Friday, 3 June 2016

Sold off Noble after 5 years.. Finally!!


Sold off my Noble after holding for more than 5 years.. Finally!! Have mentioned before that this is one of the few major bad decisions which were made so far. Well, the price which I bought was at $2.16 to be exact, with 3000 shares. In another words, I just write off a huge 88% loss, more than $5,000 from my portfolio today. This post shall and must be parked under "Mistakes" category to remind myself about it. It is really an expensive and painful mistake indeed.

Made a series of bad decision in this actually:

Honestly, to begin with, I can't even remember why this was bought in the first place. Based on Yahoo finance, $2.16 is very near the all-time high of $2.51, which was somewhere around 2008.
Didn't read any of its financial reports at that point of time. It was bought purely with guts feel, speculations and gambling style. Another minor factor is I don't wish to miss the price, afraid that it may goes higher.
Speculates and gamble. Impatient.

When the price began to drop to a low of $1.05 by the end of 2011, a naive decision was made. Can't remember much clearly again, but the decision to hold onto it was much based on the price movement. Since it came down from a high of $2.84(est.) to a low of $0.47 (est.) in 2008 and managed to come back to a $2.34(est.) in 2011. I was just hoping the same would happened this time.
I truly understand what is "history doesn't tells you the the future" means now.

The price was ranged around $0.81 to $1.44 from 2011. I didn't pay much attention in Noble during this period, just hold it and hoping that the price could reach $2 one day.
False hope.

When the reports by Iceberg Research and Muddy Waters in 2015, that is point when I start to take note about this stock again. Yet I didn't study their report again but only by reading the reports from Iceberg Research and Muddy Waters, and their target price was $0.10. Perhaps I'm in a denial stage at this point of time. Only thinking that since have already suffered from more than 50% loss in this, how much can it gets worse. The price shall recovers once this incident cleared. All these are just noises in the market, and Noble had rejected all of these allegations after all.
Nobody would admits even though if the allegations are true right?

When Noble's CEO unexpectedly announced that he will resigned due to family reasons earlier this week, this is the time when I am finally awakes. It was too late, the price was at $0.30, already incurred a 85% paper loss. I am waiting for a better price to get out this time.
Paper loss should be considered as a loss too

Today Noble Group founder and Chairman announced to step down within 12 months. Noble also said it would cut headcount and together with rights issue announcement:
  • 1 Rights Share for every 1 share in Noble Group held, issued at SG$0.11 per share, representing a discount of approximately 63% to the closing price of SG$0.300 per share on the Singapore Stock Exchange on 2nd June 2016, being the last trading day of the Noble Group shares prior to the announcement of the Rights Issue, and a discount of approximately 46% to the theoretical ex-rights price of SG$0.205 per share.
In layman's term, meaning to say I am entitled for 1 share at $0.11 for every share which I owns. In another words, I need to fork out $330 to "buy" the rights for the 3,000 shares which I owns.

I finally make the decision based on facts and not emotions this time:

First of all, feels so cheated. The announcement of CEO's resigns on 4 days ago actually says that Mr Richard Elman will continue in his role as chairman and executive director. Excuse me. Continues his role for another 4 days only?

Secondly, the way I see from Noble's rights issue announcement, Noble is using their last resort to save the company. They are still in US$3.97 billion net debt (as of 31 Dec 2015), despite raising US$2 billion within the next 12 months.
  • The rights issue, together with the sale of Noble Americas Energy Solutions (“NAES”) announced last Monday and the previously announced sale of low return assets and working capital reduction measures will, in aggregate, generate US$2 billion in additional liquidity over the next 12 months
Lastly, the ex-rights price will be diluted to the theoretically of SG$0.205 per share. My take is that it will be lower than $0.20 per share after ex-rights. With the Minimum Trade Price set by SGX, how will Noble possibly to comply it? Do a share consolidation? It is more like a rinse and repeat process to me.

Noble's decision to rights issue is an ultimatum for me to hold on to Noble shares. 穷小子 will not throw any more money into it for the rights issue. $330 is not a huge amount, but that would be about 42% of the current holding Noble shares value, based on the closing price at $0.26 today. A drop to the current $0.26 is about 88%, and to have it back to the $2 days needs about 800%. What are the chances here? Hence made the sell call, take the loss and move on. If the price miracle-ly goes up, then so be it. It is just another unlucky if this really happens.
A series of bad mistakes had resulted in 穷小子 to suffer a hefty loss of at least $5,000, it may not be a lot to others, but this is definitely be the price that 穷小子 gonna pay.

20 comments:

  1. Long-term investing is never easy and can be years of emotional horrors!

    ReplyDelete
  2. $5000 to buy a big lesson u can remember for life is worth it.

    ReplyDelete
    Replies
    1. Hi Rolf,

      Yes, 穷小子 shall remember this expensive lesson. His immediate aim is to recover this $5,000.

      Delete
  3. Selling now might also turn out to be another big mistake

    ReplyDelete
    Replies
    1. Agree that it may happens, but 穷小子 had decided to accept the loss and move on.
      Speaking of which, 穷小子 has always been unlucky in this. The price may have just bottomed out and the uptrend begins. Prays not. :(

      Delete
  4. Sometimes past history or glory is not good reference for a stock, e.g. Creative. It was a very strong signal when Noble got kicked out of the STI components. A good lesson for sharing. Thanks.

    ReplyDelete
    Replies
    1. Hi Passive Income Farmer,

      Yes, read about it history. This post shall act as a reminder for 穷小子 and everyone else. Thanks.

      Delete
  5. The Past is NOT Present. The Present is NOT the Future - CW8888

    ReplyDelete
    Replies
    1. Hi Createwealth8888,

      Nice saying. No one knows what about the future.
      Move on from the past and learn from today for the future.

      Delete
  6. I think this is a good decision to sell off and invest whatever remaining in better companies. Good lesson for sharing.. time to look at my Yuuzoo again.. hahaha

    ReplyDelete
    Replies
    1. Hi Daniel,

      Thanks. Didnt read much into Yuuzoo, make sure dont let emotions affects your decisions when the buy or sell call comes.

      Delete
  7. Why not hold it since price is already so low? You can't invest with 1 - 2k either. Just risk the remaining 1k and wait a few years as we might be at the bottom of the commodity cycle. It was a mistake to have already bought at the peak of commodity cycle...Take it as paying school fees and you will do great in the future :)

    ReplyDelete
    Replies
    1. Fair enough, cant do much with less than $1k. Mostly probably this money will be set aside for Euro 2016. #YOLO. Haha.
      穷小子 doesn't mind holding it and hopes it bottomed out since this had been the mentality for the past few years, but just that dun wish to invest more money into it.
      Noble management's decision to rights issue and with the leaving of CEO and its Chairman serves an ultimatum. The sell decision is much more bias to this than the monies factor.

      Delete
  8. In the stock market, we must pay tuition fees to learn. Losing is part of the Game. Bo pian!

    Read? Soon ... The Greatest Relief Is I have Sold!!! (2)

    ReplyDelete
    Replies
    1. Yes. Just make sure the winnings will be greater than the losing.

      Delete
  9. Nvr bother with fundamental and fake hope. If prize come down to some 10%, cut loss fast. It is there for whatever reason dont bother, just cut and get out. You can always get back later. Be it trading or value investing, there must be some protection of capital.

    ReplyDelete
    Replies
    1. Thanks for the advise. Sometimes is the emotions which took the control out of it. Must have a plan and sticks with it, which 穷小子 now does.

      Delete