Re-Visiting OCBC - When opportunity knocks twice

Weeks ago, Brexit left stock prices volatile - bank stocks were no exception. I did a short write-up on OCBC Bank in the last week of June, explaining that there was a short window of opportunity to pick up shares at $8.20+. The price rallied in the following weeks, barely crossing $9.00 in late July, so congratulations to those who've made a bit of coin trading OCBC stock.

Now, another event has shaken the market - this whole thing with Swiber's USD 700m loan with DBS has affected bank stocks. Let me just give you the cliffnotes of what happened: Swiber, a company that deals in oil and gas construction projects, originally filed to liquidate its assets to settle debt issues with creditors. A few days later, they opted instead to operate under judicial management, which lets them operate under court-sanctioned supervision. DBS granted a loan of 700m USD to Swiber, of which they're only expecting to receive half of their original loan amount back.

As of this past Friday (5 July), DBS stock price has fallen to $14.00+, and OCBC touched $8.27 before closing at $8.31.

OCBC has been buying back shares as recently as August 1st, at the price of $8.67.

This may have opened another opportunity for people to once again pick up OCBC shares at $8.20+. My reasons have not changed from my original statement in late June, and they are:

OCBC represents a blue-chip stock with roughly 4% yield a year. Dividend payments have been regular thus far.

Additionally, I've mentioned previously how I believe when a company is willing to spend millions buying back its own shares, it thinks that the market has discounted the price of its shares too steeply. Most recently, 50,000 and 200,000 shares were bought back at the prices of $8.67 and $8.75, respectively. The most recent buyback took place on August 1st.

Current book value stands at 8.55.

Until next time.


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