Saturday, October 31, 2020

Portfolio Summary for October 2020

As of 31 October 2020

CDP

Security# sharesPrice S$%
DBS70020.357.54
OCBC Bank1,5008.426.69
SGX1,2008.665.50
SATS3,9002.986.15
ST Engineering4,1003.497.57
CapitaLand5,4002.577.35
Singtel6,1002.036.55
Powermatic Data2,8002.563.79
Micro-Mechanics1,3002.661.83
ComfortDelGro7,9001.355.65
Genting Singapore11,7000.6453.99
TheHourGlass15,4000.705.71
HRnetGroup21,9000.475.45
China Sunsine31,0000.3956.48
HC Surgical35,5000.3256.11
Nam Lee Metal28,2000.314.63
Silverlake Axis40,0000.255.29
Kimly27,0000.263.72
Portfolio Value = $188,914

Trade Actions
- Bought 16,400 shares of HC Surgical Specialists.
- Bought 19,200 shares of Silverlake Axis.

SRS

Security# sharesPrice S$%
OCBC Bank9008.4212.13
SGX1,3008.6618.02
SATS2,2002.9810.49
ST Engineering1,7003.499.50
Singtel2,0002.036.50
CapitaMall Trust3,6001.739.97
Sheng Siong8,7001.6723.25
HC Surgical19,5000.3259.97
Portfolio Value = $62,480

Trade Actions
- None

Commentary:
The local stock market ended the month on a bloody note. A Bloomberg article remarked Singapore had overtaken Thailand to become Asia's worst stock market [news]. The COVID-19 virus is still on a rampage through Europe and the pending U.S. Presidential Election gave investors pause in chasing the momentum.

On my watchlist, both Singtel and CapitaLand hit their 52-week low. I would understand the bearish thesis on Singtel - there is the intense telco competition in several countries that the company and its affliates operate in (Singapore, India and Australia). Moreover, there is the massive 5G expenditure in the coming years, which leads some to believe Singtel will have to cut its dividend further to conserve cash. However, I do not understand why the market hammered CapitaLand too. CapitaMall Trust and CapitaCommercial Trust recently completed their merger, forming a new entity. Its various business divisions seem to be showing new shoots of recovery. Perhaps there is something that I am missing out.

In October, I decided to add stakes in HC Surgical Specialists and SilverLake Axis. There is no special reason, other than the stocks came within my targeted price range.

Two companies on my watchlist, Micro-Mechanics and Sheng Siong reported strong profit growth. However, at their current prices, I deem the stocks to be slightly too expensive for my liking. I will only consider them if and when they come within my targeted price range.

Only two months till we end Year 2020. Looking back 12 months ago, it is out of anyone's expectations that a virus will wreck havoc on the human race and artificially induce a global recession. We can only hope that the situation will remain under control, and that the introduction of a vaccine next year will help to curb the spread of the pandemic further.

Wednesday, September 30, 2020

Portfolio Summary for September 2020

As of 30 September 2020

CDP

Security# sharesPrice S$%
DBS70019.917.84
OCBC Bank1,5008.427.11
SGX1,2009.156.18
SATS3,9002.836.21
ST Engineering4,1003.467.98
CapitaLand5,4002.718.23
Singtel6,1002.127.28
Powermatic Data2,8002.654.17
Micro-Mechanics1,3002.281.67
ComfortDelGro7,9001.416.27
Genting Singapore11,7000.674.41
TheHourGlass15,4000.675.80
HRnetGroup21,9000.455.54
China Sunsine31,0000.345.93
HC Surgical19,1000.323.44
Nam Lee Metal28,2000.2954.68
Silverlake Axis20,8000.293.39
Kimly27,0000.2553.87
Portfolio Value = $177,759

Trade Actions
- Sold 4,700 shares of Old Chang Kee.
- Bought 300 shares of DBS.
- Bought 1,900 shares of CapitaLand.

SRS

Security# sharesPrice S$%
OCBC Bank9008.4211.79
SGX1,3009.1518.51
SATS2,2002.839.69
ST Engineering1,7003.469.15
Singtel2,0002.126.60
CapitaComm Trust5,0001.6412.76
Sheng Siong8,7001.6121.79
HC Surgical19,5000.329.71
Portfolio Value = $64,268

Trade Actions
- None

Commentary:

Summer has come and passed
The innocent can never last
Wake me up when September ends
- Green Day

It has come to the end of summer season, though technically there are only two seasons in Singapore - sunny and rainy. If you had hibernated since the start of the year and only woken up now, you would have avoided the most turmultous period in the stock market since the 2009 GFC. Naturally, you would have also missed one of the best opportunities to build equity positions.

It feels like the worst is behind us, with the government hinting on Phase 3 re-opening. The market is trending sideways, with no clear path ahead. I have stopped monitoring the market throughout the day and focused on my work instead. Under the grim atmosphere of retrenchment and business closures, I am glad I still have a job and no pay cut so far.

In September, I have added small stakes in DBS and CapitaLand when their prices dipped during mid-month. It was also fortuitous that I got out of Old Chang Kee at a favorable price.

My war chest has dwindled as I went on a buying spree over the past three months. I will need to save up again. Moreover, my boys' endowment premiums are looming near the end of the year, which will certainly take away a significant chunk of my cash. I guess it is just another form of investing for their sake and mine, as I do not want the burden of forking out a large sum for their tertiary education when I am near retirement.

Looking forward, I shall concentrate on rebuiling my cash board. Some stocks on my watchlist have run up quite a bit, and I do not want to chase the rally for FOMO. It is better to be patient and wait for retracement before nibbling.

Monday, August 31, 2020

Portfolio Summary for August 2020

As of 31 August 2020

CDP

Security# sharesPrice S$%
DBS40020.874.78
OCBC Bank1,5008.677.45
SGX1,2008.615.92
SATS3,9003.006.70
ST Engineering4,1003.407.98
CapitaLand3,5002.775.55
Singtel6,1002.38.03
Powermatic Data2,8002.554.09
Micro-Mechanics1,3002.081.55
ComfortDelGro7,9001.486.69
Genting Singapore11,7000.704.69
Old Chang Kee4,7000.701.88
TheHourGlass15,4000.7056.22
HRnetGroup21,9000.4956.21
China Sunsine31,0000.3656.48
HC Surgical19,1000.33.28
Nam Lee Metal28,2000.304.84
Silverlake Axis20,8000.323.81
Kimly27,0000.253.86
Portfolio Value = $174,675

Trade Actions
- Added 21,300 shares of China Sunsine Chemical Holdings.
- Added 2,100 shares of Singtel.

SRS

Security# sharesPrice S$%
OCBC Bank9008.6711.92
SGX1,3008.6117.10
SATS2,2003.0010.08
ST Engineering1,7003.408.83
Singtel2,0002.37.03
CapitaCommercial Trust5,0001.6812.83
Sheng Siong8,7001.7523.26
HC Surgical19,5000.38.94
Portfolio Value = $65,451

Trade Actions
- None

Commentary:
Apologies for the lack of new posts. I have been occupied with work, and I hasn't paid much attention to the stocks. But I do know the market has been on a tear lately, with U.S. equity indices hitting record high. The businesses haven't fully recovered from the COVID-19 impact, and I hesitate to build on my positions at current prices. Nonetheless, I have set up alerts to inform me when the market has come back down to a more palatable level.

Friday, July 31, 2020

Portfolio Summary for July 2020

As of 31 July 2020

CDP

Security# sharesPrice S$%
DBS40019.775.03
OCBC Bank1,5008.568.17
SGX1,2008.176.24
SATS3,9002.746.80
ST Engineering4,1003.278.53
CapitaLand3,5002.766.14
Singtel4,0002.486.31
Powermatic Data2,8002.444.35
Micro-Mechanics1,3001.931.60
ComfortDelGro7,9001.366.83
Genting Singapore11,7000.7355.47
Old Chang Kee4,7000.712.12
TheHourGlass15,4000.6756.61
HRnetGroup21,9000.486.69
China Sunsine9,7000.3352.07
HC Surgical19,1000.3153.83
Nam Lee Metal28,2000.3055.47
Silverlake Axis20,8000.2953.90
Kimly27,0000.2253.86
Portfolio Value = $157,231.50

Trade Actions
- Added 9,700 shares of China Sunsine Chemical Holdings.
- Added 10,300 shares of HRnetGroup.
- Added 12,400 shares of The Hour Glass Ltd.

SRS

Security# sharesPrice S$%
OCBC Bank9008.5612.06
SGX1,3008.1716.63
SATS2,2002.749.44
ST Engineering1,7003.278.71
Singtel2,0002.487.77
CapitaCommercial Trust5,0001.6112.61
Sheng Siong8,7001.7023.16
HC Surgical19,5000.3159.62
Portfolio Value = $63,854.50

Trade Actions
- None

Saturday, July 11, 2020

The other crucial ingredient in investing

Have you ever harboured the dream of going full-time into investing?

Imagine:

No more mad rush on the trains. None of the drudgery of pushing paperwork and clearing project deadlines. Not having to be at the beck and call of your boss or suffer the wrath of angry customers.

Instead, you get to wake up later each morning, spend a little time catching up on news and overnight markets, decide on your playbook, key in the orders and then head off to enjoy what life has to offer.

At the end of each quarter, you rake in the dividends, take profit on a few winners, cut loss on others as you contemplate the next vacation destination.


Image by Photo Mix from Pixabay

A wonderful lifestyle, right? So what is stopping people from pursuing it?

If you are like me (and the average Joe on the street), it is because we are short of one crucial ingredient:

Capital.

Investing is a catch-22 situation - You need money to make more money.

And if you want sufficient profits to cover your expenses, you will need a pile of moolah big enough to trade significant positions in the markets.

Invest peanuts and we can only expect grain sized returns.

Accumulating capital for investment is never an easy task, even for the professionals. A large part of a startup hedge fund manager's time is spent meeting potential investors and marketing his or her strategy. The entire process can take 6 to 7 meetings and 12 to 18 months before the investor says "yes" [article].

Outside the financial industry, only a select few do not have a problem with capital shortfall.

There are those born with a silver spoon in their mouths. The fortune is already made by their forefathers, and all that is needed is to manage it. This is the secretive domain of family offices. There are between 250 and 300 family offices based in Singapore and Hong Kong, as estimated by UBS [news].

Then, there are the entrepreneurs who have built a successful empire of their own. Think of the Mark Zuckerbergs and Pony Mas of the 21st century. Their hard work and streak of luck manifested into a lifetime free from financial worry. According to a 2018 study by HSBC, nearly half of Singapore's millennial millionaire entrepreneurs are self-made [news].

Finally, there is the C-suite. The CEOs and Chief-insert-alphabet-here-Officers with million dollar pay packages and stock options deep in the money. A golden retirement is almost guaranteed. This is the sort of clientele favoured by private bankers. There is even a private gym in Singapore specially catered to these senior executives [news].

For the rest of us - freelancers, small business owners, civil servants and ordinary wage slaves of the corporate world, raising capital will likely be a challenge. There is only one route to accomplish this feat:

To earn more than we spend, and to spend less than we earn.

In other words, make sure what comes into your pocket is always more than what goes out.

Simple arithmetic, yet it is surprising to see how many people fail to obey this principle.

Now I am not advocating to pinch money on every expenditure, or be a scrooge when it comes to important expenses such as health insurance.

But I do believe having the proper money habits is every bit as important as picking the right stocks.

A good investor ought to be a good money manager.

For a role model, look no further than Warren Buffett. Buffett still stays in the same house in his hometown of Omaha, Nebraska that he bought in 1958. The house is worth 0.001% of his total wealth [article].

"If you buy things you do not need,
soon you will have to sell things you need."

- Warren Buffett

If superstar investors are out of your league, take inspiration instead from Ronald Read, a Vermont-based janitor and gas station attendant. At the time of his death in 2014, Read had quietly amassed an US$8 million fortune based on nothing more than frugal spending habits and smart investing [news].

Granted, socking away savings to invest is a dreary process. Some enterprising peeps swing for the other extreme - they max out personal credit lines and unlock equity in their properties [news]. They borrow to the hilt to get a headstart.

In the current environment of ultra low interest rates and beaten down stock prices, this sounds like a winning strategy.

Do be warned however, leverage is a double edged sword. Amplified bets mean you can lose more than the shirt on your back. Just ask the holders of SocGen 5x Short SIA DLC (daily leveraged certificate). Their entire wager was wiped out when SIA stock price plummeted 20% post ex-right pricing [news].

Plus, there is nothing worse than debt collectors knocking on your door as the market gets stuck at rock bottom. And you do not know WHEN it will happen.

Be it inherited, saved or borrowed money, it is an undeniable fact that without adequate capital, any meaningful form of investing will always be an illusion.

So take time to ponder on your war chest.

When the reminder pops up to renew your non-C-suite, run-of-the-mill gym membership, consider shifting your exercise routine to the park instead.

While the dollars saved may not seem much, they can become valuable bullets in your arsenal for lifelong investing.

Who knows, that dream of being a full-time investor may be achievable after all.

Saturday, July 4, 2020

Homework (not hard work) is the hallmark of a good investor

My CFA ("Chartered Financial Analyst") membership fee came due last month.

It is pretty depressing to see US$300 whisked away in an instant. They could have liven up the transaction with a grand display of flying dollars.

Icon credit: Dryicons and IMGBIN

Heck, even a prerecorded "Thank you for your support" would have sounded uplifting.

Fortunately, my company reimburses the fee. So I do not burn a hole in my pocket carrying the three expensive alphabets on my namecard.

Unless you are a hardcore FA fanatic or for work reasons, I wouldn't recommend anyone to join the CFA Program. This is because of the rigour of the curriculum, and the sheer amount of time and effort required. (The CFA Institute recommends 300 hours of study.)

I am puzzled why people would sign up for the CFA examinations every year, but do not make a serious stab at beating them. 250,000 candidates enrolled for the three levels of exams in 2019, but only 41%, 44% and 56% managed to pass them respectively [data].

It costs anywhere between US$2,100 and US$4,350 to take all three exams.

And that's passing them on your first try.

Yet, six out of ten candidates failed to make the grade. That is a serious waste of money.

If you are simply looking to build a skill set in fundamental analysis, I'd be happy to point you to the numerous FREE resources, both online and in our public libraries. The materials are as vast as the sands on the beach, from reading a basic financial statement to building your own discounted cashflow calculator via MS Excel.

You'd have no excuse that you don't know where to start. All it takes is a little Goggling.

And if you are those who prefer a guiding hand, distilled lessons or a classroom setting, there are investing workshops available.

In fact, judging from the numerous advertisements on the Web, there is no lack of 'gurus' willing to coach new students through the analytical process of picking stocks.

For a fee, of course. Anywhere from several hundred dollars to a few grand.

But before you sign up, I would advise to ask these gurus for their 'two lists'.

The first list should contain all of their past successful stock investments, independently verified by a third party. The kind that they will gladly put up on a beauty parade.

The second list is the more interesting, and the more important - It should contain all of their past abysmal investment failures, and the extent of loss in each case.

I'm willing to bet my lunch that few investment coaches out there can produce the latter list. Either they are geniuses (even Warren Buffett has a few regrets), or they haven't had much time and exposure cutting their teeth in the market.

At the worst, they could be charlatans wilfully hiding skeletons in their investment closets. To these teachers, I recommend to keep a fair distance. Say, as far as possible.

Be it taking the CFA exam, learning through a book or emulating a trainer, my message to the aspiring stock picker is the same:

There is no free lunch in investing. You need time and effort to do your homework.

Time to read up on company reports.

Effort to compare financial statements historically and against peers.

Finally, a set of well-defined rules to judge a stock.

Investing is not tough. Not when you have the willingness to do the above.

Ultimately, it is the homework done, not hard work, that is the hallmark of a good investor.

"Never lose money. Stay rational and stick to your homework when researching businesses in which to invest."

- Warren Buffett

It is okay to browse through forums and blogs for stock ideas. But if you hadn't done the homework to convince yourself the company is a buy, you will NOT have the conviction to stay through the ups and downs of the market swings.

You may be spooked by the ever switching news headlines and sell out at the wrong time.

If your analysis is flawed and the stock turns out to be a lemon, at least you would have learnt of your shortcoming and became a better investor, not to repeat the same mistake.

And the loss will well be worth every cent of the education gained.

Wednesday, July 1, 2020

Portfolio Summary for June 2020

As of 30 June 2020

CDP

Security# sharesPrice S$%
DBS40020.805.82
OCBC Bank1,5009.009.44
SGX1,2008.347.00
SATS3,9002.867.80
ST Engineering4,1003.309.46
CapitaLand3,5002.927.15
Singtel4,0002.466.88
Powermatic Data2,8002.484.86
Micro-Mechanics1,3001.751.59
ComfortDelGro7,9001.458.01
Genting Singapore11,7000.766.22
Old Chang Kee4,7000.7252.38
TheHourGlass3,0000.691.45
HRnetGroup11,6000.4954.02
HC Surgical19,1000.314.14
Nam Lee Metal28,2000.316.11
Silverlake Axis20,8000.2353.42
Kimly27,0000.2254.25
Portfolio Value = $142,984

Trade Actions
- Added 1,200 shares of Singapore Exchange.
- Added 1,300 shares of Micro-Mechanics Holdings.
- Added 1,800 shares of CapitaLand.
- Added 3,000 shares of The Hour Glass Ltd.
- Added 20,800 shares of Silverlake Axis.
- Sold 300 shares of Old Chang Kee.

SRS

Security# sharesPrice S$%
OCBC Bank9009.0012.54
SGX1,3008.3416.78
SATS2,2002.869.74
ST Engineering1,7003.308.68
Singtel2,0002.467.61
CapitaCommercial Trust5,0001.6913.08
Sheng Siong8,7001.6522.22
HC Surgical19,5000.319.36
Portfolio Value = $64,614

Trade Actions
- None

Commentary:


I used the recent market pullbacks to add some stocks to my CDP portfolio.

SGX - The selling abated around $8, which is a 23% drop from its high. I feel SGX still has the potential to earn a decent, albeit lower revenue. (It's a duopoly with HKSE in derivative trading within the Asian region.) SGX initiated stock buyback during end June, which could lend some near-term support. The exchange had taken its first baby step to replenish its derivatives offering, with the introduction of the SGX FTSE Taiwan Index Future [announcement]. SGX had also announced acquisition of the remaining 80% ownership in BidFX, a cloud-based FX trading platform for institutional investors [announcement]. This will become another revenue source over the long term. SGX is set to report its FY2020 results on 30 July.

Micro-Mechanics Holdings - This company popped up on my screener some months back. Its fortune is tied to the notoriously cyclical semiconductor industry, similar to other broker recommended stocks like AEM, Frencken and UMS. Balance sheet and margins look healthy, even though revenue and profit is seasonal. In 2019, the semiconductor industry suffered its worst year in almost two decades [article]. (I know it personally because my wife was forced to clear leave.) But if the predictions of the World Semiconductor Trade Statistics organization were to come true, annual global chip sales should increase 5.9% in 2020 and 6.3% in 2021. This bodes well for Micro-Mechanics.

CapitaLand - I'd be the first to admit: this company has a poor ROE (10%), although management is working to improve it. I like the diversity in its revenue, both in geography and sector. (CapitaLand sells properties, leases them and manages private equity funds & REITs to own them.) Dividend yield (above 4%) is attractive at current price. The company has offered scrip election for its latest dividend [announcement], but I won't be going for it because I dislike holding odd number of shares in my portfolio.

The Hour Glass - THG turned in a pretty good set of FY2020 results [announcement]. Total revenue was $754.6m (up 4% y/y). Net profit was $77.5m (up 9% y/y). Only disappointment is the 2 cents annual dividend (Ex Date TBA), compared to 3 cents last year. The luxury industry had been hammered by the Circuit Breaker, but given THG's sizeable cash hoard of $183.1m (which covers its debt and payables comfortably), it should be able to weather through. Gross margin is an admirable 28.8%, and I believe their affluent customers' disposable income is hardly impacted by COVID-19. As The Business Times columnist Ben Paul remarked, "What better way to spend money earmarked for a cancelled trip to Europe than by picking up another luxury timepiece?" [article]

Silverlake Axis - Brian from 3foreverfinancialfreedom.com wrote a detailed article [here] on this company. The stock suffered from a short seller's report in Aug 2015 and it has been on a downtrend since. Nonetheless, the company is looking attractive at current price, with a FY2019 ROE of 41% and margins above 30%. Software is indeed a lucrative business (just ask my boss). Barring any adverse development, this company should be able to sustain its dividend.

Old Chang Kee - I've put up my position for sale, but the liquidity is pathetic. I was initially attracted to its high GPM and inflation-resistant pricing power. But increasingly, I'm getting bearish as the Circuit Breaker shut their eateries, even though the company commented offsite bento meal deliveries should help to minimize the loss in revenue [announcement]. Regardless, I expect their 1H 2020 result to be devastated and it may take some time for the revenue to recover. Will offload into the rally.