IF OCTOBER was a nasty month, November turned out to be not much kinder.
Our participants in the Stock Challenge, which started a new season a month ago, have largely held on to their portfolios with minimal buying or selling.
In the week prior to the start of the Stock Challenge, participants had the opportunity to invest their start-up $100,000 hypothetical capital.
Sebastian Chong’s start-up portfolio was up 17% on Day One, and has amazingly preserved the gain as of this report. Sebastian is increasingly convinced of the fabulous bargains that now await anyone willing to invest.
“It’s a once, or at most, twice in a lifetime opportunity to multiply our wealth many times over,” he writes in a commentary below.
Of note, ‘Level 13’ continued to be bullish on Bright World Precision, which is the subject of a takeover offer that comes with several pre-conditions.
Details of the various participants' portfolios and their commentaries:
| Stock | Number of shares | Purchase price ($) | Nov 28 closing price ($) | Value of holding ($) |
| SGX | 4,000 | 4.46 | 4.90 | 19,600 |
| Jardine C&C | 2,000 | 8.20 | 10.46 | 20,920 |
| Capitaland | 2,000 | 2.47 | 2.77 | 5,540 |
| KepLand | 3,000 | 1.49 | 1.37 | 4,110 |
| Wilmar | 3,000 | 1.87 | 2.78 | 8,340 |
| Sino-Environment | 20,000 | 0.425 | 0.61 | 12,200 |
| Straits Asia | 8000 | 0.825 | 0.71 | 5,680 |
| Mercator | 50,000 | 0.115 | 0.135 | 6,750 |
| Li Heng | 20,000 | 0.20 | 0.285cd | 5,700 |
| Yanlord | 5000 | 0.74 | 0.605 | 3,700 |
| Metro | 10,000 | 0.37 | 0.36 | 3,700 |
| Bukit Sembawang | 1000 | 3.61 | 4.05cd | 4,050 |
| Synear | 20,000 | 0.115 | 0.23 | 4,600 |
| Cash | 12,580 | |||
| Total | 117,470(+17.47%) |
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 portfolio value of $117,470 as of 28 November 2008 is up 17.47% since the start of the stock challenge a month ago.
The STI closed at 1,732.57. Uncannily the portfolio value is almost exactly the same as at 31 October 2008 when it was worth 117,440 (up 17.44%).
Although the portfolio value is about unchanged during the last 4 weeks, some individual stock component prices are up while others are down. This shows that there is some randomness in short-term price movements.
I won’t go into the details since I believe that there have been no changes in the medium and long term fundamentals of the stocks that I have selected. I did not see the need to reshuffle my portfolio or take profit on certain stocks so as to buy them back at slightly lower prices.
I could have tried doing that but it is highly possible that the portfolio would have become worse off. It is simply difficult to do short term trading under the prevailing market circumstances when there is no clearly visible trend. Indeed the STI as of 28 November 2008 is not much different as the level as of the close of 31 October 2008.
The present market sentiment is actually significantly more positive then that which prevailed between 21 October and 27 October. In a sense the sentiment of the markets has been lifted by the election of Barack Obama as President and his nomination of Timothy Geithner as Treasury Secretary, and the general belief that they are on the right track to finding effective solutions to the current financial and economic crises.
China’s huge economic stimulus packages and the full percentage point interest rate cut earlier this week are also contributory catalysts for the improvement in sentiment on the global equities markets.
I strongly believe in the world’s political leaders’ ability to work together to get the financial systems and real economies on the strong growth path again within just a few years. We are now seeing a once or, at most twice, in a lifetime opportunity of multiplying our wealth many times over if we just take the trouble of picking the right stocks at this historic stage of the economic cycle.
There is no need to be 100% in cash but on the other hand one should not be financially leveraged on equities either. One should not be overconfident on just a handful of stocks and that is why there are 13 stocks in my portfolio for the Stock Challenge.
*****
| Stock | No. of shares | Price bought at $ | Nov 28 price | Total shareholding value $ | Vested dividend S$ |
| SMB United | 227,273 | 0.11 | $0.115 | 26,136 | - |
| CH Offshore | 113,636 | 0.22 | $0.255 | 28,977 | - |
| Celestial | 64,103 | 0.39 | $0.355 | 22,756 | - |
| Tat Hong | 43,478 | 0.575 | $0.52 | 22,608 | 0.035 |
| Total | 100,477 | 1,522 |
DanielXX says:
As of Nov 28, the total value of my portfolio = shareholding value + dividends = $102,000.
It is up by 2%. Outlook is murky. Record-low valuation is offset by poor outlook across global economy. I am more ready to be aggressive because while in Sep-Oct period, I turned out to be right whenever I sold, but in mid-late November this has not turned out to be the case, suggesting that the tide might be turning.
My thoughts on specific stocks that I have picked:
SMB United:
- Track record of still making good profits in lean years for construction
- Good balance sheet
- Lagging beneficiary of construction boom and should have pretty good orders locked-in for next 1-2 years
- Potential wildcard upside exposure in deregulation of local power industry through subsidiary EDMI which makes meters.
CH Offshore: Most prudent among the offshore marine stocks which is a good thing in current environment.
Celestial: A play on China domestic consumption. Has a desirable brand. here might be interest from foreign companies hoping to enter China beverage market eg. Pepsico, Coke to acquire such brands. Soybean milk is a niche Asian product which the Westerners don't really have in their product range and thus would be apt to acquire to get instant beachhead.
Tat Hong: My view is that it was halved from $2 due to weak outlook for machinery, and halved again due to uncertainty from Marina Bay Sands project in which it is involved. With possible/probable government backstop for the Sands project and China's new $4T yuan budget focusing on infrastructure, these losses could be reversed.
*****
Stock | Number of shares | Purchase price ($) | Nov 28 | Value of holding ($) |
| Swiber | 34,883 | 0.43 | 0.43 | 15,000 |
Cash |
|
|
| 85,000 |
Total |
|
|
| 100,000 |
Kennysjq is a young investor whose investing approach involves studying company fundamentals with a mid-to-long term horizon in mind. He advocates risk taking with caution because he knows we can’t avoid it. Enjoys his daily Business Times, especially so with an americano expresso.
Kennysjq says:
I bought Swiber last Friday because I believe that the demand for oil in the mid-long term is fundamentally sound and Swiber's recent MOUs with various important agencies in both the private and government sectors will prove beneficial to them.
They're also bidding for a total of $4.2b worth of contracts and I expect them to win a handful, which will provide more earnings visibility beyond their current order book of about $600m.
On a side note, I am looking to hold 5-6 counters in my portfolio. Swiber has taken the first spot and I intend to fill up the rest by mid-late December.
*****
| Stock | Number of shares | Average Purchase/Short price ($) | Nov 28 closing price ($) | Value of holding ($) |
Bright World | 141000 | 0.293 | 0.25 | 35,250 |
| Wilmar | 20000 | 2.37 | 2.78 | 1,280 |
| UOB | 4000 | 13.56 | 13.18 | 12,368 |
| Cash | 38,327 | |||
| Total | 87,225 (-12.77%) |
Level 13 is a 31-year-old retail investor and a business analyst with 4 years of investing experience. Check out his blog for insights on financial matters (mainly equities).
No change to my portfolio in the past four weeks except that I added more Bright World shares. The reason for that is the same as why I bought it in the first place.
That is, I am confident that all the pre-conditions of the takeover offer for Bright World will be fulfilled in the coming months. Even though there is no guarantee, I feel the potential return outweighs the associated risks.
You are welcomed to post a comment or question at our forum.
For reports on the previous Stock Challenge, check out our Archives.
