TM stock.. to dispose or not to dispose, that is the question.

After staying out of the market for what seems a long time following the depth of the financial turmoil, the current clear, albeit, small global recovery, persuaded me to visit the market.On 23 April I was contemplating buying TM (Telekom Malaysia) shares, it was then below RM3.25, having risen from about RM 2.20 in Nov 2008. It did look attractive. It continued to rise a few days before ex-date 20 May for dividend of 14.25 sen, following which the price adjusted downwards from 3.96 to 3.84 and down to 3.76 and I decided to buy some shares during this period, eyeing the 98 sen per share capital repayment ex-date 27 May.

However, according to some savvy fellow investors, the selling pressure seen after the dividend payout last week seemed to indicate that the same downward price adjustment covering the entire capital repayment is likely to occur, pushing the unit share value well below the reference price (pre ex-date price),thus likely to be about 2.70 or below, and that certainly will wipe out some of my initial capital investment in the short term! Yes, I will get some cash if I do not sell before 27 May but I would lose some money at the end of the exercise UNLESS the stock price adjusts only slightly downward. Will the herd mentality (especially the institutional investors) repeat their behaviour pattern? As the medium term business outlook for TM is not that great.. this may well be the outcome.

Yet, I believe growing with the company, I take the long position and I love the annual dividend and taking part in voting during shareholders' meeting. Then to dispose or not to dispose should not be the question! Of course if the price is right I will not hesitate to clear my position... Hmmm, this is going to be fun!