Sunday, 24 February 2013

The "mass" (or the majority) is always wrong?

I attended a presentation made by the school science department yesterday where there was a group of about 60 parents. The teachers went through some questions which students were made to predict and this particular question came about. The question is as follows:

Predict what will happen when an astronaut releases both the hammer and the feather from the same height simultaneously on the moon. The choices are:

A. Both the hammer and the feather will float upwards.

B. Both objects will stay suspended at the point where they are released. Neither rising or falling.

C. Both objects will fall downwards and the hammer will reach the ground first.

D. Both objects will fall downwards and hit the ground at the same time.

Which answer would you pick? As it is, the majority of the parents picked the wrong answer and the correct answer only drew a small handful of responses.

The answer is in the video below for your reference if you need it.



Two different "lessons" came out from this simple experiment.

1. We should never have pre-conceived ideas for things which we are unsure of.

Sometimes our brains have been 'brained-washed' to believe in certain concepts or ideology either by our parents (e.g. the stock market is a dangerous place), our schooling system (e.g the stock market is efficient) or our market guru friends (e.g. what the guru said about the stock must be right).

We should always find out for ourselves, do our own homework and draw our own conclusions. (e.g. i believe this stock is a good investment because of the following reasons....or i believe now is the time to invest in the property market because of ...etc)

2. The majority is always wrong. 

From this simple exercise, perhaps it can demonstrate that in many situations, only a handful of people will read the situation correctly. This is especially so during any crisis, such as tech bubble, SARs, Lehman crisis etc.

Whenever crisis struck, no one dared to enter the market. Everyone waits at the sidelines or suffers from the pain.  Only a handful who dare to be different, who dare to go against the opinions of the mass, came out highly profitable. The mass will then lament for missing the boat and rush into the market when everyone else is doing it. You see that in the stock market, you see it in the property market and you see it everywhere. Hence whenever you see the mass rushing into something 'hot', the end is probably near. Remember my posting today to invest during a crisis. It will help you to get out of the rat race sooner.

Perhaps the last lesson should be that more parents should sign up for science lessons to improve and update their knowledge? ^_^ Happy Weekend.

Tuesday, 19 February 2013

Ascott Residence Trust

Today, i added 5 lots of Ascott Residence Trust for my SRS portfolio.

Actually i am not sure if this will turn out to be a good buy but my intent is to add around 6% yield to my SRS portfolio. I already have a Far East Hospitality Trust, but having this will probably diversify the source of "hospitality related" income.

My intention is to slowly build up a diversified portfolio of REITs such as office REIT (not sure why i sold off Suntec in the first place) and some logistics and industrial REIT (not sure why i sold of Cache either) when the yields are more attractive. hahaha. 

Anyway, nothing much to add. This is a well researched and established company.

Happy SRSing.




Thursday, 14 February 2013

Portfolio Review - FEHT, PCRT, M1, SPH, Starhill

There were a few results announced in Jan and Feb.

Far East Hospitality Trust ("FEHT")

FEHT released its "maiden" results. The press release is here.

The results was better than forecast and 2.09 cents per unit will be distributed to unit holders. The books will close on 18 Feb and the payment be made on 21 March 2013. My 5,000 units will receive about $104.50. My entry post is here. I will continue to hold this counter given the increasing tourist arrival trend. 

Perennial China Retail Trust ("PCRT")

PCRT announced its financial results for Q4 and the presentation slides is here. It intends to distribute 1.96 Singapore cents on 18 March. My 10,000 units will be entitled to $196. With the earnout arrangement in place until FY2014, i guess we are "pretty safe" for now but will have to monitor the development projects closely as they come on stream in the coming quarters. My entry post is here.


M1

M1 released its full year results in Jan. The press release was here. It proposed a cash dividend of 6.3c and special dividend of 1.7c, bringing the total dividend 8c to be paid out on 25 April. My 2,000 shares will be entitled to $160. My entry post was here. The EPS for FY 2012 was Singapore 16.1 cents and that translate into a PER of 17.3x. The counter is fairly valued but it pays out 80% of profit as dividend. The yield for FY2012 was (6.6 + 8 cents) = 14.6c translate into a yield of 5.2% at current price of $2.79.


SPH

SPH released its Q1 results. Nothing spectacular and relatively "stable". The downside is that further down the road, I am not sure if the changing habits caused by the tablets and smartphones will affect SPH adversely. This company is probably like the telcos, fairly valued but giving out stable dividends.


Starhill Global REIT

Starhill announced a DPU of 1.13 cents for the quarter ending 31 Dec 2012. The amount will be paid out on 28 Feb and my 10,000 units will receive $113. The presentation slides are here. It is encouraging to see that Starhill has been able to increase its DPU over the years.


Potential Dividend + Growth Stocks?

While big caps are relatively stable, what is probably missing from the equation is the element of "growth". As such i would like to my portfolio to have a good mix of both. Some stocks which may be worth further research on could be 2 C stocks that just released its results today. Cordlife and Courts. Tell me what you think?


Wednesday, 13 February 2013

Riverstone Holdings Limited

I added 10 lots of Riverstone Holdings Limited today at 47c to my SRS account. I decided not to wait any more.

Riverstone is engaged in the production of cleanroom and healthcare gloves as well as other healthcare consumables. 

Financial Performance (Sourced from Capital IQ)


Revenue has bee increasing steadily over the last 5 years and the net income margin has maintained above 10%. The Company is trading at a historical PE multiple of around 9.9x and has an implied yield of around 5.1%. The Company is financing its growth internally and currently has a huge pile of cash with zero debt. 

What I like about the Company
  • Zero debt and healthy cash balance.
  • Expanded its capacity due to increased is demand for its products (Please refer to announcements made by company)
  • Recurring income as the items are consumables in the healthcare sector. 
  • Probably this counter will act as a good hedge against any outbreak of SARs-like disease.
  • Low cost base in Malaysia.
  • Good dividend yield of > 5%. (I have been waiting for the price to drop for quite a while)
Potential Concerns
  • Entry of new competitors or a price war (There are quite a few competitors in Malaysia).
  • Low liquidity and institutional following. (but this may change after being featured in my blog :-P)
  • Small cap status.
Long Term Chart


The weekly chart looks pretty interesting as it breaks the neckline at 46c. A simple projection will bring it to around 54-58c if fundamentals continue to improve in the coming quarters.

Happy SRSing.

Saturday, 9 February 2013

SRS Portfolio 31 Jan 2013



There is no activity for the month of January except for an interest income of $2.60.

The invested capital since inception is $82,875. Cash stands at $61,153 and valuation of the portfolio is $39,660. This translate into a ROI of 1.22x (including both realised and unrealised gains). 

Looking back 2012, I think the results could have been better if i had held on to the shares I sold (Starhub, Suntec, Cache Logistics).

I am waiting at the sidelines to deploy my cash pile of $61,153.... seems like a difficult task. There are 4 stocks which i want to add to my portfolio but the prices is not right yet.

DORK (one alphabet represents one counter). I will add on more alphabets as i think about it later.

Happy SRSing :)




Thursday, 7 February 2013

Portfolio Review - Nera Tel

It has been a while since i did a portfolio review. There have been a few results announced (including Far East Hospitality Trust) in the last few days, i will do that review over the next couple of days... if i get to do it during Chinese New Year.

NeraTel

My initial position was made on 6 Aug 2012 at 41c, depicted by the green arrow on the picture. This picture will perhaps show you why i am moving away from trading into investing. 


The company's share price has moved up from 41 cents to 59 cents, an increase of 44%. I probably wouldn't have traded this due to its low volatility. The reason for moving away from trading is that I should utilize time to my advantage. A good stock will let me sleep peacefully and pay me a nice dividend for holding it. This is passive income. 

If i have to keep looking out for the next trade to make money, i will probably be a slave to the market and have to watch it everyday. This can be pretty draining and tiring and not a true financial freedom. In addition, trading is currently not suitable for me due to my work nature where i am always stuck in meetings and can only trade when i am free. 

The reason for documenting my "live" results is that i don't want to live a life of regret. I want to proudly show you my "results slips" twenty years down the road. I definitely hope that i can retire before 20 years is up.  Another reason is that it will challenge me to think harder as well as to find ideas from like-minded bloggers who have kindly share some of their 'gems' with me much earlier (like Dutyfree and LKN).

Q4 and Full Year results

I didn't really like the Q4 results. It was below my expectation but the full year net profit is still up by a spectacular 42%. I will have to monitor its Q1 13 results closely to see if competition is eating into the margins of Nera Tel. EPS was Singapore 5.36 cents and that translate into a my entry PE of 7.65x but the current valuation is around 11x PE.



Dividends

The Company announced a 4c dividends to be paid in May. That translate into a current yield of 6.8% (which is still very good!) and a yield of 9.75% based on my entry price. :) It is probably a good thing that the privatisation offer was rejected soundly by the board.

A secret "R" counter

I have actually spotted another company which i want to add to my SRS portfolio but the price has not moved to a level which i am comfortable with. I will share the R counter with you at a later stage.

Happy SRSing.


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