When Will You Sell A Stock?

When Will You Sell A Stock

When will you sell a stock? Recently, a reader asked me when I will totally sell off a stock from my stock portfolio. Totally selling off a stock can also be termed as “Divestment”.

It has been a long time since I divested anything from my stock portfolio. Looking back at some of my old posts, below are some of the stocks that I have divested.

That is a total of 12 stocks that I have divested over 13 years of stock investing. I do not buy and sell stocks everyday as that will define one as a “trader”, not a stock investor.

Below are some of the reasons I may divest a stock.

#1 Fundamentals of the company has changed

Office Buildings

This is one of the top reason why I will divest a stock totally from my stock portfolio. You buy a stock for various reasons.

If you are a value investor, you buy a stock hoping that the value goes up and sell off for a profit when the stock price appreciates.

As a dividend investor, you buy a stock and collect dividends, ignoring the up and down of the stock price. A dividend investor wants to hold the stock as long as possible since the stock provides endless year on year returns.

The fundamentals of the company can change over time. This can be the company selling off its business or running into financial woes whereby the reasons you buy into this company is no longer valid.

An example will be Neratel whereby the company sold off its payment solution business. The reason I bought Neratel was because of the payment solution business. Since the business fundamental have changed, I decided to divest it totally from my stock portfolio.

#2 When you are satisfied with the profits

Stock Screening

You can also sell off a stock when you are already contented with the profits.

For example, I sold off Sheng Siong because I am contented with the profit gain of 68%. Since I sold off Sheng Siong, the share price continue its uptrend but I have no regrets because I am contented with the profits locked in.

If you are a value investor, you should decide the stock price to sell before you buy the stock and stick to it.

#3 Sell when you have something better to buy

Buy

This is more of injecting more life into your stock portfolio. When the business of a company matures, the growth of the company slows down.

I usually look at the growth of the earnings per share of the company when measuring if the company is still able to grow at a fast pace. Often, this correlates to the share price of the company.

If I spot a company that the rate of growth is faster than a company that I already own, I will divest the stock and buy into the new company so my invested capital can continue to grow at a faster pace.

As a dividend investor, I also compare the current dividend yield. If there is a stock that offers higher dividend yield, I will sell off a current stock and put my capital into the new stock with higher returns.

A good example will be my divestment of The Hour Glass and recycling my capital into SPH REIT for higher dividend yield.

#4 Delisting of the company

This is not really a sell transaction. When a company delists from the stock exchange, it will usually offer a cash pay out to unitholders.

An example will be Frasers Commercial Trust. This is one of my favourite stock in my stock portfolio. However, due to merger with Frasers Logistics and Industrial Trust, Frasers Commercial Trust has to be delisted.

Old Chang Kee (SGX: 5ML) Free Curry Puffs

Old Chang Kee Curry O

Old Chang Kee (SGX: 5ML) is rewarding customers with free curry puffs! Read more below. If you didn’t know, Old Chang Kee specialises in their hot snacks and lip smacking quick bites, notably their Curry’O which is everyone’s old school favourite curry puff.

On a side note, Old Chang Kee has been paying out dividends yearly since its listing in 2008.

Recently, Old Chang Kee has launched their rewards mobile app (iOS and Android) that let you earn stamps to redeem rewards. Below is how it looks like.

Earn 10 Stamps to Redeem Reward

You earn 1 stamp for every S$2 spent in a single receipt. After 10 stamps, you will unlock a reward.

Earn Stamps

Old Chang Kee Deals

This is where you find deals such as Buy 5 Get 1 Free Curry’O.

Old Chang Kee Deals

Old Chang Kee e-Vouchers (Free Curry Puffs)

Now, this is where the good stuff are. As you can see below, I have 3 e-Vouchers that lets me redeem free curry puffs.

The free 3 curry puffs are only exclusive for DBS/POSB card members.

First, you need to download the app and sign up as a member. Just link your payment method to your DBS/POSB Credit Card and you should see the 3 free e-Vouchers after completion. The promotion ends on 30th September 2021.

While stock lasts!

Old Chang Kee eVouchers

Check-In To Unlock Deals

The Old Chang Kee app has this feature whereby you have to check-In daily for 10 days to unlock a special deal!

This probably will attract customers to launch their app daily and promotional news can effectively reach their customers.

Old Chang Kee Check-In

Summary

Remember the success of Convenience Retail Asia whereby their success comes from their mobile app and they can reach out to their customer base effectively?

Old Chang Kee Ltd definitely has made the right move and we shall monitor to see if further value of its stock can be unlocked.