Friday, November 28, 2008

November 2008 Portfolio Summary and Review

November 2008 was similarly peppered with interesting developments in the financial and economic world, which saw once spectacular blue-chip institutions such as General Motors and Citigroup being brought to their knees as the credit crunch continues its devastating rampage. At the risk of sounding like an over-zealous newscaster, I will elaborate on the events of this month in the next paragraph, and will try to temper the tone of language in order to achieve a more sober address.

With Hong Kong, Japan and Germany officially in recession, it would just be a matter of time for the United States. This will probably culminate (and go down in history) as the first truly global recession and economic downturn. There are probably many books which will be written on this in the years to come, and the amount of wealth destruction has gone into the trillions of USD. So, if you are an individual (like myself) and feel that you are getting somewhat poorer, don’t fret because millions of others around the globe are probably in the same boat or doing much worse. Even billionaires and millionaires have been unable to escape unscathed as their wealth has fallen dramatically during such hard times. It is only with prudence, fortitude and determination that one can get through these unprecedented times.

The problems with USA auto-manufacturers rose this month as a result of a sharp drop in USA consumer confidence and spending, leading to the worst sales for auto manufacturers in at least 20 years. The 3 biggest car companies (located in Detroit), namely General Motors, Ford and Chrysler, petitioned for the Federal Reserve to extend financial assistance to them, or they may be bankrupt by June 2009 as a result of high cash burn and flagging sales. As of this writing, there was still no definitive solution to their woes, though President Obama has mentioned some form of aid package to be made available to them. Citigroup, the once vaunted financial institution, was on its knees as it laid off 50,000 staff worldwide and sought to raise more capital. You can read on Bloomberg or CNBC the steps taken to rescue Citigroup, and I shall not elaborate on it.

With all these nerve-racking developments, it is no wonder everyone is living in a climate of fear and trepidation. With the most recent news of political turmoil in Thailand and terrorist attacks in Mumbai, India, this really is NOT helping the already fragile economic situation. South-East Asia is set to destabilize further as confidence in the region erodes, and more funds pull their monies out for fear of further instability. Singapore and Hong Kong may benefit though, as they are seen to have stable economies with limited trouble, but in the near term the export-oriented nature of both countries would cause investors to remain cautious.


There was significant news regarding the companies I own, as five of them had released their financial results during the month. Since I had already covered this in a previous post, I will keep this short and only report other material news:-

1) Ezra Holdings Limited – Ezra announced yesterday that they would be reviewing their options for 5 MFSV ordered some times in 2007 and 2008, in view of the challenging global economic conditions. The first contract to be reviewed is a US$68 million one signed with Keppel Singmarine, and Keppel has affirmed that they are “in talks and discussions” to negotiate on the contracts by Lewek Shipping (a subsidiary of Ezra). Assuming all 5 options for MFSV are cancelled, Ezra stands to lose just the deposit and future contracted revenues (assuming charters had already been secured). In the near term however, the move is positive as it allows cash flow to be eased and for the company to remain more nimble to deal with current issues. I will raise this (and other issues) at the upcoming AGM in December 2008.

2) Boustead Holdings Limited - There was no news from Boustead for November 2008. Note that the ex-dividend date for the interim dividend of 1.5 Singapore cents per share is on December 1, 2008. I had done a review on Boustead’s 1H FY 2009 in a previous post.

3) Swiber Holdings Limited – There were no announcements from the Company for November 2008. Shareholders are still awaiting news on the EGM to approve the third wave of sale and leaseback for 5 vessels. I had done a quick review of Swiber’s 3Q 2008 results in a previous post.

4) Suntec REIT – Suntec REIT did not release further news for November 2008. I have included the dividend in my realized gains for this month’s portfolio summary.

5) Pacific Andes Holdings Limited - There was no news from PAH for November 2008 (other than the results announcement), other than director Bernie Cheng Shao Shiong buying up 400,000 shares over 4 days (including today) at a price of S$0.145.

6) China Fishery Group Limited - There was no news from CFG for November 2008, other than the results release which I had highlighted in a previous posting.

7) First Ship Lease Trust – There was no news from FSL Trust for November 2008. The dividend of 3.05 US cents per unit (converted at an exchange rate of 1.5287 to the USD) was received on November 28, 2008.

8) Tat Hong Holdings Limited – There was no significant news for the company for the month of November 2008, other than their 1H FY 2009 release of financial results. I had done an analysis of the Company in a previous post, and I had included the interim dividend of 3.5 Singapore cents per share in my realized gains for my November portfolio review.

Portfolio Comments

November 2008 was somewhat unchanged from October 2008 in terms of sentiment (still fragile) and valuations (still depressed and attractive for long-term accumulation). As at end October 2008, the STI was trading at 1,794.20; by the end of November 2008, it had dropped by 3.4% to 1,732.57. On a positive note, my portfolio improved from a total loss % of 41.8% as at end-October 2008 to just 34.5% as at end-November 2008, helped by the life blood of dividends during this protracted and prolonged bear market.

There were no further purchases made this month as market prices of the companies I own did not fall to the lows seen during October 2008. If such opportunities present themselves again in the coming months, I will not hesitate to increase my position and to average down further.

My next portfolio review will be on Wednesday, December 31, 2008 after market close, and will include a special year-end review and commentary (similar to year-end 2007).

14 comments:

qx said...

Hi MW, if you can read Chinese well, I recommend you to read this investment blog from HK.
http://redmonkeyblog.blogspot.com/

I think this investor focus more on macro factors and less on micro (company)factors. He also shared a lot on pyschology factors of retail investor.

musicwhiz said...

Hi qx,

Thanks, I went to take a look. Not too good at reading Chinese but I think he also has a portfolio online like myself where he features his gain/loss. However, I did not read the text of his blog. If what you say is true, then I believe he is not using value investing techniques.

Cheers,
Musicwhiz

Anonymous said...

Hi, happen to look at your blog by chance on Tat Hong's postings. Ur blog is realli well-written. I've gathered lotsa insights. Ur portfolio looks realli good in the 2-3 yrs. Like you, I'm also nursing losses. But I think it's good time to pick up Long term multi-baggers when prices are so attractive. Keep blogging! Cheers

paul said...

Hi MusicWhiz,

i admire your courage to disclose your portfolio so openly to others.

Everyone seems to be suffering major losses now but i'm sure things will pick up soon.

Thanks for being so consistent!

cif5000 said...

Hi Musicwhiz,

I notice that you include the difference between STI Peak & STI Today on the presented table.

Are you contrasting the movement of your portfolio value against that of the STI?

Anonymous said...

MW

A lot will depend on the current market situation.

PanzerGrenadier said...

Hi Musicwhiz

My portfolio is also in red and easily > 50% paper losses. I'm just holding and collecting dividends and thinking more about how randomness is more common that we think in life. [Reading Nassim Nicholas Taleb's "Fooled by Randomness" and "The Black Swan" kind of does that to you!]

The more I see the upheavals in the market, the more I don't believe in efficient market hypothesis. :-)

Be well and prosper!

musicwhiz said...

Hi Anonymous @ Nov 30,

Thanks for visiting and for looking at my Tat Hong posting. Yes, I feel this is a good time to buy companies for the long-haul, not when they are massively popular and trading at high valuations.

Regards,
Musicwhiz

musicwhiz said...

Hello Paul,

Thanks too for visiting. Blogging helps me to collect my thoughts and also serves as a diary for my investment journey, so I can learn from mistakes or spot any flaw in my analysis (on hindsight). I feel being consistent is important to earn a decent return from investing, and not to "flee from the scene" when things start to look bad.

Cheers,
Musicwhiz

musicwhiz said...

Hi cif5000,

No, there is no correlation between my portfolio gain/loss and STI's gain/loss due to the additions to my portfolio over the months.

The STI display is just to highlight the drop from peak last year as a measure of the severity of the stock market slump, and is not meant to use as a benchmark for my current portfolio.

Thanks,
Musicwhiz

musicwhiz said...

Hi Anonymous @ Dec 1,

Sorry your statement is too vague. Please explain thanks.

Regards,
Musicwhiz

musicwhiz said...

Hey Panzer,

Thanks for dropping by ! Yep, now is a good time to collect companies on the cheap and also to accrue dividends from the companies we own. No point losing sleep over the "losses" because if your horizon is long-term and you do not need the cash, just relax and treat the market as just a place to execute a transaction.

I too don't believe in Efficient Market Hypothesis, or else I would not be practising value investing ! Haha !

Cheers,
Musicwhiz

Anonymous said...

Dear Musicwhiz,

Have you ever considered including Jaya Holdings Ltd as part of your portfolio. The company's price ie about $0.27 is below Ezra and Swiber but gave generous dividends. Is Jaya a competitor against Ezra and Swiber in the same industry? How is Jaya's prospect compared with Ezra and Swiber? At the current price, does Jaya offer a greater margin of safety when compared with Ezra's and Swiber's?

Regards

ROBERTAY

musicwhiz said...

Hi Robert Tay,

I have not really read up or researched on Jaya holdings, so I cannot say much about the prospects of the company, neither can I comment on their fundamentals. Please do NOT look at price alone to compare companies - it is valuations and prospects you should be looking at instead of absolute price.

I do not think Jaya is a direct competitor though I heard they have plans to aggressively expand their fleet in the coming years. DBS has issued an oil and gas report today (Dec 5) which covers the companies you mentioned. Go take a look (it's on remisiers.org), one of my links by the right sidebar.

Cheers,
Musicwhiz