Recently, I noticed that one of my salted fish had turned over (咸鱼翻身). Yup, you heard me right - that's when a stock that you had bought long long ago, and had dismissed it and wrote it off because of some mistakes in judgement but nevertheless held on to it, and is now suddenly revived. This particular salted fish is very fragrant because it had been salted since April 2010. I had bought it at an all time high of 0.270 and subsequently averaged in at 0.240, giving me an average buy in price of 0.255.
Wow...why did I buy it then? It's based on some rumors that I had long forgotten. It didn't materialise, and thereafter the stock crashed and burned but I still had on to it after all these years. Reason? It's a good reminder for myself not to buy stocks with rumors. I'm glad I've not made the mistake then, so in a strange fashion, it's quite a good tuition fee paid.
The company had been paying dividends, so it helped to reduce the cost of bearing the stock. After collecting dividends every year, it amounted to around 11% of the capital sunk in, so it's not that bad. I initially thought of cutting losses, but since I do not require the capital locked up (it was a rather small amount), I just held on to it. More like a reminder to myself rather than an aversion to realise paper losses. I must say I'm quite relentless in cutting stocks.
So, what's the rumor that's propelling this unloved penny to a parabolic capitulation now? It had recently announced that it had made placements shares arrangement (at around 0.160+) with two big investors to dilute the total holdings to around 20%. If you ask me, that's a pretty huge investment in a 'okay' company. One of the two investor is none other than Sam Goi, better known as popiah king, who is quite an astute investor and businessman. I wonder why he got into this, and with such huge stakes in the company as well. Usually share placements are frowned upon since it leads to dilution of everything, including dividends. But the market had absorbed this seemingly bad news quite unexpectedly by capitulating upwards.
Yeah, but who cares...I get to exit and pass the buck to another better player lol