Update on Ascendas H Trust

Reflections.

Ascendas H Trust plunged some 13% in one day post management announcement that it is ending all talks with takeover interests.

There I was sitting on a significant loss account. Basically you have 3 options when you are purchasing a stake.

1. You keep your entire stake
2. You sell your entire stake
3. You sell part of your stake

When I entered this trade, it was solely on the basis of a takeover offer. Which when it failed to materialize, a trader would decide to get out asap. So this likely accounted for the sharp plunge.
As I entered as a trader, I was quite ready to get out.

But then, to take a large loss is not easy. What should you do then?
You evaluate the scenarios and the assumptions you went through earlier. This is to avoid bounded rationality where one does not seek full information but make do with the most recent or available information making sub-optimal decisions.

I evaluated my choices and went with choice 3.

I sold down a small portion, and kept about 80% of the stake. I evaluated this on a total portfolio basis as well as I sold down my capitacommercial trust stake concurrently.
This is the following reasons:

1. This is a yield accretive move. 7.6% on my purchase price vs 6% from capitacommercial
2. Office reits are in a precarious position as a large supply of Grade A office are coming in
3. The recovery story of Ascendas H trust is very much intact, AUD is rising, australia economy has a certain attraction and strength
4. Management's commitment to enhancing returns to shareholders - saying no is just as important as saying yes. If an offer undervalues the asset, the management should act in the best interest of their shareholders and keep the faith.

Why then did I sell down 20%?
This is to manage the overall portfolio, certainly there are better opportunities down the road. Think when the Fed raise interest rates again or if china devalues the yuan or if the bad debt of china implodes or if Britain suddenly goes Brexit.

Anyone of the above 4 factors can cause a 20% plunge in blue chips. The volatility is very excellent for traders. But even for long term investors, one should rejoice in the sight of a sale.

Did I make a mistake?
I did my valuations the consideration that the PE and acquirers were all conducting their valuations independent of the valuator's final calculation. This is definitely something to learn from.

As long term investors - Its all about consistency, longevity and a sound process of execution. Rinse and repeat.

After all, "Not everything that counts can be counted, and not everything that can be counted counts."
- Albert Einstein