James Chong is self-employed and began his investing journey exploring various approaches to stock investments, incurring huge losses on the way. He now sticks to a core investment philosophy and has since recouped the losses while earning a decent overall profit. He believes that a high price can turn stocks of good quality businesses into a speculative purchase and likewise, a low price can turn a speculative stock into an attractive investment. The following content was recently published on The Secret Investors blog, and is republished with permission


MY PORTFOLIO experienced quite a few changes in 2014 and I thought it's good to highlight a few for my own tracking purposes. I consider 2014 a lucky year as I had sold my 2 main losers before they went down even further.

I'm glad to realize a few winners too although most of them went even higher after my sale. Also, my event-type portfolio did not register any losses for 2014.

Currently I have 15 Singapore companies in my portfolio and throughout the year it fluctuated between 14 to 18 stocks. Percentage-wise, my largest total unrealized loss currently in my SG portfolio is -4.4% while the largest total unrealized gain is about +61.3%, both inclusive of dividends.


I classify my portfolio into 2 main categories. The first is for the normal purchases based on stocks' quantitative and qualitative strength and hold on until value is realized. The second consists of event-driven stocks wherein their results depend a lot on certain external or internal corporate action(s) which I feel will close the price-value gap in a reasonably short period of time. Unlike in the USA, these situations are few and far between in Singapore. Consequently, I define them quite loosely and am pretty flexible with the type of event that I figure will occur. I ensure that there is at least some degree of undervaluation before I make my purchases -- just to be safe.

Below is a list of my top realized winners (I define this as those with more than 30% gain on an annualized basis) and my worst realized losers (Since annualized loss has less meaning here, I define it by a total loss of more than 10%). Typically I'll buy up or sell down my shares gradually over a period of time. To make things simple, my annualized returns are based on a maximum holding period, which means the actual returns should be slightly higher.

TOP REALIZED WINNERS

SMRT Corporation Ltd

400mrtUnder the new rail financing model, the Land Transport Authority, instead of the operator, will own the rail operating assets.
NextInsight file photo.
» Average Cost (Incl. Fees): S$1.02
» Average Sold: S$1.49
» Max Holding Period: 211 days
» Returns (net of costs, include div) based on avg price: +47.6%
» Annualized: +96.0%

» 
Comment: I was quite lucky here as a short while after my initial purchase, the price spiked up due to the government's announcement of a new business model for MRT operations. Nevertheless, my purchase price of S$1.02 was clearly undervalued. The non-fare segment of the company was rather attractive too. Considering the nature and moat of the business, I probably sold too low at S$1.49. Price now is S$1.58.

PNE Industries

» Average Cost (Incl. Fees): S$0.1044
» Average Sold: S$0.167
» Max Holding Period: 480 days
» Returns (net of costs, include div) based on avg price: +82.25%
» Annualized: +57.8%
» Comment: Price now at S$0.151.

UE E&C Ltd

» Average Cost (Incl. Fees): S$0.737
» Average Sold: S$1.20
» Max Holding Period: 694 days
» Returns (net of costs, include div) based on avg price: +77.4%
» Annualized: +35.2%

» 
Comment: Price now at S$1.26.

Koyo International

» Average Cost (Incl. Fees): S$0.0528
» Average Sold: 0.0864
» Max Holding Period: 688 days
» Returns (net of costs, include div) based on avg price: +66.4%
» Annualized: +31.0%

» 
Comment: Unfortunately the price thereafter went up as high as S$0.194. If I'm a bit more patient, it could have been a 250+% gain... Price now at S$0.154.
 

WORST REALIZED LOSERS

Vard Holdings  

» Average Cost (Incl. Fees): S$1.097
» Average Sold: S$0.958
» Max Holding Period: 468 days
» Returns (net of costs, include div) based on avg price: -12.7%
» Annualized: -10.0%

» Comment: This is probably my most foolish purchase in 2013. Fortunately, I sold months before the steep fall in oil prices. Counter is at S$0.595 now.

Fujian Zhenyun Plastics

» Average Cost (Incl. Fees): S$0.168
» Average Sold: S$0.155
» Max Holding Period: 934 days
» Returns (net of costs, include div) based on avg price: -1.8%
» Annualized: -0.71%

» Comment: Lucky here as I heard it is recently suspended due to some issues with its accounts. Price now at S$0.149.

 

TOP EVENT-TYPE WINNERS

Fuji Offset Plates Manufacturing Ltd

» Average Cost (Incl. Fees): S$0.35
» Average Sold: S$0.45
» Max Holding Period: 2 days
» Returns (net of costs, include div) based on avg price: +27.9%
» Annualized (Simple Average): >5000%

Captii Ltd

» Average Cost (Incl. Fees): S$0.0351
» Average Sold: S$0.041
» Max Holding Period: 123 days
» Returns (net of costs, include div) based on avg price: +17.5%
» Annualized: +61.3%

From both the realized and unrealized results, I'm glad that my endeavor to ensure the risk of permanent capital loss is kept to a minimum has been working well. More details about my investment philosophy can be found in my post here. As always, I find that the timing of sales is always the hardest part of the entire investment process. Should we wait for the momentum to fizzle out beore selling even though the price is already above my estimated value? But then again, how do we know the momentum has fizzled out and what if the price falls below the intrinsic value and never goes back up again? Because of this, I tend to start selling in phases when the stock price is near my estimate of the intrinsic value range. I guess the trick here is really to make purchases at a price so low that even if the sale is mediocre, the results will still turn out good.

SOME RECENT PICKS

I shall end off this post with 3 recent picks. For the normal portfolio, they are Sembcorp Industries and AP Oil International. You may want to check out my analysis for Sembcorp Industries here and AP Oil here. The event-type pick would be Avi-Tech Electronics Limited (company website) which I have accumulated at an average price including costs of S$0.699. Let's see how things go from here. What about you guys? Care to share what are some of your picks? Have a fantastic 2015 ahead!

Disclosure: I am long AP Oil, Sembcorp Industries & Avi-Tech.


Comments  

0 #2 James Chong 2015-01-21 14:22
Quoting Kerrick:
You could have sold captii today at 4.8c, which is 20% higher than your sale price. :zzz

Hi Kerrick,

you are right about that. Like I say in this post, I have always found the hardest part in my investment process is the timing of my exit. I usually start reducing my stake when it is close to my indicated valuation.

Thanks for highlighting
Quote
0 #1 Kerrick 2015-01-14 23:23
You could have sold captii today at 4.8c, which is 20% higher than your sale price. :zzz
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