Pages

Search This Blog

Tuesday, August 6, 2019

July 2019 Portfolio Review

STI (ES3) returns: 3.087-> 3.188 + 0.12 (dividends) = 7.16%
HSI (2800) returns: 25.25->  26.75 + 0.15 (dividends) = 6.53%
S&P (SPY) returns: 254.38 ->  283.82 + 1.43164 (dividends) = 12.14%
Current Portfolio return: 15.74% (bond, stock and funds invested for mum), 22.22% (my stocks only)


****


Transactions (between May to July)
1) Small increase in OKP due to outcome of the legal suit.
I did not expect those charged to be let off so lightly. As a shareholder, it is good news, but I do hope that the family members of the deceased are well compensated.

TBH, purchasing OKP isn't a perfectly moral move. When the day comes, a good portion of it will be donated.

2) Selling of Healthway Medical, to move funds to ... (3)
Healthway Medical is a stock that was deem cheap by insiders who are motivated to turn the business around. With the pressure of the minimum trading price fading, it might be a sound move to acquire stock instead of selling.

HM isn't quantitatively cheap as opposed to companies like LHT and ChangShouHua. It did not have a suitable dividend record. Acquiring a huge block of stock is not prudent. Chances are, I would make money if I held on, but the probability is much lower.

Results were out 2 hours ago as I wrote this post-- earnings have fallen off a cliff. It certainly looks bad short term, but afaik, renovations are on-going, and the prospects of this company is anyone's guess.

An industry insider with a qualified insight on the abilities of the management, has a better chance with this stock.

3) Initial purchase and subsequent increase in ChangShouHua due to lowering prices
CSH is just another value stock with much better figures to account for than most of the value genre.
CAGR, since 2008, as follows:

Revenue: 13.89%
Bottom Line: 14.27%
Gross Margin: from 10.69% to 23.27%
No debts
1.8billion of cash, market cap of 1.4billion
Modest dividend of 3-5% since 2012.
Positive free cash flow of 6/10 years

What is the bad news? Probably market saturation, diworsification by expanding into products that might not sell, and a increase in Days Sales Outstanding of 30% since 2008.The DSO numbers are pretty level in the last 5 years, which bring some comfort.

Cash Conversion Cycle is about the 40 day mark.

4) Increase in LHT due to lower prices
The story with LHT runs the same thread as CSH-- cheapness. It is more cyclical than CSH for sure. It has a pretty decent dividend history, shareholder-friendly management and from the words of my pal, no reasons to doubt their honesty. It has a better free cash flow record. 21.4m of cash, miniscule debt and a market cap of 29.8m means you are paying for about 8.4m for about 2.5m free cash flow yearly.

DSO, DSP and DSI looks pretty stagnant, hence fraud is unlikely.


5) Initial position in Stamford Land
Stamford Land's management is boorish. One of its board member, Danny, is a pretty collected individual and has been acquiring shares. The value, or the public opinion of it, in Stamford Land is pretty well publicized.

Management might make an emotional purchase, but board members are less likely to do so. Hop Fung (a company that was introduced by a pal) have board members exercising their stock options at 42 or so cents. If it is cheap for an insider....it should be cheap enough for someone to buy a token amount of stock in a Graham-Schloss manner.

"If you expect this company to pay high dividends, you are in the wrong investment, said Mr Ow." I agree but at a low-interest-rate environment at present, 2% is bearable.

What would SL do with its assets? I don't know, and quite frankly, I expect a long wait as well, since there are no white knights to pressure the board.

Hotel business in Australia is not remarkable at the moment, and that gives the Ow-s much needed justifications to cap its dividends.

6) Initial position in Colex
Colex has a contract that might end next year, but the value in it is obvious.

Another 2% dividend-er like Stamford Land, it has a very strong free cash flow history-- no red ink for the last 10 years. Market cap is now 33.1m, cash is 19.4m, and it is debtless for a decade.

Free cash flow for the first half of this year is 10% lesser but no cause for alarm. If they were to win the Jurong tender this coming quarter, prices should adjust upwards. Capex requirements aren't too alarming, and there is a sizable amount of book value to protect the downside.

7) Slight Redemption of Singapore Saving Bonds
Short term coupon rate has fallen off the cliff from 1.96 to 1.6x-- this tells you what they expect-- longer period of low-interest rate environment. The redemption of bonds is reactionary to the lowering of prices in the stock market.

I do not subscribe to the theory that the market is leading indicator of the economy.
We are over a decade of low interest rates. People are getting tired of dancing, yet the music kept playing. There will be an unforeseeable problem arising in the world, and valuations will adjust accordingly.

It is not my job to forecast where the problem will be. It is just too difficult to guess where and how. One has to be an optimist and buy stocks when things look pretty bad.

It takes a lot of guts to buy a Chipotle Mexican Grill at PE 50 when it was having the viral crisis... and I don't have it. These gutsy folks deserve the profits of a hefty 80 PE revaluation of CMG by the market.

In theory, when the market is depressed as a whole, this is the perfect opportunity to buy growth stocks.

In theory, that is.I just not that gutsy.

No comments:

Post a Comment

Why options is a necessary evil

The use of options can be as conservative as stocks, or in the mindset of an aggressive man, as dangerous as dynamites. I think of them as ...