50-stock portfolio (low PE, P/B, dividend paying): 1Q gain was 3.3% only

contrarian_book YOU MAY RECALL that we put together a 50-stock portfolio at the start of the year using certain metrics: Low PE, low price-to-book, and dividend paying.

We used Bloomberg data to coldly sort stocks and we made no judgement on whether any of the 50 selected stocks should be booted out for whatever reason.

And of course, there were stocks in the list whose fundamentals we were not familiar with. (See: Stock picks for 2014: Will these 50 stocks outperform?)

This approach more or less is what some funds, such as start-up Aggregate Asset Management, adopts, and is championed by David Dreman in his best-selling book, Contrarian Investment Strategies, published in 1980.

"I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low PE, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time." – David Dreman

In 1Q2014, the performance of our chosen 50 turned out to be a 3.3% gain.

It does look uninspiring. It could make you wonder: Would a skilful stock picker do much better?

There is a wide range of performance among individual stocks in the portfolio: Would a savvy investor have better luck in picking many of these and avoiding the lemons?

One thing about a portfolio stuffed with a large number of stocks is, at the end of the day, it is likely to end up within shouting distance of the performance of the market's benchmark index, the Straits Times Index. In 1Q, the STI gained 0.98%.

Among the sizzling gainers in the portfolio is Valuetronics, up 35%, a stock which has attracted effusive comments from investors in our forum recently over its latest 3Q2014 (ended Dec 2013) result.

Net profit attributable to shareholders grew by 45.0% to HK$35.5 million. For 9MFY2014, it hit HK$108.4 million, a 102.5% year-on-year increase.

On the other hand, Sing Holdings, despite being an undervalued stock, was beaten down 13% amid a downturn in the Singapore property market. (Read comments on the stock inour forum.)

	Stock price (SG cts)
Company Name	24 Dec 2013	End-Mar 2014	% change
CHINASING INVESTMENT	4	2	-50
FRASER AND NEAVE	296	315	6.4
ABR HOLDINGS	76	95	25
WEE HUR	33	35	6.1
SHANGHAI TURBO	9.1	8	-12.1
FUJIAN ZHENYUN PLASTICS	15.6	14.2	-9.0
	63	65.5	4.0
WING TAI HLDGS	198	183	-7.6
TUAN SING HLDGS	29.5	33.5	13.6
LION TECK CHIANG	77	73.5	-4.5
CHEUNG WOH TECH	13.5	14.5	7.4
CHINA MINZHONG	87.5	94.5	8.0
ELLIPSIZ	8.4	8.7	3.6
SING HOLDINGS	41	35.5	-13.4
LUM CHANG	33.5	33.5	-
	14	14	-
TRIYARDS	66	64	-3.0
RICKMERS MARITIME	28.5	28.5	-
FUNG CHOI MEDIA	10.6	10.0	-5.7
INNOVALUES	14.8	14.9	0.7
KSH HOLDINGS	47.5	46	-3.2
	81	91	12.3
VALUETRONICS	24.5	33	34.7
UOL GROUP	611	626	2.5
TA CORP	38	36.5	-4.0
ENGRO CORP	102	117.5	15.2
CHINA FISHERY	38	40.5	6.7
DEVOTION ENERGY	18.8	Delisted	--
SIM LIAN GROUP	79.5	84	5.7
FRASERS CENTREPOINT	174.5	153.5	-12.1
PAC ANDES RESOURCES	13.3	12.2	-8.3
CAMBRIDGE REIT	68	72	5.9
HONG FOK CORP	69	72.5	5.1
CHINA MERCHANTS	92.5	96	3.8
FRASERS COMMERCIAL	128	125.5	-2.0
SHC CAPITAL ASIA	15.8	20	26.6
LIPPO MALLS	39.5	40	1.3
ASL MARINE	63	70	11.1
HOCK LIAN SENG	26	27	3.8
TAT SENG PACKAGING	27.5	32	16.4
CHIP ENG SENG	69.5	73.5	5.8
MARCO POLO MARINE	38.5	38.5	--
UNION STEEL	10.8	10.7	0.9
TAI SIN ELECTRIC	31	33.5	8.1
KEPPEL LAND	337	336	-
CAPITARETAIL	134	140	4.5
	20.5	19.5	- 0.5
HIAP TONG CORP	12.3	14.2	15.4
SINARMAS LAND	47.5	57	20.0
VICPLAS	7.9	8.9	12.7

50-stock portfolio (low PE, P/B, dividend paying): 1Q gain was 3.3% only

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