Saw this post today on Investing Note: "If you have $1000 start from clean state, with enough cash float for rainy days, how would you invest given this impending/start of recession?".
It is an interesting question if the starting amount is at least $10,000 instead of $1000. With enough cash float for rainy days and I really want to invest when I only have $1000 at hand, I will go for penny stocks. It is risky but rewarding if done right. After all, we need money to earn money. $1000 is too small to start with given the commission between $10 to $30 per trade.
CFD or forex could be another option but it is not within my circle of competence. Hence, I am not in the position to comment. For me, I would have bought MDR (A27.SI) at 0.001 per share. In fact I am currently holding a million share at 0.001 during the panic sell when DOW drop by 1000 point per day. Today, there is not enough sell volume for anyone to buy at 0.001 unless you work for the banks and every trade only cost you $1.
Here is my thought process:
1) Management converted their warrant into shares - showing confident to the company's future.
Taken from annual report (page 56)
From annual report, chairman statement (page 8): The Company successfully raised $28.41m from the exercise of Tranche 2 Warrants, of which my contribution (together with my spouse) was $17.50m (i.e. almost 61% of the Tranche 2 Warrants proceeds raised). Despite the economic uncertainties, 52% of the Tranche 2 Warrants were exercised by the warrantholders. Several Directors (including myself, Zhang Yanmin, Mark Leong and Ian Oei) subscribed for the entitlement of their Tranche 2 Warrants in full. Directors and Group employees, in aggregate, have invested $17.80m for the exercise of Tranche 2 Warrants. To recap, mDR has raised approximately $95m to-date from its Rights cum Warrants issue (Rights, Tranche 1 and Tranche 2 Warrants), of which my contribution (together with my spouse) was $43.51m, our CEO Frankie Ong’s contribution was $6.60m and cumulatively that of all Directors and staff was $51.02m. I believe the investments by our Directors and staff is tangible evidence that we have confidence in our business and more importantly this increases alignment of interest with all shareholders.
2) Share buybacks during the huge sell volume at 0.001 - again showing confident to the company's future.
Taken from SGX buyback announcement on 28th Feb 2020
3) Read the annual report and you will laugh like me - it is becoming more and more like a hedge fund. (This really show how past experience affect people's action into the future. I think Mr Edward Lee wants to become Singapore's Warren Buffett)
4) NAV is around 0.0017, hence it is currently at 41.2% discount.
Worse case scenario - I lose $1000.
Average case scenario - Price stays at 0.001 for a prolong period of time.
Best case scenario - My TP is 0.005 hence equivalent to $5000 and a profit of $3950 ($50 for commission)
My two cents.
No Trade Day
Singapore market is closed. Was thinking I would trade Thailand market today. However, it seems to be down. Too red for me to do anything, not gonna sell.
Usually I will deduct my expense from my monthly allowance invest the rest while keeping 10000 Baht as emergency fund.
Currently I am holding to only two counters on SET:
ROJNA
Rojana Industrial Park Public Company
A 50/50 joint venture between Thailand & Japan back in the days. Due to it nature as a joint venture, it is required to pay out 50% of its earnings every year as dividend. Currently it is trading at 0.6 Price / NAV and a 12% Yield. I see the yearly report and drool, sold last month for a profit and bought back again earlier this month.
TRUE
True Corporation Public Company Limited
As we know it, one of the three biggest telecom service company in Thailand. So please try to choose True when you are in Thailand. Advertisement aside, I bought TRUE because its price came down 50% from its previous height and I am very happy with their customer service whenever I am at their retailer shop.
Disclaimer: Shared opinion on this blog is not to be treated as investment advice to the readers. Please do your own due diligence and consider your financial goals before investing.
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