Monthly Review- April 2013

This month marks the beginning of the release of first quarter earnings results.  I believe whether "Sell-in-May-and-Go-Away" materializes or not depends partly on the performance of the companies for the first quarter, as well as the macro environment.

So far, earnings has been average.  However, for the month, the star performers are Singpost and Mapletree Commercial Trust.  Singpost has been rising and making new highs to end off the month at $1.290 per share.  Mapletree Commercial Trust has also broke up its resistance to end off at $1.465 per share.  On the other hand, Far East HTrust had declined gradually to $1.130 per share.  Luckily based on technical analysis, I had sold 9 lots at $1.175 per share to decrease the average price of my holdings earlier. 

In addition, I have purchased 3 lots of FE Orchard this month.  I decided to buy this property and hospitality counter because it is one of the few counters in my watchlist that is still below book value.  Hence being undervalued, I believe it has more upside.  Besides, FE Orchard has just undergone restructuring from its previous status as Orchard Parade Holdings, I believe the restructuring will be beneficial to the company and it will be better able to concentrate and manage its core business.  Furthermore, recently it has announced a dividend payout for the last quarter at $0.0600 per share.  This is a bonus for me as I did not expect any dividends to be declared by this counter at this period.  Nonetheless, more is always welcomed!

As announced earlier, I had sold my holdings in SMRT.  I am glad I bit the bullet and made that decision, as by the end of the month, the share price of SMRT continues to dip further into the red.  With the sale, my current unrealized profits rose by approximately 10%.  How the coming months are going to be for the stock markets, only time will tell.  For now, I shall just wait for any upcoming dividends.

My Current Portfolio:

Lessons learnt: Stay disciplined.  I always need to remind myself to stay disciplined.  Emotional investing is my biggest enemy for now.

SMRT (26th Apr 12 to 1st Apr 13)

SMRT was viewed as a strong defensive counter when I first bought it, as it is seen as the main monopoly of Singapore's public transport system, especially for the MRT system.  This attracted me because with the view of the growing population in Singapore, which results in possible increase in ridership and hence increasing revenue, dividends were expected to remain stable.

 

 

The opportunity came when SMRT was removed from the STI components, which led to a drop in its share price to an attractive level due to the selling by major funds.  With this, I bought 3 lots of SMRT for possible capital appreciation from recovery as well as stable and consistent dividend.  The first few months were fine, though with the volatility in share price, it hovered around my initial purchase price.  As my initial plan to purchase SMRT is for its dividends, with any capital appreciation as a bonus, I am not too affected by the fluctuations. 

However, it did not take long for things to take a hit.  A series of breakdowns of SMRT trains, especially some which occurred during the peak hours, frustrated many commuters and these resulted in the interference of government bodies.  More stringent checks and fines were imposed for transport companies failing to meet certain standards.  In addition, cost pressures from labour and operations began eroding profits of the company, while the stagnating fares did not help to alleviate these issues.  All these started to cause a strain in the finances, with cut in dividends as the first sign of trouble.

As observed from the chart above, since October 2012, the share price of SMRT has been falling.  This was aggravated by the profit warning issued last month.  The price of SMRT broke down below the support of $1.575, which mean that any further decline could only find its next support possibly around the $1.20 region based on historical prices.  Hence when the share price drop to my stop limit, I decided to learn from my past experience to bite the bullet early and sell all my holdings at a loss.

My thoughts at that time: Although I harbour the thought that share price could recover, as fundamentally this is different from First Ship Lease Trust and Rotary because public transport definitely has the support in revenue.  However, with all the government policies on transport operators recently, it may be hard for SMRT to regain its glorious past as the dividend gem.  Hence I had to take the hit before conditions worsen.  Even if it recovers to higher pricing later, as per the case of Rotary now, I shall have no regrets and move on due to the unfavourable conditions now.

Lessons learnt: Be disciplined, and sell when stop loss is reached.  Do not fight against the market, because as a small investor, there is no way I can fight against the market and prevail.

Monthly Review- March 2013

This month marks the end of the first quarter of 2013. Overall this month has been a good month for my portfolio, despite the volatility in the macroeconomy.  Problems in Cyprus has forced it to near bankruptcy, but thanks to the last minute agreement, this was avoided after Troika lent 10 billion Euros to Cyprus.  However, this was not the end, as the harsh conditions stated in the agreement, which was to tax the savings of the people who has more than 100,000 Euros in the bank, led to jitters in the market.  Fearing that this could be the beginning of the harsher levies on countries asking for bailout, markets worldwide fall into the red.

Thankfully, my portfolio was not badly affected.  Instead, due to the volatility, people started looking out for high yielding stocks and this benefitted stocks like Far East HTrust and Singpost.  For the month, Far East HTrust has burst up through new highs to $1.22, before retreating and end off the month at $1.175.  During the slight correction, I managed to increase my holdings by another 10 lots.  Although this averaging up will increase my average holding cost, I believe the average holding cost is still low enough to withstand any corrections, but at the meantime allow me to gain from the quarterly dividends.

In addition, Singpost also managed to buck the trend and rose from the slight correction to reach a high of $1.25.  This is the highest closing it has reached after I had purchase this counter.  I believe Singpost will remain strong amidst its recent aquisitions.  As long as its management is able to complement the business of its new aquisitions with their current business, I believe the profitability remains.  This is especially helpful as Singpost still remains to be the sole leader of the logistics and mail business locally.

However, not all remains bright.  On the other spectrum, SMRT has issued a profit warning for the quarter, expecting a net loss for the quarter but still a net profit for the whole financial year.  This changed my perspective for SMRT, which was a gem for many high yield seekers.  In recent years, the higher frequency of breakdowns, fines imposed, all led to the scrutiny of investors, as well as the government.  As the government step in to improve the conditions of public transport, I had to agree with the analysts that future earnings of SMRT will be under severe pressure, which may lead to a cut in dividends.  All these kept me on my toes and I believe in time to come, I may have to bite the bullet and sell the counter, if it ever breaks down further and hit my stop loss target price.
Now I shall look forward to the first quarter earnings results to be out next month.  The first few reporting should be Mapletree Commercial Trust and Singpost.  I am looking forward to the consistent dividend payout, and at the same time, a price correction for the strong blue chips as we progress towards the "Sell in May and go away" period so that I can have the opportunity to add on strong counters to my portfolio.

My Current Portfolio:

 

Lessons learnt: Patience is a virtue.  For quality counters, time will prove their real potential and fundamentals.  Emotions will just cause panic sell or impulsive buying.  Stick to the original plan and be disciplined.

Monthly Review- February 2013

This month has been a cautious month, as well as an action-packed month for me.  Looming spending cuts in the U.S, which is slated to start on 1st March 2013, is making me feeling uneasy about the markets, especially when DOW seems to be nearing its historical highs during this period.

Hence, I made many selling decisions this month, with optimism that DOW is going higher and the STI following the trend, but at the meantime, the possibility of any pending correction occurring anytime soon. 

Noble is one counter that I was feeling uneasy about.  With the pending cuts in U.S., it might bring hindrance to growth.  Other than financials, the first to be hit will be commodities if any negativities set in.  Being one of the biggest commodities trader, Noble is definitely under scrutiny.  To prevent any sleepless nights, I decided to sell Noble shares at breakeven price for now.  If the situation becomes clearer, I may buy back Noble's shares, but for now, perhaps it is better for me to keep a distance.

In addition, as share price of Singpost and Far East Hospitality Trust regained their 52-week highest closing, I made the decision to sell 3 lots of Singpost to bring my average holding price to below $1.00 per share, as well as selling 8 lots of Far East Hospitality Trust to bring my average holding price to near its IPO price.  I did this so that the lower average prices of my two current strongest counters will bring about a safe buffering range in case any corrections occur, and I can purchase more lots later with the partial liquidation now.

Furthermore, the poor earnings report by FJ Benjamin for the quarter triggered many analysts downgrade of the counter, causing me to liquidate 50% of my holdings as well, as the share price plunge over the next couple of days.  FJ Benjamin is beginning to be the latest drag of my portfolio.  However, being a good retail brand, I believe as the economy continues to recover, FJ Benjamin will benefit from it.  Hence if the share price continues to drop to its support pricing, I will buy more to further average down my holding cost per share.

Overall, the total profits of my portfolio increased by approximately 9%, brought about mainly by the dividends collected by my strong counters.  March 2013 will be the month to look out for, as the effects of the spending cuts would most probably only be felt after the cuts set in. 

Consequently, if the trend this year is going to follow last year, then March will be the last month in the first half of 2013 that I will see positive gains in my overall portfolio, and the big correction will come in April till May.  I am currently ready to buy strong bluechips in the event of a correction as the recent liquidations meant I am holding on to a large percentage of cash.

My Current Portfolio:

Lessons learnt: Hold on to winners and sell only losers.  If I have held on to past winners like Mapletree Logistic Trust, Parkwaylife Reit, CapitaMall Trust, Breadtalk, Wingtai and ST Engineering, my portfolio would have been much more impressive!

Monthly Review- January 2013

This month marks the start of the new year, with new beginnings.  With the mood of optimism in the air due to aversion of the fiscal cliff in US, the recovery of the US and China's economy boosted the Singapore markets to near 5 year high.  STI rose to close above 3,250 levels in the month of January, making it one of the best January in history.

All these also helped to boost the performance of my portfolio, where my unrealized profits ended up approximately 74% higher than December 2012.  The main contributors are UOB Kayhian, Singpost and Noble, whose values were up by 5.5%, 5.2% and 5.6% respectively for the month.  On the flip side, the main dragger is SMRT, whose earnings report showed further downward pressure from higher expenses like labour costs and maintenance costs, despite the slight increase in revenue.  In addition, the negative views held by several brokerages and analysts did not help to make things any better, as they forecasted that dividends payout will be further cut in the coming quarters, and at the same time, all prefer Comfortdelgro over SMRT.

Singpost has also released its quarterly earnings report.  No surprises, as cost pressures from labour and expenses still remain, with weakening reports of domestic mail.  However, the recent acquisitions in the logistic and storage arena showed to be positive moves, as these sectors help to boost the earnings and offset the decline in domestic mail.  Dividends remain consistent at $0.0125 per share, which helped to further boost my cash flow for the quarter.  Currently the share price seems a little too high, and I believe a correction is inevitable.  I hope that I would be able to analyse it technically and with the cash I have, continue to buy more during the correction to further boost my dividend income.

One addition to the portfolio was made this month, as I took the opportunity to buy into Mapletree Commercial Trust after its good earnings report.  This is the only Mapletree stock that I have not bought before since IPO, whose assets include its crown jewel, Vivocity.  Initially I was thinking that I should buy it after its XD, but after observing the price movement of most REITS nowadays, most REITS continue to move further up even after XD.  Hence instead of waiting further, I just made the decision to buy it, which turn out to be a right move after all because within a week, its share price has already advanced by 9.4%!  Being one of the more undervalued REIT, I believe it has more room to go, especially with its planned aquisitions which may further boost its dividend yield.

All in all, this month has been great so far.  Next up, I will be looking forward to Far East HTrust's first financial report in early February.  I believe it will be decent, and it should at least be in line with forecast.  If it is better, I hope that will bring about a rise in share price, so that I can sell part of this large holdings to average down the buying price, and make it more sustainable holding it for the long term.

My Current Portfolio:

Lessons learnt:  Do not wait for corrections of any kind before you buy a stock which you believe there is value in it.  This is because more often than not, the stock would have gone up by another 5% or more, before a mere 2-3% correction sets in.  If you buy initially, the correction will not have much of a negative impact on your portfolio.  Nonetheless, if you are worried of a huge correction, buy a smaller number of shares first.  At least you have owned it.  If a huge correction comes, you can buy more to further average down the price.  Conversely if it rose further, you won't regret not buying previously and missed out this opportunity altogether.