LPI: A Great Investment Adventure

A 6 fold return

Based on the 2010 LPI Annual Report,an investor who bought 1000 shares in the company  in 1993 and kept it until this day will be in this position at the end of 2010.

Based of the price of the shares and the subsequent bonus and rights issue, that shareholder will be having RM113,875 worth of LPI shares. Add the dividends paid of RM39,750, it means that for the  shareholder  would have pocketed RM153,625 if he sold all his shareholdings on the last trading day of 2011. The rights issues quantum expended was only RM10,730 thus far. On a 17 year period, the annualised returns worked out to some 27.3% returns.

In 2010, a bonus issue of 1:2 and a rights of 1:10 at RM7.00 were issued and traded. A shareholder with 1000 shares will have to pay RM700 to get 100 shares. With the bonus issue of 500 shares thrown in, it means he will have 1,600 shares.

When the shares traded in September, from RM18.00 it went down to RM11.94 to accommodate the bonus issue. At RM12.00, this shareholder would have RM19,200. It you deduct RM700 from this value, the net benefit for the shareholder will be RM500 in September 2010.

Today at RM14.00, the worth of the shares for that shareholder will work out to RM21,400 (after deducting for the RM700 for the rights value).

An investor who bought into the share at RM18.00 cum rights would have earn RM3,700 as of today. That will work out to almost 20%. Add the special dividends when the shares go ex on 20 January, it will mean a return of 19.2% per annum. This is certainly better compared to the 3% and below fixed deposit regime in the banks today (by 6 folds!)

LPI closed 10 sen down at RM13.98.

Is LPI a great defensive stock or what?

Solid Defense

On 16 January, BNM has allowed insurance companies to increased the premiums on motor vehicles.

At this juncture, I do not know how much of motor insurance does LPI has in its portfolio. I will certainly be researching on this as it will certainly impact upon the improving profit of LPI.

When Teh Hong Piow started London Pacific Insurance (LPI), not many expect it to move up up the way it did.

In 2010, it gave  a bonus of one for every two shares held and a rights issue of RM7.00 for every 10 shares held. At that time, the share was trading at about RM13.00. It exed about RM11.80 and hovered beyond RM12.00 in a short time.

Beginning January 2011, it elevated itself to RM14 and subsequently went south by the middle of January and thereafter slid into the RM12.00-13.00 price range. There was an upsurge to RM14.00 again  during the month of July. It then went down once more right up to the RM12.00 price cohort. By October it was in the RM11.00 cohort.

From December is moved up to build a base around the RM13.00 range before the run off to RM14.00 when it touched RM14.10 yesterday(10 January 2012). This represented a 22 sen up from the day before.

Today, it is building a base above RM14.00 until the stock goes ex-50 sen special dividend on 20 January.

Good entry point or what?

 LPI is a defensive stock alright. I will trace its dividend record in the next post.

Digi: Sight Setting

As they say, " the spirit was willing but the flesh is weak."

Targeting beyond RM4.00 on hte cards

That aptly describes the flurry of buying action on Digi when trading started this morning.

The interesting thing to note is they shot the counter price to RM3.99, a heated breath away from the psychological RM4.00 mark. What does this mean? Sight setting.

It you ever underwent military or even para military training, you would know that setting the target from the front-sight and the back-sight on an Armalite  in a straight line shoot hit the target with ease even if its 40 yards away.

And so in the case of Digi, it looks like a price assault beyond RM4.00 is on the cards.

Only thing is when.

Right now, Digi has sunk into the bowels of red ink at RM3.89.

RM3.91: A Sen up at the Close

When market closed, there was some last minute buying, bringing the stock to close at one sen up to RM3.91.

Digi's Next Rubicon

Moving closer to the RM4 level

I think it has been a long time coming.

Except for a brief jump to RM3.95, Digi has been skirting around the RM3.86 level.

The last half hour spurt today that brought it to stick at the RM3.90 is certainly noteworthy.

Will it hit RM4.00 and beyond before Chinese New Year?

Will is go beyond RM3.90?

We have to see that happen,won't we?