Tuesday, November 27, 2012

Short Answers to Unanswered Questions: Stock Delisting, Pulling Out of a VUL, and Non-Monetary Returns


Dear Investor Juan,

I am an avid reader of your posts and have just started investing 3 months ago. I currently have invested mostly on fixed income peso denominated notes as they I am not yet confident in my skill with stocks. From my readings on your post however I have not come across delisting of stock (maybe I have not read enough) from the PSE:

a. What happens to the stock?
b. Encashment after delisting?
c. Will the price still have a chance to go up?
d. Other concerns an investor should think before purchasing a stock which is going or planning to be delisted?


Dear Mike,

Thanks for the question, it's a very good one. There are both negative and positive reasons for "delisting" from the stock exchange--making a stock unavailable for public trading. The "top-of-mind" reason, most probably, is if the company gets into trouble financially, such as if it is forced to go declare bankruptcy. In this case, investors should be able to get early warning from sharp and sustained declines in stock price, public disclosures, and even news reports, although losses may be unavoidable.

In some instances, though, a firm may have very good reasons to delist and revert to being "private," In this case, the firm buys back shares traded in the stock exchange, and public investors would receive a tender offer for their holdings.

In summary, and to address some of your issues regarding the possibility that a stock you own would delist, if it's because of the first reason then you should actually be concerned about whether the firm is capable of sustainable profitability rather than the possibility of delisting. And if the firm chooses to delist because of the second reason, then there's really no reason to worry because you should get at least the market value of your investment (more if the firm has reason to pay a premium for publicly-held shares) if it happens.


Dear Investor Juan,

I have started investing some of my savings in SunLife VUL (Equity Bond) since Nov 2007.
And i have started investing in BPI's UITF products, some in ODYSSEY PESO BOND FUND and a little in ODYSSEY PESO CASH MGT FUND, about a year now. I read one of your article or comments about ODYSSEY and about VULs, and it seems its not a good one, should I redeem my investment and invest it somewhere else?

In your own opinion, don't worry I will not blame you in case anything goes wrong, where should I put these investments? Should I just hold it there, and just make new investment. I want to make sure that I am investing correctly.


Dear Aubrey,

According to the "search" function of this blog (a feature everyone would do well to learn to use), I've only talked about Odyssey funds only once, and even then I did not talk about either the Odyssey Peso Bond Fund or Peso Cash Management Fund. After consulting Bloomberg, I see that these funds charge management fees of 1% and 0.75%, respectively, which are comparable to similar products in the market (at least there's no front or back sales load). Just based on this, I have no reason to recommend that you pull out of these funds.

Regarding your VUL... As far as I know another important "cost" of VULs (apart from higher fees) is the cost of getting out of the agreement early. So I suggest that you first contact your agent and ask if you can terminate the coverage and recover the portion of your premium payments that was allocated to the mutual fund, then get back to me with your agent's answer.


Dear Investor Juan,

Greetings from Dubai!

Are you having an income directly by posting articles in your blog?



Dear Marlo,

No, I don't. As a matter of fact, I even spend a small amount periodically for extra cloud storage (which is shared among all my Google accounts and websites, actually) and domain name registration. But that does not mean I don't get anything out of what I do.

This blog is very rewarding to me, albeit in a non-monetary sense. First, writing something regularly (~9 times a month!) serves as good practice for writing my dissertation and other "official" writing assignments. Second, this blog gives me an opportunity to not only share what little I know about finance but also learn from the collective experiences of all you readers. And it forces me to learn about things that I don't know, or know very little about, and that's a very good thing. Finally, managing the blog, organizing and processing ideas about personal finance, helps me better manage my own finances to. Haha, so yeah, maybe the blog does offer monetary rewards, if only indirectly.

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