Wednesday 12 April 2017

ARA - Annyeong, Ezra - Annyeong.

This is a case of two different goodbyes...

I first took notice of ARA Asset Management when I came across an interview of John Lim where I was impressed by his vision for the company. Subsequently I did a fair bit of research on the company and decided to buy into ARA.

The price ran up subsequently and hit my TP within 3 months. It was a difficult decision whether to let go back then but I eventually decided to stick to my TP and let go despite the impressive run up.

It was a short 3 months relationship but thank you, ARA, for the wonderful time. You will be missed.

For Ezra, it's a gamble gone wrong. They were once a billion dollar market cap company in the O&G sector.

When I bought into the company at $0.165, I was betting that the oil crisis will resolve soon and that they can return to their heydays once the oil price recovers.

However things started to go downhill when their borrowings increased at a pace which they couldn't cope.

No doubt the protracted O&G crisis plays a part in their woes (and mine). But I feel mismanagement is the major contributory factor to their dismal end.

Even the Aramco project and the rising oil prices did not provide the catalyst for their recovery.

Being myself, I always try to find some positivities in a situation no matter how gloomy it is.

In this case the lesson derived is that a company's management is as important a factor as the macro environment and other financial data, if not more important.

This is a $8,000 lesson which I hope other investors can learn in a less painful way.

I would be glad if this post can serves as a reminder to experienced investors and as a lesson to newbies.

Lastly I wish to dedicate the following to Ezra. Bye.

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