TM - Skipping the Capital Repayment 2012

Since the announcement of the proposal for TM capital repayment in June this year, I have already calculated what I would have earned should I choose to dump all the shares before ex-date on 27 July. In fact I noticed that the shares started to rally in late June following the mandatory parliamentary approval of the repayment and well before the formal announcement made by TM in early July.

The short rally where the share price went up to 6.33 was noted immediately following the official statement. The repayment of 30 sen a share is not at all attractive for me as I have accumulated the shares from May 2009 when prices were RM 2.62-3.14. In my posting in 2009 I was lamenting the drop in TM share price  wiping out the 98 sen per share capital repayment exactly three years back. My buy and hold strategy for this blue chip  really pays. I have also begun to "love" the shares, refusing to sell when it  started to appreciate in values and still continued buying when it was RM4.34 last November 2011.

It would be foolish of me to hold on to the shares just to get the capital repayment which only constitutes a small percentage of my gain. Knowing full well that the post-capital repayment price is going to drop at least by 30 sen a share, I decided to dispose of all my shares, realising my gain and waiting breathlessly to re-purchase them after the financial exercise.

My only regret last week was for not selling all those shares at 6.28! Instead I sold portions at various prices from 5.83 to 6.28 believing that the price would still rise (greed knows no bound) and today 24 July when the price started to slide downward due to current poor market sentiment that I came to my senses and sold the final portion at 6.13 per share. It is a typical investors' greedy behaviour, when prices are going up, they tend to hold on to the shares and when the price is spiralling downwards, they helter-skelter sell in panic. I would have made much more have I not been too greedy. Lessons which, sadly, I forever never seem to have learnt!

It is interesting to see how much TM share would cost on 27 July. How does one know whether it will be going up or down? I bet, as always, I will have some rationalisation of my action and be wise after the event. Historically following capital repayment, the share this time would be 30 sen less than the last day of trading before the ex-date, in this case would be around 5.85? Let us all wait and see.

The capital repayment would enable more people to buy the shares at a lower price.As TM is a telco, it is regarded as one of the defensive stocks in a volatile market and I certainly am not going to let the opportunity pass by. As I said in my posting in 2009, I believe in TM as a profitable company which yields high dividend for its investors. To me its share price appreciation is a real bonus and the current capital repayment is dispensable.