Sagicor Expensive Real Estate Fund

Sagicor Real Estate X Fund has been selling significantly above its IPO price of $5 and has since risen by 40 percent to $7, making it one of the better performing stocks on the local stock market since listing.

One of the properties in the fund

One of the properties in the fund

That is great for those who invested at the time of the IPO. Do the fundamentals justify the price? The fund reported earnings or better yet capital appreciation of $271 million or 18 cents per share in the September quarter and $681 million or 46 cents for the nine months to September, representing a 10.7 percent rate of return for the year. This is a very high return for a real estate investment, suggesting that a large portion is capital appreciation and not regular income.
Of import is the seasonality of the hotel operations—high income and profits in the period between December and April, July and August, and lousy in the other months, which are usually loss making months. Sagicor Real Estate X Fund had assets of $9 billion at the end of September and net book value of $6.09. The stock price is $7, for a near 20 percent premium, which is well over the market.
The fund with 1,495,336,750 shares issued, boasts a very high PE ratio of 12, which is far greater than the other stocks in the market, and without the growth prospects of the vast majority of them. In a market that values stocks based on earnings generating cash flow, the valuation placed on the fund is even higher than the PE suggests and may be as high as a PE of 30. But that is the value that would be placed on a company
growing profits at 30 percent per annum. Earnings growth will not be there to drive the stock price compared to many of the quality listed stocks. The stock is now being valued on hype not reality.
The Sagicor Real Estate X Fund has a number of hotels, but many hotels have been notorious for not being highly profitable. There is also a great level of seasonality in performance in the sector. Income from other local properties will be steady as
most are rented on a long term basis.
The company has strategically invested in the Sigma Real Estate Portfolio, which holds a mix of hotels, commercial, industrial and warehousing properties. At this time, the only investment for the Fund is the units in the Sigma Real Estate Portfolio.
The Fund is 67.7 percent owned by the Sagicor Pooled Pension Investment Funds, which are administered by Sagicor Life Jamaica and is listed on the Jamaica Stock Exchange.

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  1. […] released reports on several insider trades recently. Most recent reports show that a director of Sagicor Real Estate X Fund demonstrated strong faith in the future of the company, by purchasing 121,500 shares on November 20 […]

  2. […] the overwhelming support the stock is overvalued at the right issue price of $6.95 each. Sagicor Real Estate Fund reported profit before taxation in the first quarter of $293 million from revenues of $1.19 billion, […]

  3. […] closed with a 25 cents gain to end at $30, Sagicor Group ended trading with 169,015 units at $13, Sagicor Real Estate Fund closed at $8 while trading 584,560 units and traded as high as $9.10 for a new intraday high. The […]

  4. […] gained in price and 4 declined. After 95 minutes of trading, gains in a number of stocks including Sagicor Real Estate Fund, that traded at a new all-time high of $9, pushed the all Jamaican Composite index up 941.71 points […]

  5. […] down on the day at $61.10. Sagicor Group with 20,883 units trading, ended unchanged at $13.01, Sagicor Real Estate Fund traded 80,000 units with a decline of 38 cents to $7.62 and Scotia Group that traded 106,740 shares […]

  6. […] trading, to end at $12.55, but only after it traded during the day at a 52 weeks’ high of $13.10, Sagicor Real Estate Fund saw trading in 6,053 units but lost 40 cents in closing at $7.30, Scotia Group had 11,027 units […]

  7. […] 54 cents. Sagicor Group fell 30 cents to $12.30 with 94,210 shares changing hands. The price of Sagicor Real Estate Fund rose 10 cents, with 42,375 shares changing hands, to end at $7.70. Scotia Investments fell 72 cents […]

  8. […] at $3. Sagicor Group had 344,180 units trading 5 cents higher to end at $12.05, the company Real Estate Fund ended with 18,186 units trading down by 8 cents at $7.50. Scotia Group traded 309,997 units at […]

  9. […] at $10.55 while gaining 10 cents in the process but traded as high as $10.75 before the close. Sagicor Real Estate X Fund had 529,519 units changing hands to close at $6.50, after shedding 25 cents. Salada Foods traded […]

  10. […] with a 25 cents gain, Sagicor Group with 19,850 units at $10.75 as the price rose by 25 cents and Sagicor Real Estate X Fund 465,229 units at […]

  11. […] Radio Jamaica 86,383 units that traded did so at $2, Sagicor Group 16,400 units traded at $10.50, Sagicor Real Estate Fund had 48,600 units changing hands at $6.75, to gain 25 cents and Jamaica Money Market Brokers 8.75% […]

  12. […] Jamaica has 1 million units on the bid at $148 with one offer at $2 for 190,000 units for sale and Sagicor Real Estate Fund with 1.44 million units on the offer at $6.95 to sell and moderate demand with a bid for 16,030 at […]

  13. […] shares. Radio Jamaica with 1 million units bid at $1.48 just below the last traded price and the Sagicor Real Estate Fund with an offer to sell 1.44 million units at $6.95 and Seprod with 555,000 units on offer at […]

  14. […] $7.06, Proven Investments ending trading with 6,300 units with the price remaining 18 US cents and Sagicor Real Estate Fund had 22,500 shares changing hands at $6.90. Declines| There was only one stock that closed lower […]

  15. […] Pan Jamaican Investment finished trading with 15,330 shares traded with a gain of $1.95 to $57, Sagicor Real Estate Fund closing with 4,650 shares changing hands at 25 cents higher to $6.95 and Scotia Group concluding […]

  16. […] are, Desnoes & Geddes closing with 270,000 units as the price slipped 15 cents to $5.20 and Sagicor Real Estate Fund with 25,000 shares closed with a loss of 10 cents to […]

  17. […] with 25,966 shares trading at $4.02, Mayberry Investments had 7,886 units trading at $1.95 and Sagicor Real Estate Fund closed with 3,200 shares changing hands at $6.70. Declines| The last traded prices of stocks with […]

  18. […] traded at $7.70. Palace Amusement finished with 150 shares to end with an increase of $4 to $70 and Sagicor Real Estate Fund in trading 850 units, put on 15 cents to $6.95. Firm| The stocks in the main market to close […]

  19. […] cents to $60, National Commercial Bank closing with 12,697 shares while gaining 5 cents to $20.45, Sagicor Real Estate Fund finished with 17,000 shares as the price jumped 5 cents to $6.70 and Scotia Investments in trading […]

  20. […] cents to $7, National Commercial Bank finished with 13,003 shares trading 10 cents lower to $20.40, Sagicor Real Estate Fund trading 76,845 shares and closed with a loss of 34 cents to $6.50 and Scotia Group closing with […]

  21. […] Gains| Only 2 stocks closed higher at the end of trading in the main market on Wednesday with Sagicor Real Estate Fund closing with 2,500 shares trading, 11 cents up to $6.85 and Kingston Wharves ending with 3,300 units […]