Smitten by Paris Hilton

The other Paris, not the city

Now that I have your attention, let me tell you about my encounter with one of the most desirable women around.

I was driving one morning along Katipunan Ave. when I was struck by a huge billboard advertising a new lifestyle residential development named Azure Residences. No, I was not in the market for posh homes; I was smitten by that attractive face on the billboard.

But this face--at that time I could not make out of it. As fate would have it, on the same day when I was reading online news, there she was again, on the news because of some papparazzi following her shindigs.  OMG, she's Paris Hilton, that socialite who finds herself on the tabloids for unexpected reasons.

She's also a true blue blood, heiress to a hotel empire, and a lifestyle designer on her own right. If she lent her beautiful face to this project--there must be something behind this.

I did a quick research and I found out that the developer is Century Properties Group (PSE:CPG) which recently entered the Philippine Stock Exchange (PSE) through the backdoor--by backdoor listing, that is. A backdoor listing happens when an investor group takes over a publicly-listed corporation--it doesn't matter if the corporation is profitable or not--and injects completely different kind of assets into it.

In this case the listed company used to be called East Asia Power Resources when the Antonio family who has been into property development for the last 25 years, took over. Its patriarch Jose E B Antonio used to be an ambassador and  was featured at an international publication. So this is no fly-by-night corporation.

The latest financials were even more impressive than Ms. Hilton. At the price then, about 1.60 a share, the  price/earnings (p/e) ratio was reckoned to be less than 10, price to book of less than 2, and a percentage  return on equity at the high teens. And its big projects are still under construction or at the planning stage.

But the stock price was still dropping. I dipped my toes at 1.50, added some at 1.47, 1.45--but the price hovered at around 1.40 for weeks. How could this be? But as far as I know, analysts have not started covering this company.

Finally, with the rising of the bull market tide, CPG stock prices raced up fast breaking the 2.00 a share barrier. In the meantime, I learned that Donald Trump, a big name in U.S. property development also allowed his name to be attached to a marquee CPG development: the Trump Tower Manila.

Did I ride my shares to the top? I would be a liar or a seer, if I did that. Every time the prices bump up, I kept on lightening my load. By the time the price hit 2.10, I was completely out. Even at this price, the stock was still attractive, financial-wise, and went on to 2.30 or so.

Was I insane to let go of shares much farther from the top? It is easy to dismiss it that it is not a good investing strategy when seen from a rear view mirror. But I find this technique quite sensible. You may not maximize your gains, but you are protecting your capital from sudden downturn. If, indeed, you find the stock really attractive, you can pick up some at lower prices. This view is also shared by top investors.

Then, the company announced a top-up offering at a price of 2.05 a share. This occurs when the major shareholder--the Antonio family--sells a huge block of its holdings to outsiders to raise funds, but at the same time subscribe to the same number of shares at the same price. This is the quickest way to raise funds for the company--since a top-up offering has less paper work attached to it--without surrendering too much control.

This is also favorable for investors since the company stocks have become more liquid.

The stock price promptly tumbled to near the offering price. When it dipped below 2.00, I started picking up shares again.

This time, Paris Hilton was far from my mind.