Tuesday, December 31, 2019

Portfolio Summary for December 2019

As of 31 December 2019

Cash Equity

Security# SharesPricePortfolio %
OCBC Bank900$10.9821.44%
ST Engineering2,500$3.9421.38%
Old Chang Kee5,000$0.7458.08%
HC Surgical4,100$0.5254.67%
Portfolio Market Value = $46,081

SRS Equity

Security# SharesPricePortfolio %
CapitaCommercial Trust3,000$1.9912.17%
Frasers Commercial Trust2,500$1.668.46%
Sheng Siong8,700$1.2421.99%
Portfolio Market Value = $49,048

December used to be my favourite month of the year.  For a start, there are the year-end celebrations and get-togethers.  As most clients go on holiday, it is supposed to be a quiet month with less work and more time to wrap up loose ends.  (Or so I thought.)  This year, my work actually became hectic as we received more client inquiries and needed to resolve them as soon as possible.  Moreover, as my colleagues start to clear their leave, I had to back them up and cover their responsibilities.

Looking at the equity market, the S&P 500 Index and Dow Jones Industrial Average hit new record highs as U.S. and China agreed to a 'Phase One' trade deal.  Santa rally kicked in and added to the joyous momentum [news].  Even though the Straits Times Index did not hit a new high, the stocks on my watchlist continued to loiter around the upper end of pricing.  Day by day, I had hoped for Mr. Market to offer me shares of solid companies at a reasonable price, but I was disappointed.  Oh well, patience is key.  The chance to pull the (investment) trigger will come.

Trade Actions

Amid the festive cheer, one stock did appear on my radar and I decided to take up a stake.

HC Surgical Specialists
I bought 4,100 shares of HC Surgical Specialists ("HCSS") at $0.515 apiece.  HCSS is a Singapore-based medical group, operating a network of 16 clinics throughout the island.  It is primarily engaged in the provision of endoscopic and colorectal procedures.  HCSS also has a stake in Singapore-listed Medinex, a provider of management and support services for the local medical clinics industry.  There are several similar listings on the local bourse.  What attracted me to this company is its high cash buffer relative to its debt.  The medical service provided is specialized, thereby establishing its niche and (hopefully) a resilient stream of revenue.

However, one concern is the significant goodwill that medical groups tend to pay when they acquire a clinic from its previous owner.  Goodwill is the excess of cash paid on top of the fair value of assets received from the acquisition.  Accounting rules dictate that goodwill must be evaluated every year and an impairment charge be booked if the value no longer holds. This in turn will affect the company results for the particular year.

HCSS recently received a S$5 million investment via a convertible bond issue from Heliconia Asset Management, a wholly-owned subsidiary of Temasek Holdings [announcement].  The bond can be converted to shares at a price of $0.5361 per share.   Heliconia also has a 3-year option to purchase up to S$5 million of HCSS shares at an exercise price of $0.62 per share.  The funds will allow HCSS to expand its operations both locally and overseas.   As stated in the press release, HCSS has an interest to tap into the fast-growing healthcare market in Vietnam.


I continued to do my CPF Retirement Sum Topping-Up this year.  It has been an annual ritual for me to stash away some money in my CPF accounts.  The compounding interest rate is attractive, and there is the added benefit of tax deduction.  My younger son's TM Asia KidStart endowment policy premium also came due.  With a heavy heart, I saw $19,000 'disappeared' instantly from my bank account.  Come January and it will be Round Two when my older son's NTUC Income Revosecure endowment policy premium is due.  Another $14,000 will 'fly away' in a jiffy.  This is our third payment year out of a scheduled five years.  Nonetheless, the huge cash outflows are justified in our view.  My wife and I want to have a peace of mind and be financially prepared for our sons' tertiary education in fourteen years' time.  At a projected return of 3+%, the final sum ought to be sufficient for their local university education.  (It will be a different matter if my kids decide to pursue their studies overseas.  They will have to source for additional funding on their own, either via a scholarship or a study loan.)

The Singapore Saving Bonds continue to languish around an average yield of 1.75%.  The reality this time is that the private market had begun to adjust their fixed deposit offerings.  When my mum's fixed deposit was up for renewal this month, I struggled to recommend a good choice.  There are some feasible promotions, such as Maybank's iSAVvy fixed deposit promo [here], but the transaction has to be done via online banking.  You can earn up to 1.90% interest if you can deposit above $50,000 for a period of two years.

Looking Ahead

A friend had recently warned me against writing the date in shortened DD/MM/YY format next year.  This is because the two digits "20" for the year can be easily amended to form "20XX", which results in backdating.  Not that I am worried about making this mistake.  Most legal agreements spell out the date in full English format, and I doubt I will be signing any document that will make me a slave.  Hee.

Do you have new resolution for the new year?  For me, it is the same as always - to stay focused and disciplined in building up my nest egg.  My stock portfolio is still in its infancy stage, not even a six-figure sum.  I am nowhere near retirement nirvana.  That said, I hope there will be opportunities to go beyond the $100,000 mark in year 2020, all the while sensibly acquiring stakes of companies with strong fundamentals and a stable dividend yield.

May the new year bring you joy, prosperity and good luck, my friends!

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Saturday, November 30, 2019

Portfolio Summary for November 2019

As of 30 November 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$25.2523.07%
ST Engineering2,500$4.1323.58%
Old Chang Kee5,000$0.748.45%
Portfolio Market Value = $43,787

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.2522.19%
CapitaCommercial Trust3,000$2.0112.30%
Frasers Commercial Trust2,481$1.648.45%
Portfolio Market Value = $49,015

It was a mundane November.  I did not execute any trade, as the prices remained high.  Earnings reporting season has come to an end.  It was a mixed bag of results for the companies on my watchlist.  Those that reported better than expected earnings saw their stock prices spiked; those that reported worse than expected earnings saw their stock prices...do nothing.  (It was as if the market is simply waiting for a reason to buy in.)

I had written off the value of my Hyflux perpetual bond, but lately there was news that the company has struck a S$400 million rescue deal with Emirati utilities group Utico (news).  If the deal gets approved, I should be able to salvage S$1,500 (A 85% loss is better than a 100% loss, right?).  However, just a day after, there was rumour of Hyflux's creditors disagreeing on the incentive fee paid to the advisors (news).  (Sigh. The drama lives on.)

On the economic front, the U.S.-China trade tango continues.  There was indication that the two superpowers are coming to terms for a "Phase One" deal (news), although it may not be in time for Christmas.  I am reminded of the scene in the family car where the children (read: the market) ask the father (President Trump) for the umpteenth time, "Are we there yet?" and the father replies, "Almost, but not quite."

School holiday has started.  My family and I hopped on a short getaway to Taiwan.  We visited Taipei, Taichung and the scenic Taroko Gorge.  Fresh air certainly helps to relieve the stress of living in a cosmopolitan city.

Trade Actions

None.  Prices were unfavorable in my opinion.


Next month's Singapore Savings Bond (SSB) will have an average yield around 1.76%.  Slightly better than last month, and comparable to current fixed deposit promotions in the market now (link).

Looking Ahead

We have come to the last month of the year.  Typically, I will take this time to reflect on my accomplishments and disappointments during the year, so that I will learn the lessons and become a little wiser.

Happy holidays, my friends.

May the festive spirit fill your home and bring cheer to your family!

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Thursday, October 31, 2019

Portfolio Summary for October 2019

As of 31 October 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$26.0023.58%
ST Engineering2,500$3.9922.61%
Old Chang Kee5,000$0.7558.56%
Portfolio Market Value = $44,114

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.1721.02%
CapitaCommercial Trust3,000$2.0512.70%
Frasers Commercial Trust2,446$1.648.28%
Portfolio Market Value = $48,426

Perhaps the most exciting news in the local market this month is the partial acquisition offer of Keppel Corporation by Temasek Holdings (announcement).  Keppel is a well-known conglomerate with its subsidiaries spread across many diverse industries.  Sadly, its Return on Equity (ROE) has been struggling around the low 7%, which means Keppel's management hasn't been doing a fantastic job creating value from shareholders' capital.  That said, the management has signaled their intention to boost the ROE to mid-teens (news).  Hopefully, with Temasek becoming a significant shareholder and providing strategic direction, Keppel will be able to accomplish the feat.

The earnings reporting season is in full swing.  Many blue chips will report their results in early November.  Supermarket operator Sheng Siong Group has turned in another beautiful set of numbers, derived mainly from new store sales.  On the other hand, same store sales has dropped slightly.  Hope that the decline is just a temporary blip.

On the economic front, the United States and China have come to a preliminary trade agreement (news).  But no one is popping champagne yet, as the final outcome is far from certain.  Meanwhile, the Federal Reserve has given the market another booster shot - the third interest rate cut this year (news).

Trade Actions

None.  I did not spot any suitable opportunity.


Next month's Singapore Savings Bonds (SSB) will likely have an average yield of 1.70%.  Consider SSB only if you are absolutely risk-averse.  The private market have fixed deposit products that give a better return.  Check out SINGPromo's website for details (link).

Looking Ahead

We have come to the last two months of the year.  This means I will need to set aside cash for my sons' endowment policies, as well as do a voluntary CPF Retirement Sum Topping-up (link).  I had max-ed out my SRS contribution earlier this year.  If you have not done so, this is a good time to consider topping up your SRS retirement account and take advantage of the tax savings.  You can check out IRAS website for more details (link).

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Monday, September 30, 2019

Portfolio Summary for September 2019

As of 30 September 2019

Cash Equity

DBS Group400$25.0023.38%
ST Engineering2,500$3.8422.44%
Old Chang Kee5,000$0.7458.71%
Portfolio Market Value = $42,779

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.1120.64%
CapitaCommercial Trust3,000$2.0713.27%
Frasers Commercial Trust2,446$1.618.42%
Portfolio Market Value = $46,790

It was a quiet September month.  The STI had gone on a roller-coaster ride, and is nearly back to where it started the month.  Doomsayer calls for a recession next year have gotten louder, with nervous folks predicting terrible times ahead (see news and news).  The U.S. and China will resume their trade negotiations on Oct 10 (news), though it is anyone's guess whether there will be light at the end of the (tariff) tunnel.  Our leaders are certainly worried.  PM Lee had just reminded Singaporeans to 'be prepared for rough weather ahead' (news).  DPM Heng Swee Keat also noted that 'the Government is closely monitoring how the economy will pan out by the end of the year, and is prepared to take action when necessary' (news).

Amidst the gloomy atmosphere, I had managed to execute one trade.

Trade Actions

ST Engineering
I initiated a position of 2,500 shares in ST Engineering at $3.84 apiece.  I have been optimistic about the prospects of this company.  What began as a defence contractor for the fledgling Singapore Armed Forces in the 1960s has blossomed into a global technology and engineering group, with specialty in aerospace, electronics, land systems and marine.  The company has a healthy order book of S$15.6 billion, which includes a S$1.0 billion contract to build a heavy polar icebreaker for the U.S. Coast Guard (announcement).  ST Engineering has been generating positive free cash flow consistently over the years.  The stock price had taken a dip at month end, which I thought was an opportune time to acquire a stake.


In all honesty, I feel it is not worth talking about Singapore Savings Bonds (SSB) at this moment.  The low yield is comparable or worse than some of the fixed deposit (FD) products in the market.  We will be middling around 1.73% for next month's SSB.  If you have S$20,000 and one year time horizon, ICBC has a FD promotion that is better (link).  You may want to check out their website.

Looking Ahead

September marks the end of another calendar quarter.  Companies will be releasing their results between end October and mid November.  We will know which local companies are affected by the vicissitudes of the ongoing U.S.-China trade spat.  Earning releases tend to make stock prices volatile, as institutional funds buy or dump shares depending whether it is a 'beat (estimates)' or a 'miss'.  I will be wary to take on a position until the earnings reporting season is over, and the market has absorbed the full information bonanza.

That said, there may be special situations which cause a stock price to plunge without any major change in fundamentals (such as an analyst downgrade).  I'm keeping my powder dry and ready for such opportunities.


“October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.”

― Mark Twain, Pudd'nhead Wilson

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Saturday, August 31, 2019

Portfolio Summary for August 2019

As of 31 August 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$24.5330.03%
Old Chang Kee5,000$0.73511.25%
Portfolio Market Value = $32,672

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.1821.73
CapitaCommercial Trust3,000$2.1313.52%
Frasers Commercial Trust2,446$1.648.49%
Portfolio Market Value = $47,252

Time flies in a hurry.  I celebrated my older son's, my wife's as well as my own birthday this month.  I was amused and touched, when my five-year-old son tried to buy a birthday cake for me with his sole $1 coin.  It is little acts like this that make me feel grateful to be a father.

On the US-China trade war, there seems to be no light at the end of the tunnel.  The protest situation in Hong Kong had worsened, with violence being a common scene.  An economist had predicted that Hong Kong will precipitate a global recession (news).  I feel it is a bit premature for such a call, but I have been monitoring the market for an opportunity to buy shares of companies on my watchlist at a good price.

Trade Actions

LHT Holdings
I sold my position in LHT Holdings at $0.51 apiece.  I couldn't explain the peculiarly consistent 10,000+ shares that changed hands everyday as the price declines.  It is as if a substantial shareholder is selling his/her stake, bit by bit daily.  It started on April 13, even though there wasn't any drastic change in the company's fundamentals.  As this downward price creep is not observable in the other micro caps on my watchlist, it made me very uncomfortable.  I tried writing to Investor Relations for an explanation, but to no avail.  Since the price hit my stop-loss, I steeled myself and had to let go of the position.  I may revisit this company when the selling pressure has ceased.

Old Chang Kee
I added 4,900 shares of Old Chang Kee (OCK) at $0.725 apiece.  I feel OCK occupies a sweet spot in the F&B industry, providing more than a nibble and less than a full meal.  The profit margin is relatively stable and inflation-proof - I have seen how the price of an OCK curry puff rose over the years from $0.90 to $1.50 today.  The only concern is their UK joint venture, which is still bleeding money every quarter.  Hope OCK management can either scrap the idea, or properly evaluate a route to profitability.


The average yield on Singapore Savings Bond (SSB) has fallen below 2%.  Based on current outlook, it is unlikely the rate will rise in the near term.  Next month's SSB yield is expected to sink even lower to 1.75-1.76%.

Looking Ahead

Honestly, if even Warren Buffett is hoarding cash (news), it says much about the stock market at the moment.  It is tough to know what the unpredictable President Trump may do to incur China's retaliation and bring about a full-blown trade war.

Should the current trade hostility escalates, and the global economy plummets into a recession, it can be assured that the stock market will not be spared either.  As the cliché goes, the best time to buy stocks is when there is blood on the street.  I am standing by a small 'warchest' in case this scenario come to fruition.

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Friday, August 2, 2019

Happy News from OCBC

Came to office today, only to find positive news released from OCBC.

Not only has the company defied The Street's expectations of a drop in profit, it also INCREASED its interim dividend to 25 cents per share - the highest amount ever!

My Friday morning is starting to look brighter already.

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Wednesday, July 31, 2019

Portfolio Summary for July 2019

As of 31 July 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$26.4126.80%
LHT Holdings15,500$0.56522.21%
Old Chang Kee100$0.7750.20%
Portfolio Market Value = $39,425

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.1621.22
CapitaCommercial Trust3,000$2.0613.00%
Frasers Commercial Trust2,446$1.618.28%
Portfolio Market Value = $47,552

July went by in a jiffy.  Most of the time, I was just watching the market, which persistently remained at the high end of valuation.  I did execute one trade though.

Trade Actions

I picked up 2,000 shares of SATS at $5.01 apiece.  (Could have bought cheaper had I waited a few more days.)  Investors were spooked by the 14% drop in net profits, which saw its stock price dived over 6% in a day.  In my view, SATS is simply facing temporal, cyclical headwinds.  The underlying business looks intact.  (SATS enjoys an exclusive duopoly with dnata in servicing airlines at the Singapore Changi Airport.)  The company has a sizeable $400 million cash hoard and was still able to generate $84 million of free cash flow for the latest quarter despite the profit drop.  I will accumulate more if the share price falls further to $4.50.  The 13 cents dividend that went ex on 29 July certainly helped to reduce my purchase cost.


July's Singapore Savings Bond (SSB) (ID: GX19080E) has an average yield of 2.01% p.a (link).  As mentioned in my previous post, the SSB yield is expected to get worse.  With the widely anticipated Fed rate cut, the yield will likely sink below 2%.  I am guessing 1.95% for next month's issue.  If you are considering to park your money in SSB, there are fixed deposit products in the market with a shorter tenure and equally competitive yield.  MoneySmart blog has a summary of these products (link).

Looking Ahead

August is special for my family, as my older son, wife and I celebrate our birthdays this month.  This means I have to set aside a higher budget for expenses.  What remains will go into my money jar for investments.

As the seasonal reporting winds to a close, I hope there will be chances to pick up other quality stocks unfairly sold down due to misaligned investor expectations, just like SATS.

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Sunday, June 30, 2019

Portfolio Summary for June 2019

As of 30 June 2019

Cash Equity

Security# SharesPricePortfolio %
DBS Group400$25.9635.60%
LHT Holdings15,500$0.54528.96%
Old Chang Kee100$0.780.27%
Portfolio Market Value = $29,169

SRS Equity

Security# SharesPricePortfolio %
Sheng Siong Group8,700$1.1020.05
CapitaCommercial Trust3,000$2.1713.64%
Frasers Commercial Trust2,446$1.678.56%
Portfolio Market Value = $47,721

June was an uneventful month for me.  I had to set aside cash to pay my insurance premiums and income tax.  I kept a close eye on the market, but did not spot any favourable opportunity to buy stocks on my watchlist.  (I missed the chance to pick up SATS when it dropped to $4.93, because Credit Suisse downgraded the stock to 'Sell'.  Sigh.)

On the other hand, I offloaded two of my REIT positions.  The S-Reits have run up in price, some to heights that I wonder whether the valuation is justified.  My reason for selling is multi-fold.  First, I have changed my investment focus to operating companies instead of REITs.   While REITs provide sizeable dividend income, there is the perennial issue of ownership dilution, because the managers keep issuing new units to themselves as payment for management fee.  Slower global growth may make it tough for the landlords to justify a rental hike, as we recently saw Starhill Global REIT deciding to keep base rent unchanged for the Toshin master lease at Ngee Ann City (news).  Lastly, the capital raising and leveraging up of some REIT counters has made me uncomfortable.  A ballooned debt load and an economic downturn can be a lethal concoction, as we saw during the Global Financial Crisis (GFC).

Trade Actions

Frasers Centrepoint Trust
I let go of my FCT holding at $2.44 apiece, only to see the price blast off to a high of $2.63.  I could not fathom the acquisition of 1/3 ownership in Waterway Point and 17.1% stake in PGIM Real Estate Fund would have such a multiplier effect on FCT.  Are investors getting overly jubilant about the fund's prospects?  Rating agency Moody's did mention 'both acquisitions - of Waterway Point and PGIM Fund - improve FCT's earnings resiliency and geographic diversification' (news).  However, it also cautioned - as with all REITs - that FCT 'faces inherent liquidity risks, due to its high dividend payout ratios and minimal cash balances.'

I sold off AIMS APAC REIT at $1.45 apiece.  I had held the position for a long time, probably since the GFC.  It had served me well, providing a constant stream of income over the decade.  Management had consistently engaged in AEIs to improve the rental potential.  But it was time for me to move on.


Next month's Singapore Savings Bond (SSB) has an average yield of 2.16% p.a (link).  It is as good as it gets.  Investors holding out for a better yield may be disappointed. 

The yield on 10-year Singapore Government Bond dipped below 2% during mid June.  It is puzzling that investors are bidding up stock prices and bond prices - hence the yield decline - at the same time.  It looks like the average SSB yield will only get worse.  (I am guessing 2.01% for the August issue.)

I am not in favour of purchasing SSB at this rate of return, unless you have excess liquidity and you are not keen on stocks. 

Looking Ahead

My wife came across an article forecasting a recession next year (news).  I have my doubts, as there is no clear indication of the global economy tanking at the moment.  The last time I checked, the US Conference Board Leading Economic Index (LEI) is just flattening out (link).  (The LEI is said to be an accurate predictor of US economic health.  It declined rapidly months before the GFC struck.)  

Moreover, during the G-20 Summit, President Trump and President Xi agreed not to impose new tariffs, and for US and China to restart trade and economic talks (news).  While this does not mean a resolution of the trade row between the two superpowers, this is likely to be seen as a positive move and give investors confidence to take on risk.

End July also heralds the start of the earnings reporting season.  I will be watching to see how much an impact the US-China trade row has had on local companies.  

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Friday, May 31, 2019

Portfolio Summary for May 2019

As of 31 May 2019

Cash Equity

Security# Shares
DBS Group400
LHT Holdings15,500
Old Chang Kee100
Portfolio Market Value = $31,185

SRS Equity

Security# Shares
Sheng Siong Group8,700
Frasers Centrepoint Trust3,000
CapitaCommercial Trust3,000
Frasers Commercial Trust2,408
Portfolio Market Value = $51,652

It is no wonder the clique goes, "Sell in May and go away". The Straits Times Index suffered a 8.3% drop for the month. While the benchmark is still up 1.6% year-to-date, there is scant comfort in the global economy. The US and China have yet to iron out a trade deal, so tariffs will continue to eat into corporate profits. US President Donald Trump's latest tweet threatened to raise tariff on Mexico, if the country fails to stem illegal immigrants from crossing the border (news). Looks like "tariffs" has become the new weapon of mass (economic) destruction.

In my previous summary, I mentioned that I was keen to take on some new positions. A few micro caps on my watchlist had released favourable annual results. Unfortunately, those stocks were also monitored by others in the market. On the day after the result announcement, those stocks jumped in price significantly. Oh well, such is life. I'd be patient and wait for another buying opportunity.

I did load up on two bank stocks though, taking advantage of the selloff in the last week of May.

Trade Actions

DBS Group
Finally, I had succumbed to temptation and bought 400 shares of DBS Group at $24.25 apiece. The price is still high in my opinion. Would have preferred to load up at the 52-week low. Nonetheless, I believe the business is still intact. An annual dividend of $1.20 is a good aspirin for the volatility in its share price.

I added 900 shares of OCBC at $10.84 apiece. The Business Times recently quoted a Citibank report stating, "OCBC appeared interested to raise its 20 per cent stake in Bank of Ningbo over time as and when regulations allow." (news) This could potentially explain the rationale behind the lower-than-peers dividend payout. The article echoes the same sentiment shared in my earlier blog post (here), that something - positive or negative - may be brewing for OCBC that requires significant capital outlay. Taking a longer term perspective, I am confident the local banks will continue to be profitable, and the dividend will be increased or sustained.


Next month's Singapore Savings Bond (SSB) has an average yield of 2.13% p.a. which is on the low side compared to historical precedents. I have decided to stay out, in favour of the stock market.

Looking Ahead

June will be a 'dry' month for me, as I need to pay income tax and my insurance policies. Most probably I will only be a spectator in the stock market.

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Friday, May 10, 2019

To Diversify Or Not to Diversify?

I often ponder about portfolio diversification in my mind.  

On one end of the spectrum, there are investors like Warren Buffett and Charlie Munger who believe in concentrating their funds on their best ideas:

"Once you are in the business of evaluating businesses, and you decide you are going to bring the effort and intensity and time involved to get that job done, I think that diversification is a terrible mistake... If you can identify six wonderful businesses, that is all the diversification you need and you can make a lot of money and I can guarantee you that going into a seventh one is going to rather than putting more money in your first one, it's got to be a terrible mistake.  Very few people have gotten rich on their seventh best idea." 

- Warren Buffet's 1998 Florida University address

"The idea that very smart people with investment skills should have hugely diversified portfolios is madness. It’s a very conventional madness. And it’s taught in all the business schools. But they’re wrong."

- Charlie Munger

On the other end, there are investors like Peter Lynch, who held thousands of positions at certain times in his Fidelity Magellan mutual fund.

Personally, I limit my watchlist to no more than 15 companies at a time.  But I wonder if I should cut it down to 10.  Or even 6 (best ideas) for that matter.

When you run a concentrated portfolio, other issues start to creep in.  For example, I find it challenging to build up a position in micro caps.  On some days, the bid-ask spread is so wide, that simply lifting the offer will cause a run up in the stock price.  Perhaps that is the reason why most investors stick to the bigger companies.

Then there is the nagging concern whether you have done all of the homework required - the effort, intensity and time involved as Buffett said - to invest in the right company?

I figure it all boils down to faith.  Faith in my own stock picking skills.

To diversify or not to diversify?  What are your thoughts?   

Would you concentrate your funds on your few best ideas, or spread it across multiple positions?

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Tuesday, April 30, 2019

Portfolio Summary for April 2019

As of 30 April 2019

Cash Equity

Security # Shares
LHT Holdings 15,500
OCBC 900
Old Chang Kee 100
Portfolio Market Value = $23,996

SRS Equity

Security # Shares
Sheng Siong Group 8,700
Frasers Centrepoint Trust 3,000
CapitaCommercial Trust 3,000
Frasers Commercial Trust 2,408
SingTel 2,000
SGX 1,300
Portfolio Market Value = $41,449

In April, I did a few trades to reposition my portfolio with a new investment focus.

Trade Actions

Keppel Corp
I sold my position in Keppel Corp at $6.81 apiece. I bought the stock a few years ago, before the company entered the oil price crisis. Thankfully, Keppel managed to climb out of the mess without permanent damage. I was able to exit with a small profit, and a few years of dividend.

SembCorp Industries
I sold my position in SembCorp Industries at $2.68 apiece. I am disappointed with the company because of the dividend cut, presumably to conserve cash. It is unknown whether the management could have taken more drastic steps to curb the loss in SembCorp Marine. After years of hoping for a turnaround miracle, I decided to throw in the towel and move on.

Singapore Exchange
I bought 1,300 shares of SGX for my SRS portfolio at $7.38 apiece. I had expected the lacklustre performance in the equity trading revenue, but was surprised by the strong showing in the derivative trading revenue. With a sizeable cash hoard and zero debt, I believe SGX is robust enough to sustain the dividend payout, and at the same time develop new growth segments.

LHT Holdings
I bought 15,500 shares of LHT Holdings for my cash portfolio at an average price of $0.645 apiece. LHT is a Singapore based manufacturer of wooden pallets, boxes and crates. It also produces related products such as timber flooring and doors. This is a micro cap with a dull but stable (and profitable) business.


The May 2019 Singapore Savings Bond (SSB) has an average yield of 2.16% p.a. What is particularly attractive about this month's issue is that the bond offered an interest rate of 1.95% p.a. for the first three years - on par with the best fixed deposit rate in the market. While I did not participate, I helped my Mum to subscribe for her inaugural issue of the SSB.

Looking Ahead

While market prices have generally soared, pockets of opportunity still abound. I will be looking to take on a few more positions in May 2019.

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Friday, April 5, 2019

eBook on Avoiding Troubled Companies

Well-known local corporate governance advocate Professor Mak Yuen Teen had released an eBook titled "Avoiding Potholes in Listed Companies".  Inside the book, Prof Mak and his co-author NUS Business School Adjunct Associate Professor Richard Tan listed several red flag and warning signs that retail investors can take heed, to recognize companies in trouble.

I am still reading through, but thought it would be good to share.  If you are interested to read the eBook, you can download it from Prof Mak's website www.governanceforstakeholders.com.

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Sunday, March 31, 2019

Trade Action - Sheng Siong Group

A week ago, I initiated a stake in local supermarket retailer Sheng Siong Group (SSG) for my SRS equity portfolio.   I have been lazy to pen down my reasoning for this investment, but here it is at last.  This post summarizes my thoughts about investing in this company.

Pros for investing:

One of top three Singapore supermarket retailers
Sheng Siong Group is one of Singapore's top three supermarket retailers, according to a 2018 report (link) by the USDA (yes, the United States Department of Agriculture).  The other two are NTUC Fairprice Co-operative and Dairy Farm International Holdings, who owns Cold Storage, Giant and Market Place.  According to a chart by Maybank Kim Eng (link), Sheng Siong Group is the one of two retailers - the other being NTUC Fairprice - who has been consistently growing their market share over the past five years, from 16.9% in 2012 to 18.9% in 2017.  From a humble store in 1985, Sheng Siong Group now owns 54 stores across the Singapore heartland, with a retail space of nearly 500,000 square feet in 2018.

Operational discipline
Of course, aggressive growth without operational discipline is unsustainable over the long run.  This does not seem reflective for Sheng Siong Group.  In 2018, the company opened ten new stores, but saw two store closures as the buildings occupied were taken back by its owners for redevelopment.  SSG management is mindful to segregate new store sales versus same store sales, so that they can track each revenue growth carefully.  In its FY2018 report, SSG management astutely observed, "since the beginning of 2019, six HDB shops which were won by the competitors via online bidding in 2017 and 2018 are now vacant and have been released for re-tender."  Learning from your competitors' missteps is telltale sign of a sound management team.  SSG management is also focused on growing their fresh produce sales mix, which commands higher margins.  (That gets another score from me.)

Zero debt, stable equity base
For a company that operates a brick and mortar business, this company has ZERO DEBT.  Not even an auto loan for its delivery trucks.  Would you believe it?  Moreover, the shareholding base has been stable for the past few years.  No hanky panky stock options for management, no complex convertible instruments and definitely no need to reach out to its owners for more money now.

Healthy company fundamentals
Increasing market share (positive YoY revenue growth over past five years)
Healthy gross margin (26.8% in FY2018)
Zero debt (I can't emphasize it more)
Stable shareholding base (ditto)

Cons against investing:

Competitive retail landscape
When one is grabbing market share, you can be sure the peers will not be resting idle either.  There have been young upstarts (U Stars) and the rise of niche organic grocers, catering to health conscious Singaporean shoppers.  Moreover, traditional brick and mortar retailers face a perennial challenge from online retailers (RedMart, Honestbee).  Even market leader NTUC Fairprice Co-operative had recently revamped its e-commerce platform (Fairprice On) to fend off the challengers.  I have not seen SSG management take a serious stab at growing grocery sales on the web.  Perhaps the threat is not that serious...yet.

Price premium
Sheng Siong Group is covered by a few sellside brokers and is well researched by the market.  At the current price of $1.04, you will be paying a hefty 500% premium over NAV (19.30 cents).  This is not your typical hidden gem, but a polished jewel at the store front.  Per Buffett speak, would you be willing to pay a fair price for a good company?

China foray
Many local companies seem fixated with China as the ultimate sales nirvana, and Sheng Siong Group is no exception.  In November 2017, SSG opened its first overseas store in Kunming.  It recorded a loss of $0.7 million in FY2018.  In January this year, SSG entered into a lease agreement for a second store, expecting it to be operational in 3Q2019.  The road to China supermarket supremacy is laden with battle wounded foreign retailers (Wal-Mart, Carrefour, Tesco), and even dead carcass (Lotte Mart).  Hope SSG management has been copiously taking notes to avoid the pitfalls and potholes.  Understanding and localizing the sales mix will be key to survive - let alone thrive - on this land.

Final Thoughts

In May 2018, a value fund manager Mondrian Investment Partners bought 99,000,000 shares from Sheng Siong Group founders at $1.01 per share (link).  I have been watching the stock tussle at $1.08 for some time.  When it came within striking distance of my ideal price, I pulled the trigger.  I will surely load up if the stock price falls further to the dollar mark.  Now I have another reason to shop more at my neighbourhood Sheng Siong supermarket.

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Portfolio Summary for March 2019

As of 31 March 2019

Cash Equity

Security # Shares
OCBC 900
Old Chang Kee 100
AIMS AMP Capital Industrial REIT 2,150
Portfolio Market Value = $13,132

SRS Equity

Security # Shares
Sheng Siong Group 8,700
Frasers Centrepoint Trust 3,000
Keppel Corp 1,000
SingTel 2,000
CapitaCommercial Trust 3,000
SembCorp Industries 2,000
Frasers Commercial Trust 2,408
Portfolio Market Value = $42,932

March is another happy month for me. My company's long term incentive plan finally came to fruition, and I received a small sum as reward. Just in time to bolster my war chest for investment.

The market is rolling along nicely, even when US and China haven't agreed on a trade deal. Recent talk of the town was about the US Treasury yield curve inversion, though it didn't last very long. An inversion is said to be the harbinger of a recession. Looking at the mood in the market, a recession seems to be the last thing on people's mind. As we head into another earnings season, Wall Street is betting the US Fed will cut interest rates this year. Hard to see any justification for the Fed to do so in the near horizon.

Trade Actions

I bought 900 shares of local bank OCBC for my cash equity portfolio at $11.06 per share . I have written out my reasoning in a previous blog post here.

Sheng Siong Group
I bought 8,700 shares of supermarket retailer Sheng Siong Group for my SRS equity portfolio at $1.05 per share. I've yet to pen down my thoughts for this investment. Will try to do so soon.


There is no dividend event for my holdings this month.


The April 2019 Singapore Savings Bond (SSB) offered an average yield of 2.16% p.a., which is unappetizing to me. Granted, it is still better than most fixed deposit promotions out there. But I'm not going for it.

Looking Ahead

This week marks the start of the Qing Ming Festival, where Chinese folks will make their way to pay their respects to the deceased. It has been three months since my dad passed away, and I still think of him from time to time. Sombre mood aside, I'll be ready to pounce on any buying opportunity when earnings season (hunting season?) starts.

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Sunday, March 10, 2019

Trade Action - OCBC

This company needs no introduction.  Recently, I had initiated a position of 900 shares at a price of $11.06 apiece.  This post summarizes my thoughts about investing in this company.

Pros for investing:

Diversified earnings across industry group and geography
Besides Singapore, OCBC operates in Malaysia (OCBC Bank Malaysia) and Indonesia (Bank OCBC NISP).  OCBC also has two brokerage businesses (OCBC Securities and OCBC Sekuritas), though the result of this division is nothing to shout about.  Another affiliate OCBC Wing Hang operates in Hong Kong and Greater China.  OCBC also owns wealth management unit Bank of Singapore, which has seen healthy AUM growth in FY2018.  Lastly, OCBC owns asset manager Lion Global Investors and an 87% stake in local insurer Great Eastern Holdings.  The diversity of earning streams across industry group and geography minimizes the probability of significant loss caused by a single event.

Recent earnings miss is temporary
OCBC reported lower than expected FY2018 earnings ($1.06 against street estimate of $1.11).  This was mainly attributed to unrealized valuation losses and absence of realized gains in the securities portfolio held by Great Eastern Holdings.  It is pretty normal when investments are marked to market, volatility will swing the valuations and thus impact reported earnings.  Warren Buffett had warned about this phenomenon in his 2017 Berkshire Hathaway Chairman's Letter (source).  Judging from the YTD gain in global equity markets, assuming the trend is sustainable through 2019, the securities portfolio should experience a positive rebound in valuation this year.

Share buyback
OCBC has been consistently buying back shares from the open market.  Some investors see this as a positive move, since it reduces the float and increases earnings per share.  However, it can be a double-edged sword when management does it without regard to the intrinsic value per share.  If we use OCBC’s reported NAV of $9.56 (before unrealized valuation surplus)(source) as a yardstick, then management is not purchasing the stock because it is cheap.  It is more likely an exercise to balance out shares issued under its employee share scheme.

Cons against investing:

Lower dividend than peers
Compared to DBS and UOB, OCBC distributes a lower percentage of earnings (payout ratio of 40.6% versus DBS 59.7% and UOB 51.5%).  This is nothing new, and the bank had explained its rationale previously (source).  According to the Business Times (BT), OCBC CEO Samuel Tsien defended the conservative approach against risks on the horizon.  Mr Tsien “feels that the market is going to be a rougher market” (source).  The CEO also denied looking for potential acquisition at the moment.  For a head honcho to go against institutional imperative – of distributing similar payout as its peers and risk a share price decline – either Mr Tsien is not afraid of shareholder activism, or something is brewing for the company that requires significant capital allocation.  I believe we will know in due time.

Dividend scrip option
Contrary to most investors, I do NOT like companies to offer dividend scrip option.  Firstly, it dilutes the shareholding of existing owners who do not wish to participate (either because of odd lot allocation, which makes it harder to dispose the position in the market, or because of cashflow needs).  Secondly, a dividend reinvestment plan is typically offered because the company wants to retain more cash in their coffers.  The question is WHY?  Why is there a need to set more cash aside?  Again, this circles back to my point highlighted earlier.  There may be something – positive or negative – stirring in the undercurrent.

Oil & Gas industry exposure still a drag
OCBC increased its bad debt provision for the oil & gas industry last quarter.  News finally broke in January when crude oil products supplier Coastal Oil Singapore went belly up with US$354 million debt (source).  OCBC Hong Kong unit was owed the lion’s share at US$122.7m.  In a separate BT article, CEO Samuel Tsien highlighted oil exploration had not increased as expected when oil is trading at US$60-70/bbl range.  Vessel charter still remained below breakeven rates by the bank’s repayment requirement (source).  In short, more pain before the bank is out of the woods.

Final Thoughts

Despite my apprehension from the reasons above, I had decided to go ahead with the investment in OCBC.  Of the three banks, DBS is my first preference, but at 12x earnings (OCBC 10x UOB 10x) and 1.3x book (OCBC 1.1x UOB 1.1x), it is still a tad too expensive for me.  Between OCBC and UOB, I see more growth potential in the former.  That said, I won't be adding to my OCBC position anytime soon.  Hopefully, the reason for OCBC management's conservative stance will come to light as time passes.

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Friday, March 1, 2019

Summary for February 2019

I love February.  No, it's not because of the CNY festivities.  (Why would a parent be happy when he has to give red packets instead of receive them?)  Rather, this is the month when I get my performance bonus.  My company doesn't pay 13th month annual bonus, so this is the sole incentive I can look forward to.  Thankfully, my boss is satisfied with my last year's performance, so I am rewarded with a 0.8 month compensation.  (Sadly, not even a full month, but this will have to do.)

Trade Actions

I didn't do any trade, because I was out of 'ammunition' for most of the month.  In March, I will fund my SRS account with my bonus.  That should provide me with some gunpowder to go hunting.  I am watching a few counters.  Hopefully, there will be an opportunity to pull the trigger.

Hyflux 6% Perpetual Capital Security
I have repaid my wife for her vested portion of the Hyflux 6% perpetual.  (She needn't have taken the risk with me.)  So now I effectively own $10,000 of a nearly worthless security.  Haha.  One painful episode in my investing journey.  Luckily, I didn't allocate a lot of money in this position.  It's time to move on.


AIMS AMP Capital Industrial REIT
I received a letter from AACIREIT regarding their latest scrip option plan.  Pay date is 29 Mar 2019.  I like the flexibility where you can choose the proportion of your ownership to receive the cash dividend versus new units.  At the moment, I'm trying to get my position rounded to a nice whole lot number.  Alas, my number of units on hand is insufficient to do so.  So I opted to receive the full dividend in scrip.  Maybe next time.


This month's yield on the Singapore Savings Bond (SSB) is rather low at 2.18% p.a.  I prefer to stay on the sideline for now.

Looking Ahead

Earnings season has come to an end.  Macro events are likely to take centre stage and influence the market.  Hopefully, any volatility will result in a favourable entry point to load up on stocks.

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Monday, February 18, 2019

One Regretful Investment

I read in Business Times (link) today that Hyflux perpetual security holders will only get a 3 per cent cash recovery under the current rescue plan.  (I do not take the 7.6 per cent implied equity value into account.  Unless Hyflux manages to dispose its loss-making Tusaspring project, I doubt there will be any value in the share post-restructuring.)

I was hoping for a 10 per cent cash recovery, but oh well, I have to accept the minuscule amount left after the entire saga.  (That is, if the rescue plan goes through the approval on April 5.)

This is one of my regretful investment mistakes.  The extremely high debt burden of the company had flashed out as a red flag to me during the initial public offering, but I had chosen to ignore it.  The only consolation is that I did not put in a lot of money in the perpetual security.

I am thinking of compensating my wife for her hard-earned $5,000 when she had invested together with me.  She had trusted me on my judgement and I had failed her.

It was a confluence of factors that resulted in the downfall of what was once a local stock market darling.  But it is solely my fault for a lack of better judgement.

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Saturday, February 2, 2019

Summary for December 2018 + January 2019

Apologies (to myself especially) for the lack of update.  I have been tardy in writing.

December 2018 had been an eventful month for me.  Near the end of last year, my father passed away and I had been busy handling the funeral and the ritual duties as the eldest son.

Money-wise, a significant portion of my savings was drained to pay the premium for my younger son's endowment policy.  My wife and I had chosen Tokio Marine (TM) KidStart, where we opted to pay the annual premium for first five years (about $19,000 per year) and let the sum roll till my boy enters university.  (If you are keen, more information can be found on TM website.)

As planned, I added $7,000 to my CPF Special Account under the CPF Retirement Sum Topping-up (RSTU) Scheme.  I also contributed to my SRS account.  Both were done for the purpose of income tax relief.

The year ended with the stock market in turbulence.  Volatility is a two-edged sword - it generates heartaches and buying opportunities at the same time.  Happy for those folks who have taken the chance to load up on some good stocks.  I did not participate at all, being wary of the decline in my savings.

January 2019 came and went by.  It is amazing how fast the stock market rebounded.  A slew of positive earnings reports buoyed investor confidence and prices headed up again.

Wifey had asked me whether it was time to sell CapitaMall Trust.  She had bought the stock at $1.90 a few years back.  I told her the trend suggests it can go higher.  Nonetheless, she was happy to take profit at $2.30.  A week later, the stock climbed to $2.40.

My IFA (independent financial adviser) alerted me to China Taiping Insurance 3-Year 2.38% endowment plan.  But the yield didn't sound too appetizing, given Singapore Savings Bond (SSB) was offering 2.22% p.a. at that time.  Moreover, I was out of 'ammunition' to plow into the plan.

Speaking on SSB, it was welcoming news that we are now allowed to invest to a maximum cap of $200,000 (instead of $100,000) starting February 2019.  We are allowed to invest our SRS monies too.  I view SSBs as a safe and secure fixed income element of my investments.  The return may be low compared to stock dividend yields, but at least there is no drama.  (I am still grieving over my Hyflux perpetual bond.)

Talking about the devil, Hyflux organized a second town hall meeting for its noteholders and shareholders on January 18 evening.  (Of all days, why do it on a Friday evening?)  I didn't attend, but from what I read, there wasn't much useful information disseminated.  I think it might be time to write off my perp bond holding.  Lesson learnt - trust your analysis and don't get tempted by junk bond grade yields.

January 2019 also saw another big outflow due to my older son's NTUC Income RevoSecure savings policy.  Like the TM Kidstart policy, we opted to pay the annual premium for first five years (about $14,000 per year) and let the sum roll till tertiary fees come knocking.

After seeing the cash outflows over the past two months, I have been asking myself one question - How BADLY do I want to build my stock portfolio?

I know the answer inside, but I have never proactively worked on it.

It is time to focus on the plan again.

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