OUE Limited

What's the first thing that comes to your mind when you see this picture? 

I'm sure many of you will immediately think that it's going to rain pretty soon right??

However, what if I told you 10 mins later, this was what happened

What many of you had just committed is known as the Argument Fallacy.

Similar in the stock market, many investors would equate good results to rise in prices but that may not necessarily be the case. Let me present to you 4 case studies in 4 separate posts which happened in the span of 4 days.

OUE Limited

Last Friday, 13th Feb, OUE announced a net profit of $1.1b. No, your eyes aren't playing tricks on you. It's $1,100,000,000. This is huge jump from the previous year with a loss of $50.2m. The sudden increase in profit is due to the divestment of a couple of properties, namely Mandarin Orchard, Mandarin Galleria last year and Crowne Plaza Changi Airport just end of last month.

Investors looking for bargains after seeing this news would definitely flock to purchase this share, in turn driving up it's share price right? WRONG

OUE went down $0.03 to $2.19 although such a wonderful news was announced. 

Why?

With so much cash in hand, investors are anticipating special dividends to be paid out to shareholders. However, OUE only announced a dividend of $0.01 for this quarter as compared to 1 OUE Hospitality Trust share paid out for every 6 OUE shares held for the previous quarter. In total the distributions for 2014 would amount to roughly 16 cents. But apparently this isn't enough to impress shareholders therefore leading to the drop in price.

Stay tuned to the other 3 companies I'll be talking about!