April 2020 Portfolio Review

Overview
S&P 500 Index Fund -8.36%
Straits Times Index Fund -19.71
Tracker Fund of Hong Kong -13.31%
My Portfolio -8.38%

Transactions
-Purchase of Lendlease REIT.
-Purchase of another company in Hong Kong with strong cashflows, mainly for its dividends.

Commentary
Market seems to have recover tremendously, especially REITs. The fear of their investment properties getting revaluation, the pressure of enforcing distribution for tax purposes, have eased. Unfortunately, I am one of those who were cautious of these two issues, and did not double down on them during the sell down. Some of them were marked as much as 40% down.

TBH, I was waiting for a rights issue.

Unfortunately, the G decided to intervene and REITs do not have to distribute 90% of their income until March 2021. In certain ways, it reflects the G's expectations that things should more or less recover by Sep?

Market movement in recent period reminded me of the ironies of life. Last year, investors who are very optimistic (and naive, to the point of borrowing /on margin) about REITs earn spectacular returns on them. Many of them thought they were geniuses, but fled like cowards when REITs were sold down. Some even sold stolen ideas while giving some lame-ass excuses. Hilarious.

The market always have a way of revealing one's conviction. It is what you do that matters, not what you said.

My conviction in Southwest Airlines (SA) is not too high, other than the fact that they have probably the best ROIC among all airlines. However, by choosing to receive aid from the government, they are disallow to purchase shares, give out dividends, etc until September 2021. That means we are looking at 1.5 years of misery in this sector. I am assessing the situation slowly to see if this is an opportunity.

The purchase of Lendlease REITs is based on 2 simple ideas:
1) It has 2 years before they have to re-finance; in other words, they have no current interest-bearing liabilities
2) It is a small REIT and hence it is easier to grow. How do REITs grow? Purchasing properties and increasing rent, of course.

Till next month.

***
What a difference a few days could make.
As of 11-May-2020, the market treated me really well, as prices for XHP and TTJ recovered. I am a little suspicious of TTJ's resurgence as the volume of shares is not significant.

Let's hope it stay this way.