Portfolio Commentary: August.

The market has been terribly kind to me lately, and I feel embarrassed as I witness other investors' portfolio get smashed pretty bad. I perceive some of them to be better investors really, so I guess Lady Luck has something to do with it.

As of writing, portfolio returned 18.98%, versus a -2.04%. This lead of 21% over the index is unprecedented.

Transactions made since the last update included:

(a) Complete divestment of Wheelock Properties. While it was a low ball offer, it makes little difference if the price offered is 2.4 or 2.2. I was waiting for 2.3 but it meant very little difference to me. Gains, largely due to luck, is about 40%.

(b) Complete divestment of Religare Health Trust. This is a "special situation" component of my portfolio, but I think there is a few headwinds ahead. RHT brought home a 9.7% return.

***

 A typical value investing portfolio looks like some this:
i) general cheap stocks-- these stocks are typically bread-and-butter of your portfolio, and are expected to bring about most gains. However, they are likely affected by general market direction.
ii) special situation stocks-- these are stocks that moves without regard to general market sentiments. Gains are likely to be lesser, but they provide some kind of stability in a bearish market. Assessing how likely the deal will work out is the key here. The attractiveness of investing in such deals is a rough time line where annualized gains can be worked out.

***

I have since invested part of the sum from RHT's divestment on another idea. I hope to allocate more capital to this idea as I think this stock is reasonably cheap and the company's cash return is very satisfying. I will talk more about this company once I acquire a decent size amount of shares.

(c) Complete divestment of Perfect Shape, at about 40% as well. The annual report fail to explain why there is a growing amount of trade receivables. Funnily enough, the market is clearly not bothered about it and the stock went up significantly. Had I hold on to my stock, I would have my first ever 100% return from a stock. But holding on to it is not rational; the TR is no longer my problem but someone else.

(d) Increase in position of Innotek. For the CEO to double his positions at 40 cents a share, I thought getting a few stock at 36 cents is not a bad idea, and that was what I did yesterday. My luck seems incredible as I wake up to news today that Innotek has improved its latest quarter earnings dramatically. Stock closes at 42 cents, up 13.51%. Again, I take no credit for luck.

I must mention that this stock at one point bore unrealized profits of well over 50%, but I held on as I thought it is still too cheap. The stock corrected significantly after a poor quarter (typical market reaction that offer opportunities to the patient investor), to under 10% profit. This is stomach-wrenching volatility that a value investor have to endure at times.

There are still more than a couple of laggards in my portfolio-- laggards which will be favorably priced by the market sooner or later, I hope...