Selling SOG

I have sold 90% of my shares in SOG at SGD0.27 and will probably sell the remaining shares soon for the following reasons.

First, my original reasons for buying SOG may not be valid. I bought SOG because of earnings upside from their younger doctors especially their pediatric and cancer clinics. However, two out of three of the company’s breast cancer specialists have left the company. This was disappointing news because these doctors have been improving their patient and surgery loads. Instead of recruiting more breast cancer surgeons, SOG has hired a colorectal surgeon instead which is puzzling because this practice doesn’t have obvious synergies with their core O&G business. SOG has also invested in post-partum confinement care which is outside of its core business. Furthermore, the first centre is located in Malaysia which makes it difficult to achieve synergies with its Singapore clinics.

Second, one of the company’s founding doctors and a key contributor of revenue has gone on extended sick leave for a few months. I’m not sure about the long term implications on the company.

Lastly, the company’s revenue is still dependent on a few key doctors.

I think there’s a chance that the company will still do well. They have no debt and a strong balance sheet so there’s still a long runway to pursue growth.

After including dividends, my total loss on investment since 2018 was 17%. My takeaway from this whole experience: be really careful about buying micro-cap companies with key man risk.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s