IPO- The Moneymaker ?

Like many other small investors, I used to think that an IPO (initial public offer) issued by a company is a way of making fast and easy money. In fact it used to be that about 10 years ago but somehow, lately I noticed that the valuation of IPOs has tended to be on the high side. Examples are PChem at 5.04, ARMADA at 3.60 and now FeldaGlobal at 4.60 and Gas Malaysia at 2.20.

I remember  Air Asia IPO was at 1.25 and so as ThPlant. These were affordable prices for  individual investors and as a result wealth was shared all around. Higher valuation gives the impression that the company is doing well and also extend more opportunity to institutional investors to get the shares.

Another consideration now in light of the Facebook IPO fiasco about 10 days ago, is the nonavailability of certain information regarding the company to retail investors who apply the IPO in good faith only to suffer losses as the price depreciated following the listing. Some people who are in the know stood to get a lot of money from this unlevel playing field. FB IPO lost some 18%  of its value by end of the week of its listing.

Facebook  IPO - The fumbled sale of the century (Getty Image)

The hype about this tech IPO was over the top. Everyone who intended to make money was almost sure that the listing was godsend. What they forget is to look at the fundamentals of the company and its business model.

Selling advertising space in FB used by some 900 mil  people, sounds very good but how much earning has the company achieved prior to it being made public? Sure FB Inc. made money but the people who put their money wishing for the share price to soar are sure disappointed this time.

Imagine FB Inc. was valued higher than SHELL which has tangible assets unlike the former . That in itself should have alerted some investors to rethink their intention.

So Facebook IPO is no moneymaker for small investors.

As I said before this very public fiasco, I had faith in IPO. I have applied so many and got some and not others. And I must admit I did make some money but with higher capital outlay like in the case of PChem. Now I am wishing I have not applied for Gas Malaysia IPO which closed on 25 May 2012. The valuation is made at 18 times its PE and it was pointed out on 27  May that the prospectus which I failed to read was rather vague on the financial performance of the company apart from being affiliated to big names like Petronas Gas. I am rather worried that much as I wanted to lessen my risks during these "unusually uncertain" times , I  still have a soft spot for IPOs. Emotion is not good in investing.

 I hope I am wrong about Gas Malaysia Bhd IPO.

As for FeldaGlobal IPO valuated at 4.60? I think I am going to give it a miss and buy the shares in the open market a few weeks after the company's listing.

Lipid Lowering Drugs: A Patient's Experience

Lipid lowering drugs (statins) have been vaunted as the "miracle" drug to reduce or prevent morbidities and mortalities due to heart attack. Experts quoted research findings testifying to that effect. But like any other drugs, statins have side-effects. The only difference is some patients suffer more than others. Another point worth mentioning is some patients accept the side-effects while others, perhaps too adversely affected might complain about them.

I have come across many patients with different behavioural responses to the medications prescribed to them. As I like to engage patients to talk about their health in relation to their medical conditions, I tend to get a lot of feedbacks from patients. I find these feedbacks valuable as they form a part of sharing of experiences which could help other patients who are less vocal or suffering in silence.

And so today I had one patient who came in without an appointment, insisting agitatedly to change one lipid lowering drug labelled S which she has been taking for the last four years with another labelled L.

Upon checking my medical notes, I actually changed the S statin to L statin four months ago when I discovered that her lipid was still elevated despite being on S for such a long time. However on her subsequent visit two months later I inadvertently reverted the statin prescription to S. After taking S for nearly a month she observed that her brain became "jammed" again, yes, that was how she described it. She felt she was more depressed and also forgetful. Her joints ached and she felt generally "down". she said her problems were greatly reduced ,in fact for the first time in many months, she felt much better when she was on L statin (for the two months she was on). She was adamant that she wanted it to be reverted to L. I happily obliged.

Well, I listen to my patient intently because she is the one taking the medication and she should know best what and how she feels while on the drugs. Compliant patients will report genuinely to enable us to individualise the medications and reduce adverse effects and consequently improve their quality of life.

In the meantime her lipid level is monitored every six months to observe the effects of the prescribed statin.

Statins are known to affect the muscle and some patients are affected more than others. While this is noted in the literature, large scale studies normally would not capture so called "isolated" observations. And there is always that possibility that pharmaceutical-sponsored research would somehow skip negative findings of the drug under trial. It may sound preposterous but it has been reported.

Taking cognizance of evidence-based medicine, medications are tailored to indicate the compliance with the standard practice. However anecdotal evidence needs to be looked at for optimisation of therapy for individual patients.

And you would not be able to optimise the treatment unless you engage your patients. Quite often patients complain that doctors do not talk enough to them or that they are scared to tell the doctors what they are experiencing. It is a tragedy for patients who are in this predicament, they see doctors regularly and yet are not able to express their  fear and anxiety. Try putting  yourself in their shoes.

For all doctors out there, do engage your patients because as the saying goes , we cannot always cure but we can always comfort. Addressing their fear and anxiety and listening to them is a major part of their therapy.

AMB Unit Trust at 3% sales charge till...

As a form of diversification I have decided to purchase some AMB (Amanah Mutual Berhad) unit trust. My banker at Maybank had tried to persuade me to buy these units since early last year (2011) but I was skeptical ( without even looking at the annual financial report!). I am more comfortable with the "regular" PNB unit trusts like AS1M,ASM,ASN3 and ASW.

Last week Agnes (the persistent banker) had texted me that AMB unit trust was selling at a discount of only 3% sales charge as opposed to the usual 6.5%. My interest was piqued. I started to look for the information on this unit trust and the prospectus and was encouraged to invest. In fact I truly regretted not investing in it much earlier Launched in 2003, this PNB-owned unit trust fund has been making impressive progress giving an upside of 167% over the period. Of course you will realise that past performance is not a guarantee of future income distribution ( as they always like to remind investors!).

I withdrew some of my saving last Thursday (11 May 2012) to purchase this Unit Trust and was looking for more fund before the deadline of the discount sales charge that is today 15 May 2012! Was counting myself lucky when I received a text from HSBC on Friday 12 May, that my BNM Bond (SSR) acquired in 2009 would mature on 14 May 2012, Monday. Gosh,the 50k capital "out of nowhere"! I was adamant all of it would go to AMB unit trust. So you could imagine my desperation to get back that money in time before 4pm on 15 May today.

I checked online for the credit  last evening , but still not in. This morning I enquired "left,right and centre" for the fund as it was going to be a last minute purchase kinda thing. The telebanker said it was BNM which was delaying the crediting and the HSBC branch manager was trying to influence us to buy their managed unit trusts by saying that they could also give us a 10% return to rival AMB and that past performance is not a guarantee...blah,blah......and at 4pm there was still no sign of my "money". I was disappointed to say the least.

And just now at about 9.30pm  (15 May 2012) when I checked online, there it was my 50k nicely nestled in  among the transactions. Well, I missed the discount and now hoping that the AMB unit trust price would fall following the Eurozone crisis with Greece possibly withdrawing from the Euro (or being ejected). I noticed today there is a broad selling down across the board at Bursa Malaysia in tandem with other regional markets.

As I am no longer risk-happy like I used to be, I am into unit trusts and let the fund managers deal with the market volatility. Luckily, I  managed to come out of the market just before the selldown, leaving only my telco stocks which are broadly defensive. Though AMB unit trust is an equity fund , I feel a lot safer to be in a group rather than on my own as I am looking for returns beyond five years of investment. Trading and speculation are out as far as I am concerned (for the time being :).... at least)

A discount of 3.5% is quite substantial if you were going to buy a lot of units. As usual one can never be lucky all the time and come to think of it, the process of fund acquisition in fact constitutes half the fun of investing,

Investment- REITs Versus PNB Unit Trusts

I have been mulling over taking out my maximum investment in a REIT and place it instead in a PNB unit trust such as AS1M or ASM. Though the unit trusts are fully subscribed but you can always get them bit by bit following daily redemption activities of other investors.

PNB Unit Trust is Stockmarket-dependent

The REIT is giving a good dividend of 6.50% per annum which is the same as that given by PNB product. The advantage of the latter is it is credited back into your trust account and you just leave it for the compounding principle to do its wonderful job.

The REIT has some prime properties in the capital plus it is also doing more acquisitions of services to expand its capability of paying more dividend to its investors in the future. Whereas the PNB products are depending on the performance of the stock market in general. Both are managed by fund managers so one does not need to keep a close watch on the daily stock market activities.

REITs- Location,location.. occupation,occupation..

I would expect both investment instruments to behave more or less the same way in varying financial environments. Thus if the economy is down, both would not be able to perform as well. Even if one were to perform slightly better, there could not be that the dividend would be too much different. Could it? Could the REIT give a dividend of say 10% per annum? Like BSDReit which gives more than 9% for the last couple of years.Hmmmm... I am cracking my head now as I have to make a fast decision before end of this month.

You know that feeling of wanting to have everything? Not greed but call it diversification if you like to make it appear and sound better. By May next month I will get back my capital investment in Central Bank of Malaysia (BNM) bond or sukkuk. Perhaps I would use this 50k and leave the same amount in my REIT and see the performance pattern  from then on. In this way, I will still be able to transfer 75% of my REIT investment to a PNB unit trust.... a kind of compromise.

Really REITs may have higher dividend potential given more market confidence in the property sector in the future but I am in no mood to face the risks at the moment.

" Help my baby's turning yellow!"

A young mother turned up at the clinic last month with her seven month old infant looking desperate. She said she noticed the skin of her baby has become progressively yellow for the past week. He is her first baby and he also suffered from jaundice at birth. She was worried that the condition had recurred. In fact she had been to a private doctor who assured her nothing was wrong with the baby. She was not convinced as the yellowish tint has become more generalised to involve the baby's hands.

The mother was asking whether a blood test should be done on the infant to establish the cause of his abnormally yellow skin.

General examination of the infant showed that he was active,alert and well-fed. Of course he was looking abnormally yellow but his eyes were not, as expected if he were to have a liver or blood problem causing a high bilirubin level in the system, yellow (jaundiced). The signs and symptoms did not point to  a usual medical condition.

I proceeded to ask about what kind of food the child was given and whether mashed carrot was given and how often. The mother said she gave mashed carrot everyday for every meal for the last one month! I advised her to stop the practice because frequent intake of carrot especially in a young child would cause the skin to have a yellow tint. And there was no need for a blood test.

What the baby was suffering from is called carotenemia that is an excessive blood level of carotene which causes a temporary yellowing of the skin (pseudojaundice). Carotenemia is most commonly seen in infants fed too much mashed carrots and also adults consuming high quantities of carrots, carrot juice or beta carotene in supplement form.

Carrots contain  carotene

Mashed carrot

A meal of mashed carrot twice a week would be just fine. The mother should also use other type of green leafy vegetables instead of just carrot.

The child's skin has since returned to a normal colour. The mother is thankfully relieved.

Towards Lower Risk Investing and Passive Income

I have been investing on the stock market for some years now. As presently I have less time to monitor my stocks, I have decided to transfer gradually my equities to those managed by regular fund managers. So far I have moved about 70% of my portfolio values to PNB related unit trusts, selected REITS and a hedge fund.

I am happy to note that the unfortunate "financial opportunity loss" on the so-called capital- protected CIMB structured fund (2008-2011) has been compensated by the sterling performance of my selected hedge fund within a year! I still can recall the letter from the CIMB Islamic fund manager who wrote upon the fund's maturity date...... " We are happy to report that the fund has managed to protect your investment's capital...." What audacity I thought! My 100k was dormant and lay wasted for three years and some foreign fund managers must have made money on it especially when market recovered in 2009 surely. I am avoiding this kind of fund like the plague.

It is exciting to make money on the stock market especially with your stock's dizzying rise in capital but the time has come for me to cut down the excitement and the fun and let the passive income take over. I used to have 18 portfolios and now I am left with seven. I am not given to frequent trading as I tend to hold my stocks for a longer period but emerging market volatility after 2008 and the current Eurozone debt crisis as well as the US's slow economic recovery are causing the strategy to be unsustainable and  have subsequently altered my investing behaviour for now.

A Raging Bull

I am working towards a passive income of 240k annually  and continue with my profession for the love and joy of it as well as  for a monthly pocket money.  My journey towards financial freedom has been and still is  educational and challenging. The most memorable was when the bull was raging with the bear nowhere in sight. What a time it was!

And despite all these, remaining caring and yet carefree has always been my wish.

Felda Global IPO - Acquisition through portfolio restructuring

Details on Felda Global IPO are still hazy at this stage though it has apparently been slated for listing on 10 May 2012. Investors are waiting for analysts to run through the offer and share their findings. As it is people do not appear as excited seeing that it would be joining  the already crowded plantation counters on Bursa. Nevertheless the IPO is touted to be the biggest so far this year.

Biggest IPO so far in 2012

While waiting for the prospectus, I am already making preparations to apply for the IPO. As usual the fund would come from my savings and the sale of my current stocks which have appreciated in values. I am now thinking hard which one of them to dispose off. Among my favourite holdings are Axiata,TM and Pchem, the first two have meteorically appreciated over the last couple of years. I am into that mood again, being in love with the performing stocks. I am rather sad to part with them. May be I could just sell a small proportion of shares of each stock? The problem now is the IPO price for Felda Global has not been announced yet for me to ensure I only sell the needed number of shares.

I have other stocks like Faber,MRCB and BSDReit. The first one has appreciated from 1.52 to 1.78. I am losing on MRCB purchased at 2.20 and now is at 2.01, quite a sizable amount! BSDReit, bought in 2009 at 1.40 has now risen to 1.72 and am highly reluctant to part with it as its annual dividend at more than 9% is rather attractive.

I might sell all of my Faber shares instead and spare TM because my relentless aim is to own 100k shares of the blue chip. Was elated beyond measures when I sold off all my Maxis  shares at 5.42 and acquired additional TM shares at 4.30 and which later climbed up to 5.19! But as my luck would have it, the minute I sold off Maxis,  its price sky rocketed  to 6.00 within 10 days! My only consolation is that TM's rise is bigger for a lower unit price.

Have to make the decision soon while the market is still in an exciting mode following Dow Jones reaching 13000 points last week, the highest since 2008. I might miss the boat otherwise.

 This portfolio restructuring would be fruitful if I were to be a successful applicant of the IPO. I am itching to own one plantation stock because I had sadly disposed off all of them back in 2010 at great losses which fortunately have been compensated by my new telco stocks. I have noted though that the prices of my old stocks like SwkPlant,THPlant,MHC,UNICO  and Kwantas  have all since recovered from their lows during the 24 months' period  (2008-2010)..... can't help looking back at old stocks and unconsciously emit that veritable sigh and then snap myself out of it.

I hope for a better luck with Felda Global.