Friday, December 14, 2007

Mid-December 2007 Portfolio Review

It has been a slow month for me during the half month ended December 14, 2007, as there have been no news updates from the companies I own. I am quite content to sit back and let Management do their job in growing the company, and am not worried as long as there are no unforeseen events negatively impacting my companies. The recent fishmeal report for December 2007 for CFG and PAH did indicate rising prices of fishmeal surpassing US$1,000 per ton, and this bodes well assuming the price can stay constant due to limited supply.

The market did suffer sudden, unexplained bouts of extreme volatility, as is characteristic of a jittery bunch of speculators who will buy at the hint of good news and sell the moment things appear to be turning sour. Such activity is, of course, very conducive for the pockets of brokerage firms but can hardly be said to benefit the retail investor. One should not let Mr. Market’s moods dictate if you should buy or sell, instead one should observe the fundamental characteristics of each company to decide if it offers value. The proponents of Modern Portfolio Theory will of course stress diversification in such volatile times, as it offers protection against downside. But diversification is also a barrier to exceptional returns, and the theorists have often neglected to mention this. Companies with stable fundamentals and good growth will ultimately outperform market averages over an extended period of time, so patience is needed for an investment to grow in value.

Below is the summary of my investments and related news as at December 14, 2007 (STI at 3,466.38 points):-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $3.18, Gain 393%. I received Ezra’s Annual Report FY 2007 a while back, and have been spending time digesting its contents. There is really a lot to learn about a company from its financial statements and detailed Notes To The Accounts, and I already have several queries in mind to approach Management during the AGM. Incidentally, the AGM will be held on December 24, 2007 (Christmas Eve) and I will provide an update on the proceedings on my blog. Ezra is currently on cum-dividend for 3.55 cents per share, ex-dividend date is on December 31, 2007.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.38, Gain 83.8%. The only news concerning Boustead was that director Mr. Loh Kai Keong had purchased 135,000 shares from the open market, at around S$2.35 (exact price is unknown). It has certainly been a while since a director of a company increased his stake, and it could signal more positive developments to come in future. There has been virtually no further positive newsflow from the company since their announcement of the mega S$300 million project in Libya (of which the Group will take a 65% stake in), but I do expect more growth in CY 2008. The dividend of 3 cents per share was received on December 13, 2007.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.30, Gain 226.7%. Swiber has toned down its newsflow as well, after releasing a slew of press releases in Nov 2007. It will be holding an EGM to approve the second round of sale and leaseback, and this will be held on December 28, 2007 10 a.m. at its office at International Business Park. I am considering if I should take the time to attend this meeting, as it could reveal good insights about Management’s direction for FY 2008; and I do have some questions on Equatorial Driller as well which I hope to bounce off Mr. Raymond Goh. In the meantime, I will be reading the circular for the EGM which I just received this evening.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.65, Gain 48.6%. There was no news for Suntec REIT during the half-month ended December 14, 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 $0.62, Loss 5.3%. There was no news from the company during the half-month ended December 14, 2007.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.90, Gain 26.7%. There was no news from the company during the half-month ended December 14, 2007.

Overall Portfolio

My overall portfolio has increased by 95.5% from a cost of S$58.3K as at December 14, 2007. The market value of my portfolio is S$113.9K, up slightly from S$113.8K for end-November 2007. Realized gains remain at S$4.3K, pending the ex-dividend date of Ezra.

Comparison against STI

The STI was 3,037.74 on January 3, 2007. It is currently at 3,466.38 today, representing a gain of 14.1%.

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 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$113.9K. This represents an increase of about 44.0%.

Thus, as at December 14, 2007, my portfolio has risen by a gain of 29.9 percentage points higher than the STI.

My next portfolio review will be on Monday, December 31, 2007 after market close. I will also do a special year-end review and there will be a general commentary on what to expect in FY 2008 for the companies I own (though I may decide to do a separate posting on this).

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