This is a follow up post on last week’s entry on Eagle Hospitality Trust (EHT). Quick recap: One of EHT assets (Queen Mary) was alleged to be in danger of default due to urgent issues regarding the structural integrity of the ship and the large cost of repair necessary to maintain the ship. The share price plummeted after the news broke and I decided to buy a small amount at the discounted price.
I’m relieved to see that EHT has reversed it’s falling trend following last week’s freefall. The share price has gained 4 cents as of 11pm today over the closing price to hit 58.5 cents. That is a decent gain of 7.3% in a single morning. I can safety conclude for the previous post that I made the right call to buy in when there is weakness in the stock. At least for now. The performance of my other stocks is also commendable in contrast to the gradual decline of the past few weeks. This might be attributed to rising optimism of a trade deal being reached soon between US and China.
The only slight tinge of bittersweet regret is my thirst (or greed) wasn’t strong enough to overcome the fear of further depreciation of my pittance of a networth and deploy a substantial amount of cash to capitalise on this opportunity. Although the share price has made a slight comeback, it is still attractive at this price and I would accumulate more if I had enough capital lying around.
Fluctuations in the share price, in theory, should not be of concern as the market is fickle and I am not looking to either accumulate or sell. Nevertheless, curiosity gets the better of me and I occasionally still glance at the numbers, hoping to see more greens than reds.
I will be holding on to my small stake in EHT and enjoy the generous yields and potential paper capital gains. Judging from the actions of it’s peers, it is highly likely that EHT might have a round of rights issue to acquire one of their two pipeline properties. I expect that share price will suffer once again, more so if the rights issue is dilutive in dpu and nav. That would be the sell call for me as I still prefer holding strong reits with reliable sponsors for the long term.
Final note. Perhaps the reason I failed to get an allocation on the Lendlease IPO was that there was indeed a better deal waiting. Perhaps some things (in life) are meant to happen for a reason and we can only understand looking back. The sun will always rise again and all unfortunate and undesirable events will eventually revert back to the mean.