Mid-January 2008 Portfolio Summary and Review

It has been a rather turbulent half-month from January 2, 2008 till today, with more sub-prime worries plaguing market sentiment and casting doubts on the ability of the USA to stem off a recession. With recession fears looming, the market has been sold down relentlessly by fund managers and house traders who are unwilling to take long-term positions. Of course, the selling of late has also been the result of margin calls, as people who purchased shares three to four days ago in the hopes of a quick contra gain could only watch helplessly as the market plummeted even more. Of the 10 trading days (including today) since January 2, 2008, the Straits Times Index only rose on 2 of those sessions, thus it was closing negative 80% of the time.

In total, since January 2, 2008, the STI has lost 327.72 points, falling from an year opening of 3,482.30 to the current 3,154.58 (a loss of 9.41%). Of course, one could argue that during that time, the components of the STI have been somewhat altered, and thus the index is not directly comparable any longer. For myself, I saw a good chance of buying into a shipping trust at an attractive yield of about 10.8%, and so I made my purchase yesterday of FSL Trust at a price of S$1.17. Such defensive instruments are good during periods of market turbulence as they give consistent yield, and at the same time, I also could not find many bargains for the companies which I was eyeing. Instead of parking my money in the bank earning a measly 1.5% per annum, I decided to stash some cash into this high-yield security.

Below is the summary of my investments and related news as at January 15, 2008 (STI at 3,154.58 points). I have included Year-To-Date (YTD) gain or loss as a way to benchmark each company’s share price performance instead of a total portfolio basis, as I have made changes to my portfolio on January 14, 2008:-

1) Ezra (Vested since October 6, 2005) - Buy Price $0.645 (bonus adjusted), Market Price $2.87, Gain 345%, YTD Loss 13.6%. Ezra released their 1Q 2008 financials on January 11, 2008. I will be doing a review of their results in my next posting, along with their fleet prospects and charter rate review as well. One thing which I am unhappy with (and I have emailed to the Management) is the S$19.1 million provision for staff incentives as a result of the successful listing of EOC Limited on Oslo Bors. Apparently, CLSA also felt that this move was excessive and was not done in favour of minority shareholders. I personally do not expect a special dividend from the divestment of EOC as I know the company may need it for working capital or to expand their fleet; but knowing that S$19.1 million was set aside just for rewarding their staff is a little too much. I shall keep investors updated on Management’s response.

2) Boustead (Vested since September 13, 2006; averaged down November 13, 2006) - Buy Price $1.295 (average), Market Price $2.34, Gain 80.7%, YTD Loss 2.9%. There was no news regarding Boustead for the half-month ended January 15, 2008, and it was not sold down enough during the last 10 trading days for me to consider adding to my position, as the company’s long-term prospects look good. Incidentally, in the first issue of The Edge Singapore for 2008, Boustead was listed as one of the magazine’s Top 10 stock picks for 2008, and it included a short interview with Mr. F.F. Wong on the company’s plans and latest negotiations for contracts.

3) Swiber (Vested since February 14, 2007) - Buy Price $1.01, Market Price $3.05, Gain 202%, YTD Loss 11.1%. There was no news from Swiber for the half-month ended January 15, 2008.

4) Suntec REIT (Vested since December 9, 2004) - Buy Price $1.11, Market Price $1.53, Gain 37.8%, YTD Loss 10.5%. There was no news for Suntec REIT during the half-month ended January 15, 2008.

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 $0.51, Loss 22.1%, YTD Loss 19.0%. There was no news from the company during the half-month ended January 15, 2008.

6) China Fishery Group (Vested since November 20, 2007) - Buy Price $1.50 (average), Market Price $1.58, Gain 5.3%, YTD Loss 14.6%. There was no news from the company during the half-month ended January 15, 2008.

7) First Ship Lease Trust (Vested since January 14, 2008) - Buy Price $1.17, Market Price $1.20, Gain 2.6%. There was no news from the shipping trust during the half-month ended January 15, 2008. Their FY 2007 results and dividend announcement are due out on January 16, 2008 (Wednesday) and I will provide a quick review of it.

Overall Portfolio

My overall portfolio has increased by 64.4% from a new cost of S$70K as at January 15, 2008. The market value of my portfolio is S$115.1K. Realized gains remain at S$4.55K.

Comparison against STI

As mentioned, the STI had declined by 9.41% from the start of 2008 till now. Due to the change in the composition of my portfolio, it will not be very comparative to do an adjusted cost, therefore I will report my portfolio results as if I did not make the FSL Trust purchase. Henceforth, I will be reporting in this manner, treating the FSL Trust as a separate company to be evaluated on its own, as I did not purchase it right from the start of the year. If any reader knows of a better way to measure total portfolio performance, please do drop a comment !Without FSL Trust, my portfolio would have declined by 11.3%, mostly as a result of the forced selling of Pacific Andes which exacerbated the unrealized losses. As a result, to date in 2008, my portfolio has under-performed the new benchmark STI by 1.9 percentage points.

My next portfolio review will be on Thursday, January 31, 2008 after market close.