Saturday, 23 April 2011

Hoohaa on Preference Shares - What are they?

Many companies seemed to be in a money-raising flurry lately in the growing Asia economy, thus providing various investment opportunities eg. bond issues, preference share issues, rights issue etc for eager investors. In attempt to find out more, I came across this article good for a casual read http://www.moneytalk.sg/2009/01/case-study-of-ocbc-preference-shares.html. So what exactly is Preference Share?

Here is the definition from Investopedia.com:

What Does Preference Shares Mean?

Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a company bankruptcy, preferred stock shareholders have a right to be paid company assets first. Preference shares typically pay a fixed dividend, whereas common stocks do not. And unlike common shareholders, preference share shareholders usually do not have voting rights.
Also referred to as preferred stock.
There are four types of preference shares: Cumulative preferred, for which dividends must be paid including skipped dividends; non-cumulative preferred, for which skipped dividends are not included; participating preferred, which give the holder dividends plus extra earnings based on certain conditions; and convertible, which can be exchanged for a specified number of shares of common stock.

A company may choose to issue PS because of
  • Flexibility of payments: Preferred dividends may be suspended in case of corporate cash problems.
  • Easier to market: The majority of preferred stock is bought and held by institutions, which may make it easier to market at the IPO.
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What are the differences between the two fixed income securities - Bond and Preferred Shares? Here's a chart I made to compare the two:


BondPreference Share
TypeDebtEquity
Maturity dateYes, but co may choose to redeem earlierNo, but there may be a call-back date which co may bring forward at their discretion
Traded on ExchangeYes (low liquidity)Yes (low liquidity)
PayoutFixed interest rate till maturityFixed / unfixed dividend

-subjected to the TYPE of preference share bought
- if no dividend is declared in the event of loss making, PS holders would not get any dividend (for non-cumulative PS)
- will get dividend before common shareholders
Sensitive to market interest rateYesYes
Voting rights to companyNoNo

Personally, I would prefer buying bonds if I am going to make long-term investment, simply because of the fixed payouts and maturity date given that both instruments have low liquidity.

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Friday, 15 April 2011

Coaching for coach-to-be

Today I went for a "basic leadership for new trainers" course which is very useful and enriching. To sum it up, I have learnt these things:

1) Get to know your student

- Everyone has different values and different perspectives. Get to know them through casual interviewing and see how from there you can build rapport. Trust --> Cooperation --> Change.


2) Always be positive

- If you want your student to follow, be a role model. Even if you think certain things are stupid but has to be done. Don't say they are stupid, don't say you disagree, otherwise it will leave a negative impression. Put it in a 'matter-of-factly' way and tell them they have to do it.

3) Be encouraging

- Appreciate the good things that your students have done, give them a 'pat-on-the-back' if they have done something right / good once in a while. In times they did wrong, don't say "You are wrong" but coach them. Get them to check the things that they have done again.

4) To be specific in coaching

- Don't tell them what qualities/skills are expected of them. Tell them exactly WHAT are expected. To be 'responsible', 'to be independent', 'to be friendly'... these are too vague. Tell them the ACTIONS and behaviors that would lead them to exhibit the qualities you want to see.

Very simple concepts, ought to be useful as well. Need to practice on them. This coming June heh...

Another thing which I have learnt from HAP which I finally went for is Motivational Interviewing. It is a very challenging technique to master but widely applicable in many situations. Empathy by reflective listening, don't get into an argument, throw the ball back in the other party's court so that he would think for himself, ask permission before giving advice... Bits and pieces that I have picked up but yet to fully grasp.

Going for courses can be rewarding. There's a lot more to coaching than I thought and it's not just about sharing of knowledge. Makes me reflect on what I have gone through during my short relief teaching stint and tuition lessons. My favourite technique in the past was - nag.

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Monday, 11 April 2011

Short update - STI rebounded after quake

I wonder where's the next resistance point. Just realised my portfolio is kinda weak. It's really peanuts compared to some investor-bloggers like Wealth Buch. Amidst the uncertainty, I divested some money into bond (F&N) which is supposed to be giving a more stable but lower yield as compared to stock. I was looking into buying more of the fund I am vested in but ironically it dropped but not low enough to add to more sum.

Missed the opportunity to buy in more BakerT at 0.30 (support level) during the Japan earthquake stock plunge. Now it has risen back to 0.43c. Oh well lalala.

Have been receiving annual reports from my various invested companies. Looking forward to dividend time... Not much to speak of but better than nothing.
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My simple $ principles:

~ Simple lifestyle - don't indulge and become a brand slave.

~ Work & save regularly - that's no-brainer

~ Invest smart - diversity. you may fail, win or learn.

~ Minimal loans - don't be trap in debt mud.

~ Spend smart - always keep an eye out for good deals.

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