IT'S BEEN a tough time for our Stock Challenge participants as the market slumped further in the last one month.
The exception is remisier Aileen Goh, whose portfolio is looking pretty with just a 1.8% dip to date, while the others reported losses ranging from 20% to 32%.
We are now in the last lap of the Stock Challenge which began on April 7 and which will end on Friday, Oct 17 – after just over six months. Participants had started with a hypothetical $100,000 cash pile and they now have a last chance to report a gain.
They just might, because of the chain of events in the last few days as world central banks took giant steps to stabilize financial markets. Watch this space.
Stock | Number of shares | Average purchase price ($) | Price sold at | Sept 19 price ($) | Value of shareholding ($) |
Straits Asia Resources | 30,000 | 3.03667 | 2.78 | 1.82 |
|
KepCorp | 5000 | 9.17 | 9.00 | 8.70 |
|
SembMarine | 10000 | 3.43 | 3.43 | 3.50 |
|
SPH | 5000 | 4.10 |
| 3.85 | 50,050 |
Cash |
|
|
|
| 48,170 |
|
|
|
|
| 98,220 (-1.8%) |
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:
Transactions:
- Sold off Straits Asia at $2.78 when it rebounded strongly as I thought it's a good opportunity to cut loss as the coal price is still in the midst of a downtrend.
- Used the proceeds of Straits Asia sale plus the remaining cash (then $19,000) to buy 5000 Kep Corp at $9.17, and 10000 shares of SembMar at $3.43 and 5000 SPH at $4.10.
- Market turned extremely bearish with more bad news in the US financial sector surfacing.
- When I had the opportunity, I sold the 10000 of SembMar at $3.43 to reduce risk and to plough it into SPH (buying 8000 more at 4.11), which I thought would be a more defensive stock in times of uncertainty.
- Last Friday (19 Sep), when the market rebounded strongly, I decided to sell off 5000 KepCorp shares at $9.00, still thinking this is a trading market, and wondering if all the good news is merely temporary.
- Reasons to hold on to SPH:
- Defensive earnings
- Attractive dividend yield of > 7% p.a
- Should be reporting its 4Q results in Oct, and final dividend expected to be 19 - 24cents given further recognition from its Sky@Eleven residential development.
*****
Stock | Number of shares | Price bought at ($) | Sept 19 | Value of shareholding ($) |
Sunshine | 250,000 | 0.15 |
| 15,000 |
China Taisan | 100,000 | 0.235 |
| 15,000 |
Cash |
|
|
| 49,600 |
Total |
|
|
| 79,600 |
Mephisto is a 30-something investor who says he is a simple man who enjoys his bak ku teh with Chinese tea every weekend morning. Having gone through the 1987-2007 booms and busts, he has a great deal of respect for Mr Market. Nevertheless, he enjoys pitting his wits against the market, which is by itself a learning experience, he says.
Mephisto says:
For this coming month, I continue to remain pessimistic. In fact, more pessimistic than before. Banning short selling is a very bad move because this will dry up liquidity in the markets. We will see the fall of hedge funds very soon if this ban is not reversed.
I intend to sell the China Taisan and Sunshine at the close of the market day and keep cash, waiting for opportunities. Will provide updates later.
I have just finished reading this book by George Soros, titled "The New Paradigm for Financial Markets / The Credit Crisis of 2008 and What It Means." A fascinating book and I would recommend to everybody to read it.
*****
Stock | No. of shares | Price bought at ($) | Price sold at ($) | Latest market price($) | Total shareholding |
Jardine Cycle & Carriage | 4,000 | 17.295 | 1 lot at 17.34 | 16.48 | 49,440 |
SGX | 2,000 | 6.10 cum dividend 29 cts | -- | 6.71 | 13,420 |
Parkway Holdings | 5,000 | 2.16 | -- | 1.90 | 9,500 |
Cosco | 7,000 | 3.11 | 2.09 | 1.82 | -- |
Swiber Holdings | 10,000 | 2.66 | 1.59 | 1.27 | -- |
Sino-Environment | 24,000 | 1.488 | 1.18 | 0.985 | -- |
Cash |
|
|
|
| 3,471 |
Total |
|
|
|
| 75,831 |
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:
The STI closed at 2,797.50 on 15 August. Even with the help of a 140-point leap on 19 September, the STI at 2,559 is still well below its level on 15 August, the last monthly reporting date for this investment game. As the market sentiment looked set to get worse in the early stage of this round, I decided to switch out of Cosco, Swiber and Sino-Environment into blue or semi-blue chips.
I started with just 1,000 shares in Jardine Cycle & Carriage at the beginning of the current reporting period. On 21 August, I bought another 3,000 shares at $17.40 since its share price stayed firm while the rest of the market was declining. On 4 September, I decided that holding 4,000 shares of this heavyweight was not so good an idea.
I sold 1 lot of Jardine at $17.34 and bought 2 lots of SGX at $6.10 (cum dividend of 29 cents) and 5 lots of Parkway at $2.16.
I have previously written about the long-term attractiveness of Jardine Cycle & Carriage with its strategic interests in the Indonesian motor trade (including Toyota), heavy equipment (including Komatsu), vehicle and equipment financing, oil palm plantations, and a significant stake in Bank Permata (managed and partly owned by Standard Chartered Bank). It has recently established a foothold in Vietnam in motor vehicle distribution.
As for Parkway Holdings, it is the largest comprehensive healthcare group in Southeast Asia with strong earnings contributions from Singapore and Malaysia. Despite ‘sell’ or ‘neutral’ calls from brokerages, I would consider Parkway as an undervalued stock for the serious investor at today’s closing price of $1.90.
Now, I would like to highlight the attractiveness of SGX stock. To me, SGX is both a defensive and a growth stock. Its annual dividend for the financial year ended 30 June 2008 was 38 cents and even if the total dividend for the current year were to drop to 30 cents because of lower revenue and lower profit in a stock market with lower trading volumes, the dividend yield would still be over 5%. My purchase price of $6.10 includes a 29-cent final dividend for the year ended 30 June 2008. After deducting the dividend, my net purchase price is just $5.81.
With a 30 cent expected total dividend for the current financial year, the yield for the current year works out to be 5.2% ($0.30/$5.81). SGX has all the attributes that a serious investor would look for. Excellent management, high earnings growth beyond the current year, high dividend yield plus an extremely strong balance sheet. Just consider, SGX has a cash balance of $822 million versus shareholders’ equity of $894 million as at 30 June 2008. Again, despite this great opportunity to invest in a great proxy for the growing financial importance of Asia, I have come across at least a few current broker reports with a sell on SGX when its share price was about $6. They claimed that because SGX will see reduced revenue and earnings projected for the current year, their fair value estimate is only $5 meaning that it should be purchased only if it goes well below $5.
Just because of an imagined downside of $1 to $2, those analysts would prefer that their clients sell off their shares and miss a potential gain of as much as $25 if they were to hold out for the next 5 years. That is my long-term target price (farfetched as it may sound to some). We are in the midst of Asia’s economic boom that cannot be stopped so easily and more importantly we are witnessing the transformation of SGX into a global exchange for a wide range of international derivatives, ETFs etc besides being a stock exchange for Singapore. If you are prepared to lock up your SGX shares until 2018, the potential gain over the 10-year holding period can be even more astounding. If I were to estimate the 10-year total shareholder return (capital gain plus dividends) at over $100, would you be surprised?
*****
Stock | No. of shares | Price bought at | Price sold at | Sept 19 price | Value of shareholding ($) |
Celestial | 75,000 | 84 cts | 62 cts | 58.5 cts |
|
China Sky | 56,000 | $1.03 |
| 49.5 cts | 27,720 |
China Hongxing | 132,000 | 35 cts |
| 31.5 cts | 46,200 |
|
|
|
|
| 73,920 |
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 says:
Made one transation in the last one month: sold Celestial and channeled all the proceed to buy China Hongxing.
Nothing else to add except that this has been an exceptional week but since my portfolio has
no ammo left, can only sit and watch. Now is not the time to sell good companies but to pick up selectively. Still no change in my views for my stock picks.
*****
Stock | No. of shares | Price bought at $ | Sept 15 price | Total shareholding value $ | Vested dividend | Remarks |
Pan-United | 31,500 | 0.635 | $0.50 | 15,750 | 0.0265 | Conviction hold. |
CH Offshore | 34,188 | 0.585 | $0.51 | 25,494 | - | High oil prices are driving deepwater cycle. |
Hongguo | 38,460 | 0.52 | $0.225 | 13,220 | 0.013 | Strong brand equity suggests sustainable momentum. |
Silverlake | 50,000 | 0.40 | $0.22 | 11,000 | 0.005 | See my article titled |
Total |
|
|
| 65,464 | 2,467 (Total) |
|
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:
As of Sep 19, the total value of my portfolio = shareholding value + dividends = $67,931.
It is down by 32.1%. No transactions since the last update.
It could have been worse! It appears that Asia has been hit severely over the past few months as a result of repatriation of capital back to the US to fill their holes in their balance sheets which have been revealed to be gaping by the problems at Fannie and Freddie plus all the investment banks, hence explaining the pump-and-dump operations present in a number of stocks eg. Jiutian, Ferrochina, Sino-Techfibre, China Energy etc.
A catch-all plan for the illiquid mortgages, hopefully coming up over the weekend, should be a good sign to end the massive loss of confidence. So once again, the US taxpayers are financing the rescue of the housing market, the banks and the whole world. Better than the ROTW financing them this time, anyway. Might be looking to swap one or two stocks in my portfolio for other stocks in the coming weeks, depending on the relative valuations.
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