Wednesday, 25 January 2017

Wilmar International - Selling off my first share purchase, after 1,709 days

Wilmar International was my first entry into the market. Exactly! which siao lang (crazy person) chooses a cyclical commodity counter as his very first foray into stock investing? I had very basic knowledge of what business were they in, mainly knowing it as the stock that legendary Singapore Remisier King, Peter Lim, made his billion(s) from.

Referring to my stock journal which I kept for all my trades, I bought it when the price started to show signs of increase and wanted to, using the current lingo, fast in fast out on this trade. Unfortunately, Murphy's law struck and whatever can go wrong went wrong. My purchase price of $3.94 on 22 May 2012 was never to be seen over the next 4.5 years. The closest it went to before yesterday was $3.92.

Hence you can say that yesterday was monumental for me in terms of my investing journey. I finally sold off my holdings at $3.94 today, incurring commission charges but thankfully, gained in terms of dividends collected. The current uptrend seems intact, considering it closed at $3.97, but breaking even was clearly a more than satisfactory outcome for me when I remembered seeing it languishing at a lowly $2.50 not too long ago. It was a trade that offered me important learning points.

Learning Points (in reference to Wilmar International):

  1. Buy a business that's easy to understand
    1. Commodities related financial reports are complicated to understand
    2. Performance affected by many factors, including weather elements
    3. Scope of business too wide and not easy to get a feel of
  2. Choose stocks that has stability in earnings
    1. Cyclical business will have some quarters with good harvest whereas some quarters will be impacted by wet or dry season hence have poor harvest. Share prices will rise and fall accordingly. 
  3. Dividends help to cushion fall in prices and provides income while waiting for a turnaround
    1. Dividends are the rewards to investors for staying invested in the business
    2. Prefer dividends that are lower than earnings so that some reinvestment can be made into the company for expansion or growth
  4. Most importantly, do your own due diligence before purchasing a stock instead of basing it on a herd mentality and following the crowd. 

Disclaimer: I'm no longer vested in Wilmar International. The above information are based on my limited understanding and does not constitute a buy or sell call. Always do your own due diligence before taking any actions. 









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