Thursday, 30 September 2021

September 2021 Updates - How I Broke My Own Rules in Investing

Sept 2021
Local Portfolio Value after market close (excluding USD and HKD)


84 shares of @ $24

36,000 shares of Sembcorp Marine @ $0.08 (Rights subscription under CPFIS)


60 shares of AMC @ $40.50

1) CICT @ $279.72
2) CLCT @ $384.93
3) Ascendas Reit @ $192.85
4) MLT @ $216.10
5) ESR Reit @ $34.40
Total: $1,108

Short-Term Transactions

Closed 1 x SPRT Put 210917 at $26 strike with $11 premium early at $6.69.
Sold 2 x DIDI Call 210924 at $10 strike with $0.35 premium. Expired.
Closed 3 x SPRT Put 210917 at $19 strike with $3.70 premium at $3.40. 
Sold 1 x SPRT Call 210917 at $38 strike with $2.49 premium. Expired.
Sold 1 x SPRT Put 210917 at $14 strike with $1.15 premium. Assigned.
Sold 5 x SPRT Put 210917 at $13 strike with $0.84 premium. Assigned.
Sold 1 x FUTU Put 211015 at $80 strike with $3.60 premium.
Sold 2 x DIDI Call 211029 at $9.5 strike with $0.3 premium.
Sold 1 x TSM Put 211015 at $107 strike with $1.37 premium. 

For my SGD portfolio, not much change in terms of value. Collected S$1,108.00 of dividends this month. 

Decided to subscribe for Sembcorp Marine rights issue.
With this, I'm holding 60,000 shares at S$0.4052 average price.
Wifey's is 45,000 shares at the same average price.
Both of us are holding this under the CPFIS.

For my Syfe Core Growth portfolio, TWR has dropped to 3.77% which is lower than last month's figure, in line with the US and Chinese markets volatility.
Have DCAed into this portfolio yesterday and plan to continue this every month.

For my USD / HKD portfolio, I added 84 shares of SPRT at $24 and bring my holdings to 168 shares.

I also took assignment of 6 Put contracts for SPRT (1 x $14 and 5 x $13 strikes).

After conversion to Greenidge Generation (GREE) at a ratio of 1 SPRT : 0.115 GREE, my total holdings stand at 85 shares at average price of $167.03.

This whole exercise is a very bad mistake on my part. Many schoolboy errors were committed. I broke several of my own investment rules along the way despite so many years of investing. To be honest, I am very disappointed with myself.

How I Broke My Own Investment Rules

Yes, I have to make this bold and underlined to remind myself of this round of mistakes.
Mistake No. 1: I invested into the counter without doing enough due diligence. I knew it was going into a merger and the price is driven up by the euphoria but that's about it. I did my fair value calculations for the share price after I went in, not before. Schoolboy error.
Mistake No. 2: I got FOMO. Yes - after so many years, I still fell for it. Stupid. My emotion in investing definitely needs working on.

Mistake No. 3: I set a stop loss. But did not follow it. Really, stupidity has no cure.

Mistake No. 4: I traded options into the merger despite unknowns regarding the post-merger treatment of the option contracts.

I can go on forever... But the first 3 mistakes are pitfalls which I am well aware of yet I still fell in.. And the funny thing is that I always remind others not to do these..

Anyway because of this episode, my USD / HKD portfolio went from a profit of about 20% to now a loss of about 35%.

Hopefully I can fight back and level the field soon.

As mentioned above, I did a fair value calculation for GREE share price after I bought in and the value I got was $77 per share which gave a conservative market cap of around $3 B for GREE (RIOT's was $3.38 B when I did this calculation back then).

In other words, based on this $77 GREE valuation, each SPRT share must be bought at $9 or below in order to breakeven.

Hence if I have done my calculations first, I would not have bought into SPRT.

Of course as this past month has shown, the share price of Bitcoin miners has spiraled down as Bitcoin went into correction mode.

Taking that into consideration, if I take a conservative 80% of RIOT's current market cap at this point of writing as a reference, the fair value of GREE share should be around $49.

(0.8 * 2.39 B) / 38.67 M = $49 (conservatively speaking)
Currently Bitcoin is trading at around $43,000.

So assuming if Bitcoin goes back to around $50,000 which is the price when I first did my calculations, GREE should be trading at around $77 theoretically.
This also implies an upside of 308% from current share price.
However the issue is when will the market rate GREE at its fair value. Sometimes fortune favours the patient.
The current share price doldrum is partly due to the falling Bitcoin price and SPRT investors offloading to cut loss.
Once the loss cutting is done the share price should start to recover and consolidate in range.
My game plan or exit plan whichever is nicer to call, is to hold and try to position my average price to the fair value through DCA and options trading when the new option ticker is up for GREE.
The odds are against me but hopefully things will improve soon. Afterall GREE is a fundamentally good company at its base.

Enough about my mistakes for now...

This month I added S$7,500 into this portfolio and also received US$100.32 for the fractional GREE shares after conversion.
I also made a profit of US$1,473.93 (~S$2,006.79) from options.
Moving forward I will continue to use options to supplement my investable income and narrow the loss from GREE.
Last but not least, if you want to open a moomoo account you can do so using my referral link here

As always, good luck in investing!

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