Friday, April 01, 2011

March 2011 Portfolio Summary and Review

I guess March 2011 will be very memorable because of one very striking event – the huge 9.0 magnitude earthquake in Japan which triggered a massive, deadly tsunami which wiped out more than 20,000 people and which left Japan in a state of paralysis and shock. My heart goes out to the victims and to those whose lives were irreparably shattered by this natural disaster, as Japan reels from the worst earthquake since records began. But the Japanese are a resilient people and rebuilding is due to commence once search and rescue have completed their grim tasks and the rubble is cleared away, which may take many long months. Such horrifying tragedies only serve to remind me every day of how lucky I am to be living in a disaster-free country (no volcanoes, earthquakes or typhoons), and I am thankful for that. The Nikkei plunged about 13% in 2 days as a result of this catastrophe, and the Singapore market also took its cue from Japan and started to plunge below the 3,000 mark, only to swiftly rebound when the panic and fear had subsided over the possible worldwide nuclear contamination.

The other “big” piece of news which needs no more mentioning is the war and violence in Libya, and I shall not go into details because the news is already reporting it to death. Other than this, other news included URA coming up with a new set of guidelines for property developers to make sure they do not deceive prospective buyers with misleading showflats (they are seeking public consultation on this till mid-April 2011). Inflation is once again rearing its ugly head in rising food prices (gosh, even school kids are not spared), and COE prices remained high at S$43,813 for small cars and S$59,073 for Open Category. I guess all this means that elections are coming soon, because there is definitely a lot to talk about and even more to contest over! (And also because all the parties are starting to “parade” their candidates publicly, thus heightening the already palpable tension in the air).

In the interest of brevity, and because I know I have a tendency to start to ramble on about news, economics, politics and other seemingly mundane issues, I shall forcibly stop myself here just in case.

My portfolio and comments for March 2011 is as follows:-


1) Boustead Holdings Limited – From the bad news in February 2011 comes a sudden turnaround in March 2011, with Boustead announcing contracts for Boustead Projects as well as a tie-up for ESRI Singapore. But first, the bad news – on February 28, 2011 Boustead quantified their potential financial exposure to the ongoing crisis in Libya, to the tune of S$15.5 million to S$39.6 million. This was omitted from my previous month-end portfolio review as the review had been prepared before the announcement came out late on the last day of February. With luck though, the Company can activate the “Force Majeure” clause and recoup some of the losses, but at this point in time it looks like the war may be a protracted one and is not likely to end soon, so I will take it that Boustead will write-off their entire investment in the Al Marj Township in Tripoli. And now for the good news – Boustead Projects announced a total of 3 contracts almost back-to-back; two were announced on March 16, 2011 and involved a S$55 million design and build contract for SDV Logistics to build a logistics facility, and a S$17 million design and build contract for a high-tech production facility (client not mentioned). The next day on March 17, 2011, Boustead Projects announced a design, build and lease (DBL) contract for Continental Automotive Singapore Pte Ltd, and this will be Boustead’s eighth DBL contract in their portfolio of leasehold properties. Then on March 22, 2011, Boustead announced that ESRI Singapore (their geo-spatial arm) had teamed up with Earthmine to deliver 3D panoramic street level imagery in Singapore.

2) Suntec REIT – There was no news from Suntec REIT for the month of March 2011.

3) MTQ Corporation Limited – MTQ announced on 4 March 2011 that they had subscribed for 200 million shares of Neptune Marine Services Limited (“NMS”), an oil and gas services company listed on the Australian Stock Exchange, at AUD 5 cents per share. NMS was undergoing a re-capitalization exercise and was offering 3.6 new shares for every ordinary share in order to raise money to clear off debts and to restructure the Company’s business divisions. As a result of many existing shareholders not taking up their rights entitlement, MTQ then moved in to purchase a nearly 12% stake in the Company for A$10 million (about S$12.93 million). The rationale for this investment was that MTQ viewed NMS as a strategic extension of its predominantly workshop-based operations in Singapore and Bahrain. MTQ wanted exposure to a complementary business which would bring about synergies with its current business and enhance long-term shareholder value. These quoted investments will appear under MTQ’s Balance Sheet as at March 31, 2011 when they release FY 2011 financial statements some time in May 2011. For info, the closing price of NMS on the ASX on March 31, 2011 was AUD 4.6 cents.

4) GRP Limited – There was no news for GRP for March 2011. The interim dividend of 1 cent/share was received on March 2, 2011.

5) Kingsmen Creatives Holdings Limited – There was no news from Kingsmen for the month of March 2011.

6) SIA Engineering Company Limited – There was no news from the Company for March 2011.

Portfolio Review – March 2011

Realized gains remained at S$55.4K in the absence of any divestment and also no dividends were declared for the month of March 2011.

Due to the Japan mega-earthquake and the turmoil in Libya, Mr. Market became rather manic-depressive and therefore I took the opportunity to increase my stakes in Kingsmen Creatives and SIA Engineering. A total of about S$16.8K was injected to purchase more shares in Kingsmen at 56 cents and 55.5 cents on March 1 and 2, 2011; while S$7.8K was injected to purchase more shares of SIA Engineering at S$3.91 on March 17, 2011. A total of S$24.6K was added to my cost which has now risen from S$185.3K as at end-February 2011 to S$210K as at end-March 2011. My cost for Kingsmen remains the same at 56 cents, while I have reduced my cost of investment in SIA Engineering to S$4.064 from S$4.087 previously.

For the month of March 2011, the portfolio has dropped by -5.1% (using XIRR in MS Excel to compute) against a -2.6% fall in the STI; thus underperforming by 2.5 percentage points. Cost of investment has increased to S$210K as explained earlier, and unrealized gains stand at +10.5% (portfolio market value of S$232.1K). Cost of investment now stands at its highest level ever, and I plan to continue to add on to my positions or to initiate new positions if opportunities arise.

April 2011 will be an interesting month to sit through as the crisis continues to unfold in many parts of the Middle East such as Yemen and Bahrain, and as turbulence continues to rock Libya, resulting in escalating oil prices. The earthquake relief efforts and containment of nuclear radiation in Japan’s Fukushima plant are still ongoing, and this will cast a pessimistic pall over sentiment in the short-term. Suffice to say that I am constantly building up my cash reserves month after month through regular savings, rental and dividends; and will not hesitate to deploy more cash should I see suitable opportunities.

Of course, monitoring the health of my companies is of utmost importance, as is reading news pertaining to their industries and businesses and reviewing any announcements or press releases which they may come up with. Such is the interesting journey of a value investor, and I seek to constantly learn more about how companies tick and what separates a great company from a mediocre one. April 2011 will not see many results released (in fact, only Suntec REIT), so it will be a time for reading, research and reflection as I polish my craft and enhance my knowledge base.

My next portfolio review will be on April 30, 2011 (Saturday).

24 comments:

Dennis said...

when did u start investing into stocks? Total returns of 36.9% over 5 years, that's very poor returns after you have done so much "work" in investing.

Your returns would have at least been a few hundred percent if you learn TA which would have managed to help you avoid the Stock Market Crash in year 2008 and you bought stocks again after the market crash.

That's precisely what I did.

JW said...

Dennis, you failed to consider a few things mathematically and statistically.

MW pumps in and takes out capital constantly. His gain on his report is merely on his portfolio size, and does not take into account

i) The money he has taken out, which would make the gain appear higher. But this effect isn't very big for MW does not take out much money.

ii) The money he has constantly put in throughout the market crash to the market bull, which would make his gain appear much lower. This effect is bigger on his portfolio.

iii) His past mistakes.




Your paragraph that your returns would have been a few hundred percent and avoided the market crash if one learns TA is an extremely one-sided view. If you managed to do it, congratulations. Fact is, everyone of us knows "TA Experts" back then who lost their fortunes. Trading is never a zero-sum game; it's worse than that for brokerage fees needs to be paid.




Finally, MW's heaviest work is to type out and share his analysis on his blog. The amount of time spent on consolidating his thought processes to share with us is much more than analysis, which can be fixed and simplified like TA. You merely need to zoom in to that few numbers you want if you know what you are looking for.



Certain S-chips used what I called personally, "reverse FA", to trick value investors in. I believe there will come a time when "reverse TA" is used against TA traders too.

JH said...

Dennis:

I notice the above blog was copy & paste from a blog, dated 16 Mar 2011.

Any reason for such double posting (see below)??

-----------------------

http://www.blogger.com/comment.g?blogID=28021668&postID=5058614918601663561


"...Dennis said

Your returns would have at least been a few hundred percent if you learn TA which would have managed to help you avoid the Stock Market Crash in year 2008 and you bought stocks again after the market crash.

That's precisely what I did.

March 16, 2011 1:46 PM..."

la papillion said...

Hi JH,

I've a simple explanation. Dennis is a spamming bot and should be treated as such.

Contestsinkie said...

Hi MW,

What's the your reason for increasing your stake in Kingsmen?

Just curious...

Musicwhiz said...

Hi Contestsinkie,

The proceeds from my divestment of Tat Hong had to be re-deployed. Tat Hong was giving me a yield of about 3% based on my purchase price, and that was a business which needed heavy capex. The decision was then to deploy the monies into a company which had a good track record of high ROE and healthy FCF, and Kingsmen has been well-researched by me and was giving a yield of about 6.25% at my purchase price (I did not factor in the one-off special dividend of 0.5c per share). Hence, my decision to inject more monies into Kingsmen. Some of the proceeds plus additional savings was also chanelled into a blue-chip company SIA Engineering with a projected FY 2011 yield of 5%.

Regards,
Musicwhiz

Createwealth8888 said...

We may want to measure our investing success against our investing goals.

Once you have met your investing goals, you have succeeded.

Congratulate yourself for that year and take it one year at a time as investing is a marathon race and you still have many years to go.

So what is your investing goal in the stock market?

Examples:

1. Beating bank fixed deposit interest rate

2. Beating inflation rate

3 Building up your passive income streams

4.Building up your child's university fund

5.Building up your retirement fund

6.Building up your wealth to reach financial independence stage

or

7. etc...

I know MW's investing goal is 2) Beating inflation rate.

From his Total returns of 36.9% over 5 years, I will say that he has met his investing goal. His performance rating is Good!

Read? http://createwealth8888.blogspot.com/2011/01/portfolio-management-measuring-your.html

Cory said...

MW, glad you have used XIRR.

A realtively easy baseline of measuring without overly taxing to support while maintaining privacy.


Cory

Dennis said...

beating inflation is easy, our goal as Investors should not be so low.

Even if anyone buying STI ETF could have beaten his returns, that's why his returns are mediocre.

It is the Truth, but I know me speaking truth hurts, difficult to accept Hard Truths sometimes.

Cheers!

Dennis Ng

Dennis said...

Hi Musicwhiz, remember me? I avoided stock market crash in year 2008 and reached Millionaire status then. Please learn, u can improve your investment performance if you're open-minded enough to learn from others.

kennynah said...

hey you, Dennis (the menace)!

this is Kennynah, remember me?

why are you being a pest here in MW's blog.

how MW does in his investment portfolio is none of your business.

you have been lucky that CID branch wasn't able to nap you for your marketing of questionable land banking products a few years ago. in case you were wondering, i filed a report against your firm and you.

don't push you luck too far and go away.

you are certainly not welcome here, just as we banned you from joining us at investideas forum.

we all know you are not a nice person, but at least, for your own sake, try to be a decent person. otherwise, your parents will be very ashame of you, acting like some spoilt brat.

Dennis said...

As I said, if people are open-minded enough to listen to me, they would have avoided the stock market crash in year 2008 and you would have been much Richer than you currently are. I am so high profile and uncalled for personal attacks on my by kennynah only shows the kind of person he is (looks like he has NOT changed). I have a fortnightly Personal Finance column in My Paper and often sought by TV, Radio, Newspapers and Magazines for comments on Personal Finance and Investing. Why? Think about it.

Be open-minded, our minds are like the parachute, only useful when open.

Cheers!

Dennis Ng

Dennis said...

As a comparison, I made over 200% returns from year 2002 to 2007. I made another over 60% returns in last 2 years.

Not trying to boast, my returns are just average in fact, but hoping that it becomes clear for more people to see that if we are open-minded to learn from others, we can possibly Improve our Investment Performance.

Cheers!

Dennis Ng

Createwealth8888 said...

I too like to see MW setting higher investing goal. But, the truth is not all horses want to win the race.

Some horses prefer to be ride by kids and then walking down the path slowly at their own sweet time. Kids like it that way too. LOL

AK71 said...

Hi all,

My first comment here although I have been aware of the exchange for a while now, courtesy of MW and LP.

I was wondering if I should say this as I really don't want to join the fray but I just decided to do it. You could think of my comment as a stray bullet and don't dwell on it... too much.

Whether someone's performance is good, average or poor depends on the yardstick that is being used. Unless we are in a regulated environment like a national school, it is really subjective. Even the grading or ranking systems in our schools are not perfect.

In fact, recently, I asked CW to help rank my performance because I had never done it before and he explained to me quite clearly how he would rank my performance based on the goals which I have set for myself. This was just for fun.

There are so many types of people in this world with different aspirations. There are so many types of investors in this world with their own methods. While it is good to exchange ideas and share methods, it is up to the individual to decide on his path.

I am puzzled as to why would someone force ideas down others' throats and try to make them look bad by saying "I have done so well and you have done so badly".

If people do not like my ideas, I stop sharing my ideas with them. Otherwise, they might think of me as a buzzing fly, an irritant.

Live and let live.

AK71 said...
This comment has been removed by a blog administrator.
Createwealth8888 said...

Read? Marathon and Investing

Dennis said...

I'm not trying to boast, but it is REALLY the Truth that if a person only manage to get 39% returns over last 5 years, while others are getting say 200% returns, then the Wealth Gap between these 2 Investors would get wider and wider.

The Rich get Richer and Richer becos they learn how to Invest,

This is my last posting here since it is clear that no one really get the Message I'm trying to put across and only thinking that I'm trying to boast.

Well, my true Intention I know very well, I hope musicwhiz can be open-minded enough to learn to improve his investment performance since he is spending so much time on investing and analysing, he is currently NOT maximising his potential.

Cheers!

Dennis Ng

Cory said...

Dennis, I think there is a huge misconception.

The 36.9% is based on the current portfolio size which has grown over the years and with new funds.

This will significantly skew the %.

If MW has started with 10K, 5 years ago, it would have been 775% with current P/L.

XIRR for each year will be a better estimate. There are other methods but i am just giving an example.

MW values is in his Investigative reports. I thought is not money can measure easily for so many to read. You have miss out all this without appreciation.

I understand where you are coming from. But I think there are better ways to communicate better.


Cory

Sgbluechip said...

Hi MW, oil demand is not likely to taper off with the middle east unrest. Currently India and China are having the highest car population growth with India having cheap cars at the expense of inefficient (oil consuming) engines. Do you think when airline companies cut back on their budget, SIA engineering will be hit with smaller margins and less maintainence contracts?

I do like your analysis on the co, but it is still at the mercy of airline companies and oil prices.

And, ignore Dennis.

Musicwhiz said...

Hi SGBluechip,

Thanks for your comments. Those are well-reasoned arguments you brought up, but I think the demand for air travel is not going to taper off so drastically even if we hit another recession. SIAEC always had a stable business in the sense that it was cash-flow positive even when business fell during the last recession. And even though oil prices are rising, the rise of the budget airlines has kept demand for air travel strong; and these airplanes also need to be serviced, maintained and overhauled.

So my opinion is that SIAEC may get hit in the short-term, but it is unlikely to affect the long-term prospects of the Company. As a result, I feel that current yield should continue to hover around 4-5%.

Thanks!

Musicwhiz

Createwealth8888 said...

For those investors who inject capital regularly, it is better to use XIRR to track portfolio performance; otherwise use CAGR.

Read more? Have you started using CAGR or XIRR to measure your portfolio performance?

JW said...

Cory,
"The 36.9% is based on the current portfolio size which has grown over the years and with new funds."

I have already mentioned it.
Different people have different ways in calculating returns. But to appreciate the different ways requires a grasp of basic mathematics.

Cory said...

Here;s the link on how i compute my performance.

http://cory-investor.blogspot.com/search/label/XIRR

Absolute is good if we are leaving money in the money and doing almost nothign about it.

Annualized gives myself a self-yearly comparison as a challenge and reflection.

Cory