Belle Buy-out

Private equity firms, Hillhouse Capital Group and CDH Investments, offered to buy Belle at HKD 6.3 per share, valuing the firm at HKD 53.1bn. That’s 20% premium to its last closing price of 5.27 before its trading halt.

Coincidentally, in my first post on Belle, I valued Belle at HKD 5.2 – 5.4 per share. That’s exactly where Belle was before the trading halt. In my last post on Belle, I adjusted my estimate down to 5.07 – 5.26 due to weakening CNY. But all these don’t matter. I sold out Belle 3 months too early!!!

Too many times in the past 6 months, I made the mistakes of selling out too early, missing the big gains that took place after my sale. For Belle, I first bought it at 4.72 in July 2016, bought more at 4.41 in December 2016 and sold out at 4.81 in January 2017. Including dividends, forex gains and trading fees, the return averaged nearly 8% for 6 months holdings. At buy-out price of 6.3, I missed out 30% gains by selling 3 months too early.

I certainly did not foresee such buy-out offer. All I can do now is to move on quickly and don’t let this affect my day. Lady luck is simply not at my side to bless me with such unexpected gain for Belle. I hope I have better luck next time.

Looking back, missing a buy-out offer in 3 months is not even considered a close miss. My closest miss is 1 business day. In 2009, I wanted to buy an electronic manufacturing firm on Friday, but I decided to wait until Monday as I wanted to read more about the company’s annual report over the weekend. When Monday came and I was ready to trade, it’s too late. The offer was announced and the price jumped at opening.

Belle - Share Price - 2017-05-02.PNG

Source: Google Finance





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