture that one day this company will grow to be a big and profitable organization and people will realized how undervalued this company is and I will be grinning by the handsome rewards. What a joke! Now I fully understand the famous saying, “love your stock but don’t fall in love with your stock.”
I should have realized that something is wrong when a cash rich company is not paying any dividends for years. I was really annoyed by fellow SH at each AGM who keep on grilling the BODs for not paying out dividends. In my heart, these people are so shortsighted.
While not paying dividends to SH is still “acceptable”, continuously raising money in the market via right issues should have raised a big red flag. The reasons given by BOD for these actions is to preserve or raise cash for plant expansion, for new products development, for adding new production lines etc… it sound so damn convincing to me.
And then one fine day in Mar this year, a long term ID tender his resignation abruptly. I was alarm, but it is still not enough an impact to upset my love for this company. However, the next day after this ID announced his resignation; my beloved company once again announced another big right issue and priced it at a big discount to the last traded price! The stock price crash the following day. It breaks my heart and I started to realize that I am taken for a ride. My sweet dream is turning into a nightmare. After some soul searching, I decided that enough is enough. Few days after this rights announcement, I wield my sword and in one swift decisive move I chop off this rubbish at 4.1c, completely. Strangely, I feel more relief rather than pain. A burden is now off my back, I do not have to hope for a hopeless hope anymore.
I thought I got it cheap each time I average it down at lower price. It is a steal, I thought, only that it is the company that is stealing my money. Wise WB said: “It is better to buy a good company at a fair price than to buy a fair company at a good price”. This is so wise, so wise…..
Now that this is behind me, I really feel very relief and lighthearted. I tell myself that I would rather miss a boat than to hit a rock.
Even despite this, I still know of friends who are die- hard fan of CP and are still holding on to their dear shares. I wish them well.
Just sharing this with fellow investors and I hope you can learn a thing or two from my mistakes.