Thursday, March 8, 2012

How could I have missed out on Dutch Lady? :-(

This is part and parcel of learning as an investor. Back in 2005, a good friend of mine complained about his holding, Dutch Lady. It was not that he was making losses from the holding as I knew he bought the stock during the lowest of lows i.e. crisis period in 1998. He held a lot of Dutch Lady, I can vouch for that and his complaint is that he felt that Dutch Lady was undervalued. At that time, it was traded at around RM6.00. Instead of buying, I laughed at him, saying that yes it was potentially undervalued but perhaps the stock has very little followings. This is because I told him, traders do not like stocks where the management does not bother to move the stock. Dutch Lady is owned by corporations, not individuals. As there is no stock options either, I thought the management has no incentives even if the stock price move upward as they are being paid salaries and bonuses to do well. The stock performance does little to their motivations. How wrong was I?

Since then, the RM6 became RM30 now, not inclusive of the not less than RM4 of cash dividends they have declared from 2005 til now. This is a lesson - company performance counts, dividend counts. The sad part is I knew the company is a good stock and I waited and waited. Although I have been following the company ever since 2005, my slow decision making and over cautiousness costs me a lot. I always wanted to buy Dutch Lady but felt that it was a little too expensive every time evaluated the company. So I waited for the price to retreat. It never really retreated.

I am those investors who suffer from the syndrome wanting to buy at really cheap. But for good companies, sometimes it never or rarely comes by. I am now crying at the little corner of my house each time I look at the price.

For the benefits of those who would like to know the performance of the Dutch Lady over the last 5 years.

Serious Investing!


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