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.

Monthly Review- December 2012

2012 ended the year on a high note for most investors, as the STI rose by 19% for the whole year at around 3,200 points.  This year has been a great run for my portfolio as well, though it's filled with ups and downs along the way. 

The first couple of months has been great for equities, as despite uncertainties, the breakthrough of 13,000 points of the Dow Jones Industrial Average gave investors in the Singapore market a boost of confidence to bring the STI back to the 3,000 levels as well.  However, when May approaches, the "sell in May and go away" syndrome seems to act on everyone again, as the index fell to its lowest for the year, bringing my portfolio down together with it. 

As we continue through the year, the gradual recovery of the US economy, the soft landing and the reversal back to growth by China, the diminishing problems in the Eurozone and all the quantitative easing and the lax monetary policies by Japan, US and Europe gave much reasons for investors to cheer.  This is very much reflected in the markets, even in STI where it gradually moves up since May to end at 3,200 levels in December.

Boosted by all these good news, my portfolio also grew in size.  On a total weighted average, my portfolio was up by a mere 4%.  The seemingly poor performance was due to the huge loss I made at the start of the year when I decided to sell off First Ship Lease Trust.  Ignoring this initial loss, my portfolio would have grew by a weighted average of 14%. 

This year, I got rid of the two biggest "toxic assets" in my portfolio, namely First Ship Lease Trust and Rotary.  Although it takes a lot of courage and the ability to endure the pain from realizing the huge losses, the decisions made are definitely a relief for me.  Finally I do not have to stare at my portfolio with the huge unrealized losses, and continue to pin hopes on them for a possible turnaround.

This month, I sold off Wingtai and ST Engineering, as at that point in time, they had reached their recent all time highs.  Hence I thought that it was the best time to realize my profits.  Nothing much else happened as by this time, I think it may be the time for me to trim my portfolio and to reduce my holdings, so that I have the "ammunitions" to buy quality stocks when any possible corrections come, especially when STI has reached the 3,200 levels.

For the whole year, the star performers are Mapletree Logistic Trust, Parkwaylife Reit, CapitaMall Trust, Wingtai (all of whom I have sold earlier in the year, and now they have reached new highs in their share prices), ST Engineering, and amongst those that I am still holding on, Singpost and UOB Kayhian.  Of course, needless to say, the main draggers are First Ship Lease Trust and Rotary. 

For the year 2012, my annual dividend returns is 2.4%.  This is because for the year, I have sold off too many dividend counters, which is the main reason for the decline in dividends collected for the year.  In 2013, I will continue to find good dividend counters to add on to my portfolio to increase my dividend income.  At the same time, I hope that I remember and relearn all my "lessons learnt" penned down this year, so that I can improve in my investing journey for the new year!

 

My Current Portfolio:

 

Performance for the Year 2012:

 

 

Lessons learnt:  It is important to adjust the portfolio every year, to weed out the losers and add on the gainers.  This will help to boost the portfolio, to prevent the losers from sinking the portfolio further.  Do not rely on "hope".  If the fundamentals have changed, get rid of the losers as soon as possible to minimize losses.  Averaging down can only be done for quality stocks with good fundamentals.

ST Engineering (23rd Mar 11 to 18th Dec 12)

ST Engineering is the first major blue chip stock that I managed to venture into after building up some capital.  After its share price slide down by approximately 10% or so, I decided to grab this opportunity to purchase 2 lots of this strong conglomerate for possible capital appreciation and strong dividend returns.

However, it seems like there were more sellers than buyers for this conglomerate during that time, as even when fundamentals of the company remained intact, and its operating cashflow remained healthy, its share price continued to decline under pressure.  The decline was gradual, but consistent, making the share price down by another 15% thereabouts over the next 8 months.  This made me very disturbed, as despite the intact fundamentals, this is not reflected in the movement of its share price. 

Noting this, I decided to put aside my fears of possible further decline in share price and increase my holdings in ST Engineering, which was a great opportunity for me to average down my average purchase price, as well as increase my exposure to this strong conglomerate at a discounted price to its actual value. 

Indeed my beliefs paid off as soon after, a price reversal set in, allowing me to sell of the extra lots that I have at hand to further lower my average price of the 2 lots at hand which I intend to hold for long term.
Consistent and continual contract wins by ST Engineering continued to boost its share price, which did not look back thereafter.  As the share price crossed $3.60 with a reasonably high volume in November 2012, which was a historical high, I decided to add on my positions again to tap in the possible new high.  It did not take long for the share price to move higher to $3.88.  Initially I hope that it could move beyond $3.90.  However after 2 failed attempts to close above $3.88, I decided to sell and realise my 17% profits the third time it reaches $3.88. 
My thoughts at that time: The share price of ST Engineering has tried to break through $3.88 twice previously, but failed.  When it tested the same level the third time, I decided to just lock in and realise my profits, since my initial target has long been reached and surpassed.
Lessons learnt: Dips in share price of strong conglomerates are great opportunities of invesments, as when fundamentals remain intact for such big companies, it is just a matter of time when price reversal sets in to begin its upward trend.

Wingtai (1st Feb 11 to 6th Dec 12)

Wingtai was first purchased as it has a strong foothold in both the mid to high end residential segment, as well as the retail sector, including brands like G2000, Topman etc.  I see this as a good opportunity for me to invest in the residential sector, especially when Wingtai's share price has decreased substantially, with no substantial change in fundamentals.

However, things did not go too well after the purchase.  This is caused by the series of cooling measures implemented by the Singapore Government to prevent any possible bubbles from forming in the housing sector.  This creates a huge selling pressure on property counters as investors fear the possible negative effects these cooling measures will bring to property prices.

As observed, Wingtai's share price plunged by a massive 44% to $0.92 over the course of the year, before the reversal sets in.  It was a very depressing period for me, as holding on to this counter seems as if there was no light at the end of the tunnel at that time, as the price just keep on moving southwards.  But with a high NAV, I believe the company will not go bust, and even if it does, it has more than enough value to liquidate to compensate and hence protect my capital investments. 

Hence I took the plunge as an opportunity to purchase more shares to average down my holding.  However, as it declined further, my emotions set in and the fear that it will end up like First Ship Lease Trust deterred me from buying further when it went below $1.00 per share.  I am glad that during the course of this 2 year period, I made a couple of purchases and sales to average down my buying price, because soon, the reversal sets in. 

To help the recovery, Wingtai announced that Chairman is buying back 15% of the floating shares at $1.39 per share.  This announcement boosted the share price to above $1.30 levels and thus allowing me to erase all loses as I managed to breakeven at that price.  In addition, as I am holding 7 lots of Wingtai at that time, I decided to sell 15% of my shares back to the company to reduce my holdings, in case the price support fails and decline again.  After the sale, I ended up with odd lots of shares, which caused me to purchase back some shares to make it a complete lot.

After all the buying and selling comes to an end, I am rewarded with a consistent continual rise in Wingtai's share price as the market sees minimal impact in the cooling measures introduced by the Singapore Government, as up till this point, it only resulted in the stabilisation of property prices, instead of a price correction as feared previously.  This boosted market's confidence and at the second half of the year, the rally for property developer counters arrived with much anticipation. 

At a high of $1.77, it seems like the rally for Wingtai is coming to an end as it lacks the strength to push to higher prices.  The price booster soon came as SC Global, another high-end residential property developer announced the privatisation of the shares with an offer of $1.80, which is a 49% premium over the last closing price.  This news boosted the shares of Wingtai to breakup to $1.80 as well.  With this, I made the decision to sell all my holdings at $1.82.

My thoughts at that time: Looking at the rally, I was a little hesitant to sell as there may still be possible upside after the recent breakthrough.  However, with the issue of the US 'fiscal cliff' looming and remains unsolved, I concluded that the risk : reward ratio may have become too much to bear at this juncture.  Since the next announcement of any possible huge dividend payout (which could possibly act as another price catalyst) is at least 6 months away, I shall lock in my profits before the new year, and enjoy my December holidays.

Lessons learnt: For quality stocks, it is just a matter of time that the true value of the stock gets unlock.  Just as waiting for the right opportunity to buy requires patience, waiting for the true potential to be unlocked also requires much patience.

Monthly Review- November 2012

This is a month filled with volatility and action for me.  As previously posted, I had sold all my holdings in Rotary with a huge realized loss.  Instead of being depressed, I actually felt more relieved, as it seems to me that Rotary, like First Ship Lease Trust, had been a long term burden in my portfolio, and finally I have plucked up the courage to bite the bullet and realize all losses to admit that I have made the wrong decisions.

With the freed up remaining capital from the sale of Rotary, I am ready to look for better opportunity out there.  At that time, my focus laid on Noble.  Noble has recovered from its loss a year ago to churn a profit for the third quarter.  However, as it was below analysts expectations, it led to a slide in share price.  In my opinion, I saw this as an opportunity as Noble was not making a loss this time, thus its fundamentals have already improved from he previous year.  It was just beaten down as it missed expectations.  Hence I bought into this strong commodity trader, awaiting for it to reverse its course.

Unfortunately, at this point of time, a substantial shareholder of Noble decided to sell a huge chuck of his shares at a discount.  This caused the share price to plunge the following day, and it weigh down my portfolio.  Just as a ray of hope shines through the gloomy skies as the Chairman of Noble stepped into the market soon after to purchase shares, all was in vain as the outbreak of the "war of words" between competitor Olam and Muddy Waters created more doubts in commodity firms, which translates to further selling pressure.  At this point of time I can only hold on to the shares to await the release of next quarter's results, which could boost the shares once again, provided if its fundamentals remain intact.

In addition, I added my holdings in Far East HTrust and FJ Benjamin, both with the intention of averaging down the buying price after the recent drop in share price.  The drop in share price for FJ Benjamin was rather significant, due to the counter going Ex-Dividend.  However, since fundamentals did not change, the drop will not deter me from adding on to my holdings.  Both counters are involved in the hospitality and retail sector, which is one of the stronghold of Singapore's economy.  Although downward pressures in profitability remains, especially due to rising labour costs and miscellaneous expenses, I believe they will still have the capability to outperform.

Next month is the last month of 2012.  I hope to see the window dressing and the exuberance in the stock market that may help to propel my portfolio to new highs. 

My Current Portfolio:

Lessons learnt: Do not look back on loss-making investments.  Once sold with realized losses as decisions has been made, you should move on.

Rotary (26th Jan 10 to 6th Nov 12)

Rotary was once a growing Engineering, Procurement and Construction company in the oil and gas sector.  As a leader among the contractors, Rotary had a good reputation in the industry.  This is reflected in its ability to clinch the massive USD 745 Million worth of contracts in the SATORP project in the Middle East for the construction of refinery tank farms.  It is because of all these reasons, that I decided to invest in this company, hoping to see the realization of its potential in time to come.  

All was well, and Rotary continue to announce more contracts clinched through the months and its share price remained relatively stable till 2011 when its CFO resigns and things start to take a turn.  Share price starts to dip and falls to a new 1 year low.  However, being naive and greedy, I held on to the counter, waiting for a rebound to happen.  

Indeed a rebound occurred in early 2012, pushing Rotary's share price to to the high $0.70 per share levels.  But greed continues to blind me, in hope that I may be able to break-even, I continue to hold on to it, but in my dismay, all that comes is just the continuous tumbling down of the share price, which never turnaround again.  

Things worsen in September when Rotary released its first profit warning in recent years, stating that cost overrun in the SATORP project due to design flaw and the unforeseen increased in man-hours caused Rotary to suffer a huge 3rd quarter loss, and a projected full year net loss as well.  This sparked the panic sale of its shares, and trying to be as calm as I could, I told myself not to panic sell at this time, as it will mean I am selling low.

After some thoughts, it seems that Rotary's share price is drifting lower and lower.  The alert button in me was activated when its share price drifted below $0.40 per share.  With this, I decided that it is time for me to cut loss to prevent further damage to my portfolio and hence I sold all my holdings at $0.395 per share, which was a massive 58% capital loss.  If there is indeed a rebound after the sale, I can only accept the losses, as fundamentals have changed.  The current Rotary, in my opinion, is not as strong and reputable as it was prior the SATORP incident, mainly because financially, it has took a big hit as we see its cash flow plunged in the released 3rd quarter results.  

My thoughts at that time: I am quite hesitant to sell my holdings in this counter as it would mean a realization of a huge loss, right after the massive loss I realized in January this year from First Ship Lease Trust.  However, it is also the lessons learnt in First Ship Lease Trust that I should follow, and understand that "hoping" for a rebound usually just make things much worse, as these hopes are not supported by any fundamentals.  In the final quarter of 2012, Rotary is going to announce a full year net loss.  In addition to that, if the 4th quarter results also suffered a net loss, I believe there will be more downward pressure, and that is too much risk involved.  Hence I decided to cut.

Lessons learnt: The moment a company stops giving dividend, it is a clear signal to sell the shares of the company, regardless of the loss, as this move by the company signals a lot of pessimism in the near term future of the business.  If I sold my holdings during the release of the 2nd quarter results, my capital loss will definitely be below 50%.

Monthly Review- October 2012

This month marks the beginning of the release of results of the quarter from July to September 2012.  Many analysts and brokerages have downgraded the earnings expectations for the quarter, brought about by weak economic outlook in Europe, slowing demands in China as well as weak economic numbers in Singapore.  However, against all odds, my portfolio still grew by 11%, brought about by strong dividends and good performance by SingPost, but increase is capped by the decline in share price in Far East HTrust.

So far, only SingPost has announced its results for the quarter.  Results has been decent and within expectations, as revenue increased year-on-year, with pressure from the domestic mail section.  I am not too overly worried about this segment as SingPost has been actively building up its revenue from other areas and through acquisitions that has shown to help boost its profits.  Most importantly to me, the dividends has been maintained for at least the past 5 years.  The consistent payout is in line with the consistent income I am expecting.  As I am holding this for the long term for its dividend payout, and possibly reinvesting the dividends later for compounding effects, I am not overly worried about near term price fluctuation.

In addition, after its annual meeting, Wingtai has finally announced its yearly dividend payout of $0.0700 per share, as well as its quarterly results.  The quarterly results has been impressive, with profits churned in from recent sale of units, mostly from Foresque Residences.  However, possible further cooling measures by the Singapore government remains the top concern for property counters like Wingtai, which may cause dampening in demand of the mid to high end residences in the event of further curbs.

This month, I also saw the sudden decline in the share price of ST Engineering and Far East HTrust.  There has been no change in the fundamentals of the counters, but nonetheless, perhaps due to profit taking by retail investors after the recent rise, share price of ST Engineering dropped by more than 5% from its high of $3.60 to $3.40, while Far East HTrust dropped by almost 9% from its high of $1.08 to $0.985.  Seeing this as an opportunity to grab more solid counters, I added my holdings in ST Engineering and Far East HTrust at $3.48 and $1.025 respectively.

Furthermore, Rotary issued its profit warning last month, saying that it expects a net loss for the third quarter, as well as full year net loss for FY2012 due to losses in its SATORP project.  I will keep watch of this counter till the release of its results, to decide what is my next move for this counter.  It has been the biggest drag on my portfolio since the sale of First Ship Lease Trust in January this year.

My Current Portfolio:

Lessons learnt: Holding on to losers even when fundamentals have changed, in hope that a rebound may occur soon, is just a false hope pending doom.

Monthly Review- September 2012

This month has been a slightly positive month for the stock markets worldwide, largely attributed by the announcement of the unlimited bond buying programme by ECB in Europe to Eurozone countries that require it, as well as FED's newest QE3 in US, which promised to continually buy mortgage-backed securities till unemployment rate falls to acceptable levels.  This boosted the stock markets temporarily, but doubts began to spook the markets soon after on the effectiveness of these measures.  For the current month, in comparison with the previous, the total amount of unrealized profits increased by approximately 31% while the amount of realized profits increased by approximately 16% with the sale of my holdings in CapitaMall Trust. 

The biggest contributor to the rise is Wingtai, which has rebounded strongly since May's rangebound share price of between $1.145 to $1.355 till $1.710, an impressive 44%!  Wingtai has definitely been the main driver that boosted my portfolio from a net loss position to a net gain position.  With the continual sales of their remaining mid to high end residential properties, and the expected launch of a new project next year, I believe its prospects is still positive, barring any further cooling measures by the Singapore government.

In addition, for the month I have added positions in the new IPO counter Far East Hospitality Trust.  After failing to obtain any placement for its shares during IPO, I  went on to purchase its shares post IPO as I believe in the strong fundamentals in the tourism story in Singapore.  Furthermore, Far East has been a leader in the hospitality sector, thus I strongly believe its managers will actively manage the Trust with due diligence to improve its returns to all shareholders.  Indeed, within less than a month, the share price of Far East Hospitality Trust has rose by 6% above my purchase price.  I believe there will be more upside to come, and I am looking forward to its announcement of its first financial report post listing.

However, capping the gains in my portfolio is Rotary.  After announcing that it is expecting to post a full year loss in FY2012 due to its SATORP project in the Middle East, the share price plunged to its lowest since May 2009.  Since the sale of the biggest dragger First Ship Lease Trust in January this year, Rotary remains as the next biggest dragger in my portfolio since.  Although the fundamentals have changed, I will continue to wait for a better opportunity to divest.

The upcoming month is filled with uncertainty, as October has always regarded as a negative month for equities.  Moreover, companies will start reporting their third quarter financial results next month.  With the PMI numbers below expectations in many countries, the third quarter results may drag the equities market.

My Current Portfolio:

Lessons learnt: Keep to my forte, invest in high dividend paying counters and strong blue chip counters.  Growth counters do not seem to show any growth potential after I purchase them.

CapitaMall Trust (21st Mar 2011 to 7th Sep 2012)

CapitaMall Trust was bought with the intention to tap the growth in the retail sector, as well as to gain a steady stream of income from its steady dividends.  Being the first REIT to be listed on SGX, and the only Singapore-based REIT in the STI component stocks, I believe it is a safe and strong bet to own.  Hence after it dropped from a previous high of $2.16 in October 2010 to $1.75 in March 2011, I decided to buy 3 lots to keep for dividends.

Since the purchase, the share price have been rather volatile due to the uncertain macroeconomic conditions.  As observed, CapitaMall Trust showed its resilience throughout this period of uncertainty as the share price just fluctuate between a range of $1.61 to $2.07, while other shares experienced a much higher volatility.

The only regret I had is that I did not add on my positions in this strong counter when the share price dropped below my initial purchase price.  Even when opportunities presented themselves twice during this period, I did not act.

Overall, my total gains in this counter is a decent 22%, with total dividends collected accounting for 8%. 

In my opinion, with the current low interest environment and the on-going asset enhancement initiatives by CapitaMall Trust on a couple of its malls, I believe there is room for further appreciation in its share price.  However, as the STI moved above the 3,000 level and CapitaMall Trust retest the high of $2.00 level after a rather long period of volatility, thus I decided to sell my holdings to realize my profits first.

My thoughts at that time: Since I have already set a target price of $2.00, once it hit my target price, I shall be discipline to sell it and realize my gains.

Lessons learnt: Discipline is always great, as it increases my satisfaction with my gains if the share price drops after the sale.  On the other hand, it also minimizes regret if the share price rose further after the sale, as I am being discipline and sticking to my plan.