Monday, October 15, 2007

Mid-October 2007 Portfolio Review

I took the opportunity to avail myself of a non-performing company which was originally purchased based on the “turnaround” theme. The company in question is Global Voice and I am happy to report that it no longer takes a place in my portfolio as I had sold it off at 17 cents on October 3, 2007, incurring a loss of about 4.2%. This coincided with Global Voice’s announcement that they were issuing EURO 35 million worth of convertible bonds, and I had written in a separate posting how this was likely to adversely affect the cash flows for the company, thus making it the last straw for me to sell.

The STI continues to make new highs, even briefly touching the 3,900 point mark before retreating. SGX has unveiled a new set of 30 stocks comprising the new, revamped STI (in collaboration with FTSE) which will be implemented on January 1, 2008. In addition, there will also be new indices for China stocks, oil and gas and mid-cap, to name a few.

Below is the summary of my investments and related news as at October 15, 2007 (STI at 3,862.02 points):-

1) Ezra (Vested since October 6, 2005) - Buy Price $1.30 (bonus adjusted), Market Price $6.90, Gain 431%. On October 1 and 5, 2007, Ezra announced the successful sale of 51.1% of EOC Limited (including April 2007’s sale), leaving Ezra with only 48.9%. They will thus equity account for EOC’s results from FY 2008 onwards and this is in line with their practice of being asset-light. The proceeds from the sale will be used for vessel fleet expansion, working capital, acquisitions as well as a dividend to shareholders. Ezra are due to report their FY 2007 results on October 16, 2007 (Tuesday) after market close. I will be doing a review of their results about 2 to 3 days after the release, in order to compile the information and analyze the numbers.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.38, Gain 83.8%. There was no news from Boustead in the half-month ended October 15, 2007.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.80, Gain 276.2%. Swiber had announced more details of their sale and leaseback on October 1, 2007, in which US$95 million would be received in cash progressively and the company will book in a gain of US$33 million which represented the excess of proceeds over book value of US$62 million. The disposal needs to be approved at an EGM to be held at a future date. My previous posting also mentioned that the Group had purchased 4 new vessels (2 subsea and 2 10,000 bhp AHTS) in an effort to expand their capabilities into deep-water. The vessels will be delivered between 4Q FY 2009 and 1Q FY 2010.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.91, Gain 72.1%. There was no further news on Suntec REIT besides the fact that the resolutions were approved at the EGM held on October 8, 2007.

5) Pacific Andes (Vested since March 29, 2006; Rights Issue July 11, 2007 at S$0.52 per share; averaged down August 17, 2007) - Buy Price $0.655 (rights-adjusted), Market Price $0.835, Gain 27.5%. On October 10, 2007, China Fishery announced the acquisition of a 7th fishmeal processing plant in Chimbote for US$15.3 million. This plant can process 60% steam-dried fishmeal and 40% flame-dried fishmeal and will increase the Group’s total fishmeal processing capacity to 549 tonnes per hour. The acquisition will be funded from the proceeds of the senior notes due 2013.

Overall Portfolio

My overall portfolio has increased by 146.9% from an adjusted cost of S$43.2K (less the cost of Global Voice) as at October 15, 2007. The market value of my portfolio is about S$106.7K and unrealized gains total S$63.5K. Realized gains have dropped slightly to S$3.94K to reflect the realized loss taken on Global Voice.

Comparison against STI

The STI was 3,037.74 on January 3, 2007. It is currently at 3,862.02 today, representing a gain of 27.1%.

Adjustment of cost to ensure consistency of comparison – My cost and market value were S$33.9K and S$46.0K respectively as at Jan 3, 2007 while my current adjusted cost (after selling Global Voice) is about S$43.2K. Thus, I will adjust the market value of my holdings as at Jan 3, 2007 according to the % difference in cost in order to ensure a fair comparison. After adjustment, the new market value will be about S$58.6K. The market value of my holdings as at today is S$106.7K. This represents an increase of about 82.1%.

Thus, as at Oct 15, 2007, my portfolio has risen by a gain of 55 percentage points higher than the STI.

My next portfolio review will be on Wednesday, October 31, 2007 after market close.


Anonymous said...


Pretty good returns. Keep up the good work. It does not matter whether one is a growth investor (like me) or a value investor, as long as one makes money ;-)


level13 said...

I had GV some time back. sold off at a profit. didnt want to look at it again. Reasons are:
1) it is a capital intensive business. always issuing convertible bonds and diluting current shareholders interest.
2) the huge amount of shares outstanding. Even if it made profits in the future, the EPS will likely be low.
As a value investor, the 2 points above are precisely what you dont want to see.


musicwhiz said...

Hi MM,

Thanks, I believe growth and value investing are closely tied together, so perhaps our methods are not so different after all. :)

Regards, Musicwhiz

musicwhiz said...

Hi level13,

Thanks for the reminder on GV. I am glad to be able to cut loss and learn from my mistake. An investor gets better and better from the mistakes learnt, as long as he does not repeat them. I agree that companies with huge share floats (e.g. Memstar) cannot easily increase their EPS. What Management needs to do is to initiate a share buy-back assuming the company has sufficient cash, in order to enhance EPS.

Glad you managed to sell GV at a profit. Cheers !

Regards, Musicwhiz