PORTFOLIOS OF all five participants in our Stock Challenge, which started on April 7, have been unable to fight the market slump, and have turned negative.

Their performances ranged from –5.9% to –20%. In comparison, The Straits Times Index has fallen nearly 12% since the ‘game’ started more than four months ago. The participants started off with $100,000 of virtual money.

To date, the 'top' performer - that is, the one with the least damaged portfolio - is  Mephisto, who is down 5.9%. Details of all portfolios are as follows:



StockNumber of sharesPrice bought at ($)Aug 15
price $
Dividend $Value of shareholding ($)
Dutech200,0000.23
0.21

0.02
46,000 (incl of dividends)
Sunshine250,0000.15
0.10
 25,000
China Taisan100,0000.235
0.195
 19,500
Cash    3,600
Total     94,100
(-5.9%)
















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Mephisto's avatar

Mephisto is a 30-something investor who says he is a simple man who enjoys his bak ku teh with Chinese tea every weekend morning. Having gone through the 1987-2007 booms and busts, he has a great deal of respect for Mr Market. Nevertheless, he enjoys pitting his wits against the market, which is by itself a learning experience, he says.


Mephisto says:

The market is treacherous. Definitely not a trading market now. Have to buy and hold long long term.
 
Dutech reported a weaker than expected 2Q. While sales growth was in line, the profitability was lower due to an increase in cost of raw materials. The management’s guidance seems to indicate that the business environment is challenging and margins are unlikely to recover to the previous levels. While the stock’s valuation seems cheap, I have now decided to sell all 200,000 shares at 21 cents (at Friday's closing price) and keep cash.
 
Sunshine reported a good set of results. 2Q profit is up 116% to RMB 42.4m. 1H2008 net profit of RMB 111.9m is up 100% compared to full year 2007 profit of RMB 56m. The share price seems to be dampened by the constant selling by shareholder Deutsche Bank. I guess one has to be patient to see results in this company.
 
China Taisan reported a doubling of results in 1H2008 to RMB 134.9m. PE for FY2008 is approximately 3x. Dividend yield should be around 11%. While growth has slowed down in 2Q 2008 compared to 2Q 2007, the company is still poised to report a 50% growth in earnings for 2008 compared to 2007. I am maintaining my stock position with a view to increasing it should the share price drop some more.
 
Overall, my portfolio is down approximately 6%. Have decided to adopt a more conservative approach in view of the volatile market.


                                                                                                *****


Stock

No. of shares

Price bought at

Aug 15 price

Value of shareholding ($)

Celestial

75,000

84 cts

71.5 cts

53,625

China Sky

56,000

$1.03

71.5 cts

40,040

 

 

 

 

93,665
(-6.3%)


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Audi Wong

Audi Wong, 35, is a commercial pilot who has invested very successfully in stocks and properties, especially in recent years. He graduated from the University of New South Wales with a bachelor’s degree in aviation.




Audi writes (from hotel in London):

Am switching from China Sky to Li Heng.  Sell China Sky at  S$0.71 to buy Li Heng at  S$0.53.  More short term profit growth visibilty but I still think that both companies have their own strengths.  See October edition of Pulses for a full review of both nylon giants.  

As for Celestial, commendable results from the company but the headwinds of soy prices are strong indeed.  Will have a look at other alternatives to invest in since this Stock Challenge's timespan of 6 months is short.  Celestial is a good investment for the long term if one has a long timespan and especially when soy price drops since they have raised their ASPs by quite a bit.  So that's when you'll see their profit margins come roaring back.





                                                                       *****

Stock

Number of shares

Average purchase price ($)

Aug 15 price ($)

Value of shareholding ($)

Straits Asia Resources

30,000

3.03667

2.39

71,700

Cash

 

 

 

19,000


Total

 

 

 

90,700 (-9.3%)

 

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Aileen Goh

Aileen Goh, 31, has been a trading representative at Phillip Securities for the past eight years since she graduated with an accounting and finance degree from Monash University. She has a mix of investing approaches: long-term fundamentals-based investing coupled with short-term trading, depending on the circumstances.

 
Aileen says:

Well, the market has certainly been very unkind to us.  However, with the fall in commodity prices and the rise of the US dollar, general shares should see some improvement as inflation starts to ease. Having said that, this will also have some negative impact on resource shares like Straits Asia.  But I believe all these will only fall in place probably by the end of the year. Thus, I’ll stick to Straits Asia for the time being. Anything can happen in the short term.



                                                                                        *****

                         
StockNo. of sharesPrice bought at ($)Price sold at ($)Aug 15 price ($) Total shareholding
value ($)
Cosco               7,000            3.11 2.28     15,960
Straits Asia 4,000
5,000
3.02
3.03
2.49
2.49
2.39        ----       
Swiber Holdings5,000
2,000
3,000
2.53
3.00
2.65
 1.64      16,400
Jardine Cycle & Carriage2,00016.981,000 at 15.9617.28     17,280
Sino-Environment15,000
10,000
1.48
1.50
1,000 at 1.241.34     32,160
Cash           2,481
Workings
11,871 + 1,240 – 12,080 +15,960 – 15,150 + 22,410 – 21,770 = 2,481
Total    84,281 (-15.72%)



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Sebastian Chong

Sebastian Chong has invested actively in equities since the 1970s. He is managing director of Financial Info Analysis Pte Ltd, a company he founded after he retired as an accounting professor at the National University of Singapore. He now runs his popular investing website, www.shareowl.com

Sebastian says:

During the reporting period between 11 July and 15 August, all the above 4 companies in the
portfolio announced their results for the second quarter and first half year ended 30 June 2008. All their announcements showed strong growth on a year-on-year basis. Their expectations forthe rest of the year and future outlook generally were positive.  However only Jardine Cycle & Carriage saw its share price on 15 August being slightly higher than my purchase cost  of $16.98.

Cosco, Swiber and Sino-Environment are currently trading below cost. This is due to poor market sentiment for China S shares and for small cap stocks. As their long term prospects remain bright, it is unlikely that I will be doing any further switching of the portfolio components. Patience is the name of the game.

The STI closed at 2,797.50 on 15 August and I expect  the market’s weakness to remain for at least the next six months or so. The GDP of Western European economies is turning negative and US housing prices are still falling.

I had expected the Olympics in Beijing to lead to a rally in China A, H and S shares but instead, China shares has been going down since the eve of the Olympics.  Obviously a slowdown in the growth of the Chinese economy is to be expected in the months and quarters to come.         




                                                                                                *****


StockNo. of sharesPrice bought at $Aug 15 priceTotal shareholding value $Vested dividend
S$
Remarks
Pan-United31,5000.635$0.59518,7430.0265Conviction hold.
CH Offshore34,18815,8000.5850.655$0.56528,243-High oil prices are driving deepwater cycle.
Hongguo38,46020,2940.520.51$0.28516,7450.013Strong brand equity suggests sustainable momentum.
Silverlake50,0000.40$0.27513,7500.005See my article titled SILVERLAKE AXIS: Software solutions for Asian banks.
Total    77,4811,585 (Total) 


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DanielXX's avatar

DanielXX is a 30-something investor who is well-known in certain online investing forums as well as for his
blog, where his writings on investing reflect depth of thought and analysis.

DanielXX says:

My portfolio is down 20%, mainly due to my China stock exposure. It is amazing that S-stocks have gone down by 60-70% since last October, and are just 10% above mid-2006 (which was in the aftermath of the big correction in May 06; there was an S-stock mania as well in early 2006). So the clock unwinds all the way back to 2 years ago. Are we going to unwind back to 2003 valuation? I'd prefer to give a running
commentary rather than a prediction, because the volatility of the past few months suggests that we cannot really know the depth of it all.

As of Aug 15, the total value of my portfolio = shareholding value + dividends = $79,066.
No transactions since the last update.


The bulk of my losses are in Hongguo. China stocks have been smashed to a pulp as a result of the collapse in their home stock market. Given that domestic consumption and investment have remained robust, I would hold on to them in the absence of adverse company-specific developments.
 The same applies for the other stocks. The reasons that I bought into them initially remain valid.  



Next update: Monday, Sept 22. 


Previous reports:

STOCK CHALLENGE: Pilot is still ahead with 6.1% gain

STOCK CHALLENGE: Pilot is flying high now

STOCK CHALLENGE: Sebastian still No.1 with 58% gain in 8 weeks

STOCK CHALLENGE: Top performer is up 63% in 5 weeks


STOCK CHALLENGE: Results range from 0% to -6.1% after 2 weeks 

STOCK CHALLENGE: 5 investors manage $100,000 'windfall' 

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