Monday, December 31, 2007

End-December 2007 and FY 2007 Portfolio Summary and Review

The final half month till the end of FY 2007 was also slow, as trading volumes on the SGX dwindled because of fund managers and retail investors going on vacation. The slew of public holidays and “half” trading days also did nothing to boost liquidity in our stock market. SGX had changed the bid system on December 24, 2007 to enable the bid-ask spreads to be reduced and to encourage more trading in counters. All counters below S$10 now trade in bid increments of $0.01 (except penny stocks which remain status quo) while counters above S$10 trade in bid increments of $0.02.

A forumer by the nick of cif5000 on Wallstraits forum has kindly introduced me to a website which can help to compute the annualized compounded rate of return (CAGR) on my investments. This will make it easier to track my return on investment using a time-adjusted method, rather than absolute rate of return (which does not take time into account). Thus, for future portfolio reviews, I will be including the CAGR to date.

Below is the summary of my investments and related news as at December 31, 2007 (STI at 3,482.30 points):-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $3.32, Gain 414%, CAGR 108%. Nothing much happened in the half-month ended December 31 except that I attended Ezra’s AGM on Christmas Eve which I had blogged about some time back. The counter went ex-dividend today and the dividend was 3.55 cents per share, giving me a dividend yield of 5.5% based on my purchase price.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.41, Gain 86.1%, CAGR 66.3%. There was no news regarding Boustead for the half-month ended December 31, 2007.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.43, Gain 239.6%, CAGR 301%. Swiber had clinched an extension to their mega Brunei Shell contract of US$146.6 million announced in February 2007. This time, the contract value is around US$53.4 and will be recognized in FY 2009. This further affirms Brunei Shell’s confidence in Swiber’s abilities as an EPCIC contractor. I also attended the EGM on December 28, 2007 which I blogged about earlier.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.71, Gain 54.1%, CAGR 15.5%. There was no news for Suntec REIT during the half-month ended December 31, 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 $0.63, Loss 3.8%, CAGR -3.5%. There was no news from the company during the half-month ended December 31, 2007.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.85, Gain 23.3%, CAGR 492%. There was no news from the company during the half-month ended December 31, 2007. I think the CAGR computation is a little strange for CFG, at 492% ! Perhaps the I added in the wrong figures ? Anyway, since this is such a recent investment, perhaps the simple ROI of 23.3% will suffice.

Overall Portfolio

My overall portfolio has increased by 99.4% from a cost of S$58.3K as at December 31, 2007. The market value of my portfolio is S$116.3K. Realized gains have increased to S$4.55K as a result of the dividend from Ezra.

Comparison against STI

The STI was 3,037.74 on January 3, 2007. It has a year-end close at 3,482.30, representing a gain of 14.6%.

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 adjusted current cost is S$58.3K. Therefore, my adjusted market value will be about S$79.1K. The market value of my holdings as at today is S$116.3K. This represents an increase of about 47.2%.

Thus, for FY 2007 my portfolio has outperformed the STI by 32.6 percentage points. It may be difficult to outperform the index consistently as I had read that value investors do have some very bad years, but hopefully over the long-term my annual returns will still be better than the STI.

My next portfolio review will be on Tuesday, January 15, 2008 after market close.

Year-end FY 2007 Summary and Comments

For the financial year 2007, my investments generally did well and the companies which I own saw their businesses growing at a healthy clip. As we move in FY 2008, I will continue to monitor and read up on the businesses which I own and their relevant industry in order to get a better picture of whether their earnings can continue to grow; while at the same time researching into other possible investment opportunities. The central tenets of my investment philosophy remain the same: preservation of capital and margin of safety are paramount. I will NOT take unnecessary risks in punting and speculating, but will do things the slow and steady way. Though this method may seem silly and downright stupid in a roaring bull market, it will surely limit my losses in a correction, crash or prolonged bear as I have a margin of safety as cushion.

During FY 2007, I made a total of 3 purchases of shares in companies (not including the Pacific Andes rights issue and repeat purchases to average down). These include Swiber in Feb 2007, more Pacific Andes in August 2007 and finally China Fishery in Nov 2007. There were 2 sales made during the year: that of UTAC (which I had originally purchased in June 2006 using technical analysis, then realized it was a mistake) and Global Voice (which was purchased as a turnaround play in Nov 2005 before I undertook a value investing philosophy). These mistakes and others can be found in my “Investment Mistakes” section of my blog. I will continue to be patient and wait for the right opportunities to purchase shares in good companies. If the price is not right, then I will wait indefinitely.

Overall, I am pleased with my performance in FY 2007, which represents the first full year in which I have practiced value investing. Hopefully, as I move into the future, I can improve and refine my knowledge of value investing in order to become a much better investor than I am now.

Wishing all readers a very Happy, Healthy and Prosperous New Year and may 2008 be a fruitful year !

Note: I will be going on a leisure trip to Bangkok, Thailand from January 1, 2008 and will be back on January 5, 2008. Thus, there will be no updates during this period, but feel free to leave comments on ANY post and I will promise to respond when I return from my trip.

14 comments:

Anonymous said...

Musicwhiz,

Thanks for sharing your knowledge all through 2007. I came in here to specially send my new year greetings to you.

Wishing you a very happy 2008 and a fantastic year ahead. May all your wishes come true!

SJ reader

musicwhiz said...

Hello SJ Reader,

Thanks for your New Year Greetings :) I will continue to share what I know and to continue my series as the months go by, as well as to blog on anything interesting which I may encounter.

Wishing you a very Happy 2008 too and may all your investments bear good fruit ! ;)

Regards, Musicwhiz

Anonymous said...

Hi,

This is the first time i'm reading your blog. My first impression is that you are a very good investor. Not a lot of people churn out 100% return on their investment.

However, on closer look, you seems to only include your "winners" in your performance review. I believe you bought other stocks as well. My 2 cent worth is that you can consider including all stocks that you have bought in your performance review. This would avoid mis-representation of your performance.

Thank you.

Best regards,
Concerned reader.

musicwhiz said...

Hello Concerned Reader,

Yes, I did buy other stocks as well and sold them along the way from the time I first started investing in the Singapore Stock Market. I have detailed many of the mistakes I have made under the category heading of "Investment Mistakes", which you can take your time to read.

These initial mistakes did result in realized losses, of course, which is reflected in my total realized gain/loss figure during my portfolio review. The S$4.55K realized gain which I stated HAS taken into account all realized losses from past investments PLUS all dividends received to date (since Dec 9, 2004 when I first started investing). I have kept my losses small by quickly cutting loss on non-performing companies, and keeping my existing portfolio of companies to maximize returns as I believe they have potential to grow.

Therefore, I am not only including "winners" in my portfolio; the reality is that I have sold off my "losers" such as Global Voice, Trek 2000 and Asiapharm over the years (to name a few) and retained only the good companies within my portfolio.

Should you require clarification on any other aspect of my portfolio, just feel free to drop another comment. Have a very Happy New Year and prosperous 2008 !

Regards, Musicwhiz

Derek said...

Hi MW,

I'm very impressed on how you organize your portfolio. I'm going into my 3rd year in stocks and my portfolio is still pretty messy. I will be picking up a thing or two from you especially on the 'CAGR' portion.

Have a successful and prosperous 2008!

Cheers
Derek

skyalps said...

Hi MW, I have just starting reading your blog and find it very insightful. For this particular calculation, how do you calculate the adjusted cost? By factoring in inflation? Appreciate if you could explain it to me. Thanks!

'My cost and market value were S$33.9K and S$46.0K respectively as at Jan 3, 2007 while my adjusted current cost is S$58.3K. Therefore, my adjusted market value will be about S$79.1K.'

musicwhiz said...

Hello Derek,

Wishing you a Happy New Year too !

Regards, Musicwhiz

musicwhiz said...

Hello Skyalps,

For adjusted cost, I took 46K/33.9K and multiplied by my new cost of 58.3K to get the new adjusted market value of 79.1K. Basically, it is to adjust my new cost proportionately to my old cost and old market value.

Regards, Musicwhiz

HH said...

MW, Happy New Year!

It is always inspiring to read your blog :) . Force me to do a portfolio review now.

Thanks!

cif5000 said...

musicwhiz,

I've got the high-feeling to be mentioned in your blog. The web-calculator can calculate up to only 5 transactions.

[ADV] What I will do next is to create a website that provides value investors with personal portfolio tables. We can then work out our returns, taking into account for time-based transaction such as buy, sell, stock-split, dividends, rights, capital reduction, etc. Overall portfolio or stock return can be viewed on monthly, quarterly, yearly basis. It should take another month or so. Meanwhile, I will continue to receive any good suggestions for this new site. If you have something that you would like to see, my email is cif5000@yahoo.com. Cheers and keep blogging.[/ADV]

musicwhiz said...

Hello HH,

Happy New Year too ! Thanks for visiting !

Hope 2008 will be a very good year for both of us. :)

Regards, Musicwhiz

musicwhiz said...

Hello cif5000,

Don't mention it, thanks for your help.

OK, will support the website once it is up, thanks for that too !

Regards,
Musicwhiz

TopTrader said...

great job!

musicwhiz said...

Hello toptrader,

Thanks for visiting ! :)

Regards, Musicwhiz