There will always be funny moments when we are new to things. An hour before the Philippine Stock Exchange opened today, I checked my stock portfolio, everything looks normal. So I went about my day as usual, working on a new post about Pag ibig foreclosed properties for sale this 2016.
After publishing said post, I again checked my COL’s online stock market portal and my eyes almost popped-out of the socket and I almost *almost fell off my chair, LOL. I couldn’t look pass the glaring -30% loss on CNPF, and the negative P19,000++ paper loss!
Why in heavens?! What happened?
My brain froze, I almost auto-pilot to cut loss. LOL. Good thing, there is still some saneness left in me that I investigated first the happenings this morning.
Well, to be honest my investigation was confined on checking the TAP Traders Apprentice page on Facebook for words about CNPF, hehe. And I wasn’t disappointed, the reasons for the moved was discussed in various threads in TAP.
Now, my trading plan for CNPF (Century Pacific Food Inc) is to hold this for the next 3 to 5 years, until this hit minimum of 150% rate of return. A paper loss of -30% is scary! Especially that I am a new investor in the stock market, and the largest paper loss I’ve seen on the portfolio was just around -12% and that even turned-around immediately to reflect positive gains.
CNPF registers -30% on the portfolio! From market price of P23.55 the trading day before (July 11), price dropped to P16.28 today July 12, and it even went as low as P15.90!!! Waaaah
Que Horror! What happened? Why did the stock opened at P16 when the day’s previous closed was at P23.55!
THE IGNORED “SIGNS”
Well, there was a “sign” weeks before, that this new stock market investor didn’t really minded, didn’t really reflected on what things means. I’m using the ‘because I am a newbie’ card here hehe.
Century Pacific management declared cash dividends AND stock dividends on all outstanding stocks. The ex-date is today July 12, 2016. What this means?
All those who owns shares of CNPF stocks as of July 12, 2016 are eligible to receive the cash and stock dividends. Record date is July 15, while payment date is August 10.
- *Cash dividend on common shares at P0.10 per share.
- *Additional cash dividend on common shares at P0.10 per share.
- *Stock dividend on common shares at 50% per share.
You can check the full list of DIVIDENDS declarations on PSE EDGE.
Currently, my portfolio stands at a paper loss of P19,278.34 for 2,700 CNPF shares. Come August 10 which is the expected payment date of both the cash and stock divs, my CNPF stats will adjust.
2,700 shares at 50% stock divs = 4,050 shares will be my new position on CNPF on payment date.
Assuming that the market price of this stock remains as is, i.e. at P16.28 per share, when my additional 50% shares will be credited to my account, my new position or market value on this stock will become:
4,050 shares x P16.28 / shares = P65,934.00
Supposed the price will further mark down to P16, my would be position will then be 4,050 x P16/shares = P64,800.00
Now, if we compare this to my CNPF position as of July 11 (the day before ex-date), I stand to gain with the declared stock divs. This is on top of the declared P0.10 + P0.10 cash divs.
CNPF stock position market value the day before Ex-Date: P63,079.50
Every day, before market opens, I take a screenshot of my stock portfolio for historical tracking. Hence, it is easy for me to compare the CNPF before ex-date and ex-date day and on stock div payment date.
After realizing there is a good reason behind the market price drop experienced today, I finally breathe a sigh of relief, haha.
Good thing, I didn’t fall off the chair for real. Haha 😀
*It is a usual case for the price to go lower on ex-date, this is because there are stock traders who are only into the stocks for its dividends and once ex-date arrived and their dividend entitlement is secured, they sell the stocks at market price, or even lower just to divest in that particular stock.
Another reason is that when a stock dividend is declared, especially “big cash dividends”, this money no longer belongs to the company. It now belongs to the investors. So the exchange adjusts the share prices downward in proportion to the declared dividend and the new market cap of the listed company. Same thing is experience with a stock dividend declaration – the stock trading price adjust, goes lower.
So we shouldn’t panic. Panic is for the weak of hearts. The stock market demands toughness and grit. 😀
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Happy investing and learning!