This article by Goh Tee Leng (left) was recently posted on ValueEdge and is republished with permission
LOOKING BACK at my past investments, I realise that for companies to realise their full potential, it usually takes 4 to 5 years. In today’s article, I will write about my investment thesis at the point of investing in 3 companies and where I went wrong.
» Singapore Post:
This was the very first stock I bought and it was solely based on my wanting a stable stock which would pay dividends year after year.
Subsequently, given how the slow-mail business was dying, SingPost's earnings started to decline, resulting in a fall in the share price to a low SGD0.80. While the company still consistently paid dividends, I decided that with a spike in price, it was my cue to exit this stock.
I remembered reading many reviews that there was too much optimism in the market especially for a business that was dying.
Looking at it now, who would have anticipated that Singapore Post would do a joint venture with Alibaba, reviving what most thought was a ‘dying’ business. Looking at all the past DCF models analysts created, there was no way anyone could have expected this move.
» Comfort Delgro Corporation:
» QAF Ltd:
With QAF, it was one of my first forays using a Graham-method of buying stocks below NAV.
With a NAV of approximately SGD1.00, I felt that at SGD0.70, the stock offered a sufficient margin of safety.
Furthermore, with its simple business of selling bread – Gardenia & Sunshine -- I felt it was definitely a classic Graham stock to buy. However, what led me to sell the stock was probably behavioural bias as I saw the company suffering a few quarters of negative FCF. Looking at it now, the company has hit my initial target price of SGD1.00.