Sometimes You Get Lucky (Update on PHEN)

Hey there. Last week, I got married. Yes, that’s the reason for a lack of update on this blog. After I came back from the honeymoon, I immediately checked my investment in PHEN (among others). If you may remember, I bought PHEN and detailed my thesis on it. The thesis was wrong. I was expecting to have a higher tender offer price for the shares. I bought my PHEN shares for 1.47. The tender offer was 1.45. I didn’t lose much if I do tender my shares. But what caught my attention was Ayala’s move to list some of its subsidiary as a backdoor listing.

Here’s a picture of a Tarsier that I got from the honeymoon.

Ayala just placed their logistics division to the newly acquired public company POPI as a backdoor listing. I thought, ok, this might be interesting. Since the tender offer price is not much in terms of loss. I might want to wait this out and see what happens. Ayala might do the same for PHEN as a backdoor for AC Energy. If Ayala do make PHEN as its AC Energy (listed public company), I might have bought AC Energy at 1.47 too cheap. Insanely cheap.

Sometimes you get lucky because you don’t have complete information when you decide on an investment. Sometimes its bad luck, sometimes its good luck. In this scenario, since I am not going to lose much. Bad luck for a low price of tender, turned into good luck of a possible backdoor listing. The floor of my loss is at the price of 1.45, I think the upside is unlimited. I don’t know. But it seems pretty good odds to me. Low risk, high return.

Are We Speculating Now?

I know, I know. We, value investors, shouldn’t be speculating. We shouldn’t be basing our investments on rumors of a backdoor listing. And that is true. We shouldn’t. But it just so happen that I bought at a very low price, where we have a very clear picture of the potential loss of capital (P1.45), book value is at 1.85, that whatever happens, it won’t break us. Heads I win big time, tails I don’t lose much. So why not just wait and see how things play out?

There’s also those quotes that I always hear all the time. “High risk, high rewards.” That’s true if you’re trading. In investing, “low risk, means high rewards”. And this investment is a proof to that. Buying at 1.47, potential loss at 1.45, the upside is unlimited (we don’t know). See? Its ok if you don’t know what the future price is, as long as you know the amount you’re going to lose and make sure that it ain’t much.

I am currently holding PHEN at +56.46%

Leave a Reply

Your email address will not be published. Required fields are marked *