Saizen REIT – Free Shares, Free Money!
In what seemed like a crazy year since 2015, this was literally one of the dark horses of my recent purchases. I hesitated to blog about this until the counter went XD today, as it was a risky trade in my opinion, and didn’t want to drag some readers into the ditch at a high price.
As for the reason why I bought it back then? There was really nothing much to go on, except for the hope that the Japanese economy would pick up due to the monetary easing policy, which should prop up its economy. Additionally, I noted that a small portion of their properties were unencumbered, which means that they’re free from loans, which should give them some bargaining power and room for more debt if and when they need to borrow cash. All in all, a great price for a fair company, to put it in Warren Buffett’s words. Additionally, I’ve seen that AK71 also owns Saizen, which to me, meant that it does bear some merit for consideration (i.e. doing your own homework before buying it, rather than copying others’ homework and then blaming that fella for your mistakes).
In October 2015, Saizen held an AGM, which I attended, and apparently there was a buzz about the meeting, as it seemed that there was a firm offer to buy their portfolio, which management could only confirm on the AGM day itself, being a sensitive transaction. I myself wasn’t aware of this, as I was happy enough to receive dividends from an undervalued REIT. So when the price was finalized at a very delicious $1.056, what I did was just chillout and relax, since I have already made 27% on this counter according to my calculations, just by doing nothing at all!
So what does this mean, and what would I do with the shares now? Well, it means that I’ve got “free” shares because the special dividend paid for my shares (and a bit of pocket money!), and also “free” money. Money in the form of either an RTO on Saizen, or it delists within the next 12 months, and distributes excess cash back to shareholders. Whether it will be successfully be RTO-ed or delisted is yet to be seen, but for me, I’m happy to let my chicken run free range.
With that said though, one should never “fall asleep” on their investments, as the ever-changing business environment can make or break companies. That’s why ETFs exists today, so that when one company falls from grace, another steps up to take it’s place in the index it is tracking. It’s all about diversification – even bubble tea shops don’t sell bubble tea only, they also sell fruits and dessert nowadays, something which I’ve only just realized today!