Ayala Real Estate Investment Trust (AREIT) Analysis: Buy Near ₱24.90 or Wait for a Recovery Above ₱27.00? (2024)

AREIT, Inc., Ayala Land’s real estate investment trust company, dived by 7.78 percent at ₱24.90 per share from its Initial Public Offering (IPO) price of ₱27.00 as of closing on Thursday, August 13, 2020.

The total turnover value capped the day at nearly ₱832.50 million and a block sale worth nearly P12.3 billion.

The local investors were more optimistic than the foreign investors as the former registered a Local Buying amount worth nearly ₱741 million. In contrast, the latter only registered a Foreign Buying amount worth ₱91.50 million. Foreign investors recorded a Net Foreign Selling worth ₱400 million.

Who got a deeper pocket? The local or foreign investors? Of course, it’s the latter. So, why is that the locals were more aggressive buyers than the foreign ones?

I know that some of the stock brokerage firms in the Philippines were prohibited from trading AREIT in their platform. It was due to some concerns on the status of the requirements they submitted to the Philippine Stock Exchange. As a result, many traders and investors claimed that they couldn’t trade their AREIT shares, whether they want to buy more or sell all shares.

Technically speaking, you could say that the prohibition to sell AREIT shares is the reason why the locals registered a more massive buying amount than foreign investors. How about the relentless hype on social media weeks before the IPO? I’ll let you decide.

Trade-Volume Distribution Analysis

Last Price: ₱24.90
VWAP: ₱26.26
Dominant Range: ₱24.90 – ₱24.90

The last price of ₱24.90 is lower than the volume-weighted price of ₱26.26, and the dominant price point of ₱24.90 is the intraday low itself. That’s a confirmation of a bearish day for AREIT.

Suppose AREIT recovers on Friday, August 14, 2020. If that will be the case, monitor the range between ₱26.90 and ₱27.00 because this is the next dominant range on my Trade-Volume Distribution chart.

True Market Sentiment – EOD

True Market Sentiment: BEARISH
5 of the top 10 brokers registered a positive Net Amount
3 of the top 10 brokers registered a higher Buying Average than Selling Average
Top 10 Players’ Buying Average: ₱26.1083
Top 10 Players’ Selling Average: ₱26.2484

Bonus Info:
22 out of 80 participants or 27.50% of all participants registered a 100% BUYING activity
11 out of 80 participants or 13.75% of all participants registered a 100% SELLING activity

Don’t be surprised why BPI Securities Corporation and SB Equities, Inc. are the top two trading participants of AREIT on Thursday because they’re two of the three Joint Lead Underwriters of AREIT.

If piggy-backing brokers is your style (not me), watch out for the trades of BPI Securities and First Metro Securities on AREIT in the last trading day of the week.

Let’s see if the usual selling mantra every Friday will significantly influence the second trading day of AREIT.

Recommendations

Should you sell your AREIT shares?

My answer to your question is also a question, and I’m not philosophical. Is your trailing stop still intact?

If your answer is affirmative, then it’s either you hold your position or reduce the percentage of risk on your trailing stop so you’ll have a more conservative trailing stop. Make sure you don’t average down because you’ll never be able to level your average price on the prevailing price of AREIT unless you have at least a billion worth of buying power solely for AREIT.

I know why most investors resort to averaging down. Somehow, you are hoping that your average price will get closer to the prevailing price of the stock.

Some investors only brainwash themselves by saying, “I’m a long-term investor” while quoting Warren Buffett.

Don’t resort to the “I’m a long-term investor, anyway” mentality unless your buy case is backed up with numbers that you can gather and interpret.

Don’t say AREIT is an Ayala-led company, and the “Ayala stocks” are fundamentally sound when you don’t even know how to compute a simple P/E ratio.

Don’t say big words when you can’t even coherently present your thoughts.

Don’t get me wrong. I’m not saying you should not have bought AREIT in the first place.

I’m not attacking those who bought AREIT shares or whatever stock.

I’m pinning down the wrong mentality of justifying one’s action with words only and not numbers.

Establish a data-driven buy case. Have a methodology from creating your watchlist to mitigating your risks. If and when you do that, you won’t need to ask what to do next on your stock. You’ll be able to invest independently and trade tactically.

Should you buy new AREIT shares if you don’t have some yet?

You’ve read my analysis on AREIT.

My Trade-Volume Distribution analysis for AREIT is bearish.

My True Market Sentiment for AREIT is bearish.

It’s more prudent to stay on a wait-and-see mode for now.

If you’re one of our clients, feel free to ask for my latest Trade-Volume Distribution Analysis and True Market Sentiment chart in our Private Clients Forum. We’ll guide you as trading happens.

The answer to the question on whether you should buy near ₱24.90 or wait for a recovery above ₱27.00 is not a definitive “Yes, buy near ₱24.90” or “Buy once it recovers above ₱27.00”.

In the case of an IPO stock where there’s not much historical data yet, I’d recommend that you consider doing a test-buy or buying more once the prevailing price becomes higher than the VWAP and once the dominant range becomes closer to the intraday high than the intraday low (it doesn’t have to be at the intraday high itself). It’s a bonus if the True Market Sentiment is bullish. Buy in tranches. Remember, every single trader eavesdrop on other traders’ actions. Also, you need to set up your trailing stop. Don’t obligate the stock where it should go. It’ll go wherever it wants to go. It’s you who needs to be flexible on your expectations and plans. The use of a trailing stop will help you achieve that, but you need to have the time to monitor the stock because not a single broker in the Philippines has a trailing stop feature in their systems yet.

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