May 2021 Portfolio Review

(re-updated on 26-May)

Straits Times Index Fund: +11.56%

Hong Kong Tracker Fund: +7.01%

S&P 500 Index Fund: +12.44%

My Portfolio Returns: +33.99% (I triggered a recalculation from Stock.cafe end and it went from 41% to 33.99 -_-" no idea what happened)

Transactions:

-Return of capital of I.T. risk arbitrage position

-Increase of Mapletree NAC Trust

-Sold a modest amount of Perfect Shape

While I might have omit to write about the I.T Ltd position, the stock was pretty volatile on voting day itself, falling as much as 8-10% before shareholders accepted the privatisation.

This net a return of 8% within 6 month, which annualised to a 16% return. It is also one of the luckiest one yet, given how little work I put into buying the stock.

At a very unfortunate timing of 1pm two Fridays ago, the Singapore government announced a list of curbs in an effort to calm down COVID infection. This sent the market on a free fall, particularly retail REITs. At one point of time, Lendlease REIT was down by 8 percent, and Mapletree NAC Trust went down by almost 5%.

Lendlease REIT was particularly interesting since about 1/3 of its return is from its Sky Italia rental, and Mapletree NAC even more so, given that its main revenue is from overseas, particular Hong Kong.

Unfortunately, I bid pretty much close to intraday low and did not fill my orders for Lendlease.

Both stock recovered pretty a little so far, demonstrating how jittery markets could be on abrupt announcements. 

***

Portfolio returns is now a staggering 33.9%, surpassing my own expectations and highest ever return in a year. It was bitter-sweet considering that my mum's health dipped a bit during recent weeks, and I wasn't really paying much attention. Needless to say, returns are lead by Perfect Shape. 

TBH, I do not believe I deserve such a high return, and I attribute this to luck on a single holding. The way I pick my stocks, based on value; and my own expectations are that I attain modest, market-beating % which will meaningfully compound over time.

Since I am a strong believer of mean reversion, I expect bad times to come one day. So I am very grateful for what I am getting.

I don't feel encouraged by the rapid rise of Perfect Shape stock prices, which are often accompanied or preceded by "business updates", usually optimistic in nature, of business expansions. The market rewards the risk-taking behaviour of the company by bolstering its stock price to record highs. I sold off a little at 7.4x, and remains a bit undecided with the rest, now that the price is 8.x.

Should I sell? There are 3 sell rules. First is to sell if you need the money, which I don't. I don't have a better idea to allocate the capital to. I do not belong to the "cash-is-trash" camp, and is more liberal with the idea of holding cash than most. I believe that buying a bad stock is going to hurt far more than inflation. 

Secondly, I could sell when it is overpriced, but how do I know for sure? The latest figures are not out. I do see a few flashing, warning signs regarding its Day-Sales-Outstanding ratios, and I want to verify that with the upcoming FY2020 results.

Thirdly, one should sell if he makes a mistake. This is not applicable to my Perfect Shape thesis so far.

A large part of my motivation to hold on to some of the stock is that I simply have no other ideas.

***

I am still waiting for OKP (which was fined a very paltry sum of a million, when you compared that to what it has in its books) to revert to value. It is still very much weigh down by COVID-19-related labour concerns as well as a lack of projects. I would imagine that, in view of rising interest rates, a depressed price, and clarity to its legal woes, the company could take advantage and privatised itself.

I believe that investing as a private business owner would never go out of fashion. But I am still waiting patiently, in a world where tech and growth stock flourishes; and old, dumb, simple companies are disregarded. 

***

As of now, in terms of market value, Perfect Shape is 32%, OKP is 20%, and Centurion is 9.6%. My top 5 positions constitute 76% of my capital so far. 

I am cautiously monitoring the balance sheet of Centurion Corp. The COVID control measures seems to be adequate across the nation so far, which I attribute this to very strict mandates from MOM. Management's tone seems pretty levelled so far, so I am not too worried.

***

My opinion of crypto-currencies does not change: I have no idea how to value these stuff and therefore I shall refrain from them, no matter how tempting it gets. Before I put a single cent in an idea, I ask myself if I would put in more capital if it falls by 20%? Is the idea, "easy"?  The only people getting rich are the ones selling shovels (crypto-mining rigs, GPU card sellers, coin exchanges, etc) and not the prospectors.

Do stocks like Tesla deserve their sky high valuation? I don't think so... but I am no Burry and I won't touch anything related to them. All I could see is that the market is very generous in their valuation of far too many tech companies these days. That generosity doesn't last.

Just avoid stuff that you have no idea of; I am not responsible for the foolishness of others.

-end