Friday, November 30, 2007

End-November 2007 Portfolio Review

The half month from mid-Novembe 2007 to end-November 2007 was equally turbulent, with the resurgence of the sub-prime credit crisis sparking panic and fear in global markets. Many mortgage companies in the USA such as Wells Fargo have had to make large write-downs to reflect the losses for sub-prime debt. It did not help that Sears, a popular retailer in USA, also reported a 99% drop in 3Q 2007 net profit, which led economists to conclude that perhaps spending was dropping and USA is in greater danger of falling into a recession. On the Singapore front, inflation hit a 10-year high of 3.6%, while unemployment also fell. There was no particularly earth-shattering news about the companies I own, but the economic news was certainly interesting to follow !

I did take the opportunity to purchase shares in China Fishery Group Limited (CFG) as a result of Mr. Market’s manic-depressive mood swings. This was done on November 16 and subsequently again on November 20 to average down. With a historical annualized PER of less than 10, dividend yield of more than 5% and good growth prospects moving forward, this has made it an attractive purchase. CFG has a strong competitive advantage in that they are one of the few big seafood players in the world, and the Management has a good track record of growing the company for the last 8 years. I have thus included CFG in my current portfolio review.

Below is the summary of my investments and related news as at November 30, 2007 (STI at 3,521.27 points):-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $3.34, Gain 418%. Ezra has concluded their share buy-back scheme for now, it would seem. In total to date, they have repurchased 5.436 million shares from the open market to hold as treasury shares, at an average price of S$3.4603, costing them a total of S$18.8 million. On November 23, Ezra also announced the placement of 28.879 million shares in Ezion holding, in which they have 50 million shares, at a price of S$1.21 per share, thus netting a gross cash inflow of S$34.9 million. At this point, it is unsure if Ezion will issue Ezra with an equivalent number of shares to cover back this sale and at what price, as the announcement did not make it clear. I will be clarifying this as well at the AGM. Subsequently, on November 28, Ezra announced that EOC had snared its first major regional contract worth US$148 million, of which I had done a posting on just 2 days ago.

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 not much news from Boustead, except to announce on November 28 that they had incorporated a new subsidiary company known as Boustead Infrastructures (Labuan) Pte Ltd and that its principal activity would be building construction. This could possibly be a prelude to the Group snaring some construction contracts in Labuan, perhaps ? It remains to be seen if this will come to pass. On November 29, 2007, Boustead went ex-dividend for its interim dividend of 3 cents per share, representing a dividend yield of 2.3% based on my buy price. If annualized (using last year’s final dividend of 4.5 cents per share), the total dividend would be 7.5 cents per share for a yield of 5.8%.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.48, Gain 244.6%. There was no news from Swiber other than the announcement, on November 19, 2007, that it had incorporated a subsidiary company called Kreuz Offshore Marine Pte Ltd principally engaged in offshore marine support business. Recall that Kreuz International Pte Ltd is the renamed company after Swiber acquired North Shipyard Pte Ltd on August 6, 2007.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.55, Gain 39.6%. There was no news for Suntec REIT during the half-month ended November 30, 2007. The dividend of 2.8268 cents per share was received on November 29, 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 $0.635, Loss 3.1%. There was no news from the company during the half-month ended November 30, 2007.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.58, Gain 5.3%. There was no news from the company during the half-month ended November 30, 2007. However, Pacific Andes did buy shares in CFG over a number of days. This totaled about 1.254 million shares through Golden Target Pacific Limited.

Overall Portfolio

My overall portfolio has increased by 95.2% from a new cost of S$58.3K as at November 30, 2007, as a result of the purchase of shares in China Fishery Group Limited. The market value of my portfolio is S$113.8K. Realized gains have increased slightly to S$4.3K as a result of the ex-dividend for Boustead.

Comparison against STI

The STI was 3,037.74 on January 3, 2007. It is currently at 3,521.27 today, representing a gain of 15.9%.

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 about 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$113.8K. This represents an increase of about 43.9%.

Thus, as at November 30, 2007, my portfolio has risen by a gain of 28 percentage points higher than the STI.

My next portfolio review will be on Friday, December 14, 2007 after market close.


Anonymous said...

Hi MW,

Its me again. Just a note to let you know that US market has reversed to the upside starting Thursday.

I guess to test the usefulness of market timing on portfolio returns (I know, I know, value investors are not supposed to market time ;-)), you might want test on paper how your portfolio will perform if you got out totally on Nov 9 and reloaded totally on Thursday.

That is what a CANSLIM follower will do. I avoided a 15% decline in my portfolio during this time.

Have a good weekend.


la papillion said...

Hi MW,

Great returns ;)

Hmm, buying China fish and Pac andes..almost like buying swissco and swiber. Are you not afraid of putting too much into one basket?

Musicwhiz said...

Hi MM,

Thanks for the tip. But for some of my companies, I do not think I can get them as cheap anymore should I choose to unload them. I know what you mean by selling when you think the market is too high then buying them back, but usually this is done on hindsight. It is very difficult to forecast when the market will "top" and when it has bottomed out. Thus, I choose to ride through all the ups and downs.

Have a good weekend too !

Regards, Musicwhiz

Musicwhiz said...

Hello la papillion,

I do not mind putting too many eggs in one basket as long as the basket is a good one, and provides secure returns over the years. There was an article in today's Sunday Times (Dec 2, 2007) saying that we should be careful about putting eggs in too many baskets as some of the baskets may be lousy, or may have holes.

To give another example, I had wanted to purchase shares in Ezra's associate company EOC Limited and had enquired about it from the company, only to realize that it is was listed in Norway, Oslo and investors had to have an Oslo bank account to be able to buy and hold shares in EOC. If not, I would have bought into EOC as well as it is on a path of expansion (recently, it announced a US$148 million contract).

Regards, Musicwhiz

Anonymous said...

Hi MW,

Just happen to stumble upon your blog tdy was pleasantly surprised to discover tt it contains a wealth of info abt value investing.

I found the sections on yr personal investment journey and mistakes especially illuminating and helpful for a budding investor like myself.

Really grateful for yr patience and willingness to share such insights. Keep up the good work!! =)

Musicwhiz said...

Hi ycy,

You are most welcome. Do come back often for a read and please feel free to contribute comments ! Thanks !

Regards, Musicwhiz