Daily Encounters with Companies within my Portfolio

Interestingly, I had first hand experience to deal with many of the companies that I have in my portfolio. You see, this is exactly what makes these companies great in my eye. They are not some stock ticker or symbol that I play around with. These to me are actual quality and solid businesses that make profits and contribute to the overall growth of the economy. They are doing stuff that are very familiar to me and I hope stuff that will continue to be as relevant if not more, in the future.

That's why I ignore what most pundits say and I proudly say that I am in love with my portfolio and I shall always stay invested in the same holdings and probably add more if it's relevant. The only reason a company leaves my portfolio is if a significant or long term impairment of its business model occurs or there is some permanent underlying reason that makes the holding in my portfolio unviable.

Raffles Medical - I visited Raffles Hospital yesterday for a medical appointment and saw first hand the demand for healthcare needs in Singapore. Let me say that I was pretty impressed with the crowds I saw and at the efficiency and service standards of the hospital. The crowds that I witnessed were again clear signs that healthcare is a paramount need in Singapore not only for locals but for foreigners as well. This is a small holding to me but I would be keen to add exposure when the price becomes more viable as it has risen quite substantially recently.

Singtel - Most of us nowadays have a mobile phone. And with that phone i'm sure, a data plan. I just paid my monthly mobile bill recently and what a hefty bill it was. The great thing about such companies is how sticky customers tend to be and also slight price increases over time is mostly tolerated by users as mobile usage has become second nature to us. This is a core holding to me.

Capitamall Trust and Mapletree Commercial Trust -  I have been shopping at Vivocity and many of the malls under Capitamall Trust and glady I still enjoy those shopping experiences plus the convenience of many of the malls. It's true that online shopping nowadays is catching on but there are many times whereby you need a brick and mortar shopping experience to get the stuff you need. That is the modus operandi of Capmall as alot of their malls serve necessity requirements. Nevertheless, REITs remain a semi-peripheral holding in my portfolio. 

Sembcorp Industries - The only service that I get to experience with this company is their waste disposal service and I see those trucks pretty often. In fact it's this part of the business that got me initially intrigued to the overall company. We all need waste to be disposed one way or another don't we. This holding has been the biggest detractor thus far for me, I adopt a wait-and-see attitude on whether I will still continue to add on dips.

Jardine Matheson - I shop pretty frequently at Cold Storage and Giant, which are all under this huge conglomerate via Dairy Farm. I also work at MBFC and part of it is is owned by HK land, which is under this conglomerate. It seems that is is hard to escape the reach of this massive company and this is exactly what I like about it. Although the stock has been pretty weak recently and earnings are forecasted to be slow I still am very positive on the LT prospects of this iconic conglomerate. I look to increase exposure in this holding for sure in future.

OCBC Bank - As a consumer I dont have much access to OCBC's services and perhaps I should have more. Nevertheless, I like the business and how it serves alot of the rest of us and that is suffice reason for me to stay invested. I shall probably look at DBS in the near future too as I use alot more of its services. But for now, OCBC remains a key anchor of my portfolio.

Comfortdelgro - MRT (certain lines), taxis, bus, vehicle inspection, etc. Come on, I deal with this company extremely closely. Be it taking taxis, buses, sending my car for inspection this is another great example of business you can't really escape. And I'm glad so far it does not seem to have much of the maintenance issues witnessed by SMRT. I really like this company and it has become a core holding in my portfolio.

In summary, as shown above many of the companies I own, I use their goods and services alot. That gives me a great advantage as I am able to experience first hand, the quality and necessity of their offerings over time. It allows me a strategic vantage point as a first hand user, to determine if the businesses they run are still as relevant today and in the near future. And that honestly, helps me sleep better at night. Remember, invest only in businesses YOU understand and not necessarily something that a stock analyst has recommended in which the business is something you have not even heard of. Thanks for reading and have a blessed week!

Signing Off

Transitioning Stock Investor

Special Writeup - Especially for Aspiring or Beginner Investors

I recently have been asked by a few close friends on why to invest, what to invest and how to invest. Alot of times we may take our easy access to financial markets for granted as probably investing is second nature to us. However, I realised that for many folks out there who are either not working in the financial industry or are not versed yet in all things investing, they may find it difficult to understand how to start investing and for that matter doing it right. Thus, I'm writing this for their benefit.

To keep it simple, I will categorise markets into 3 broad forms. There is the equity or stock market, fixed income or bond market and alternatives such as FX, real estate, gold, etc.
I shall elaborate with the commonest, which is the stock market (but if there are requests to understand the other markets do post your comments and I shall blog about them). 

In Singapore, we are blessed with the SGX stock market. What is even more cool is that we are able to buy smaller lot sizes (100 shares) which makes accessing the market even easier. Basically, to access the stock market there are 2 main ways: Actively or Passively. Both have their pros and cons and I shall elaborate a little further below.

1. Active Participation in Stock Market
- This is the most traditional way to be involved in the stock market. Just buy the shares of the company. To do this, you would need to open a brokerage account with any of the local brokerage houses. This is where alot of beginner investors stump and get alittle lazy. If you wish to invest, you need to get moving!
- Honestly, buying stocks directly is not as daunting as it seems, as long as you understand what you invest in. My suggestion is to start off with blue chips, look at the 30 stocks listed on the STI Index and figure out which companies and their respective businesses that you like. And just buy into them and hold them for the long term. It is that simple for a start.
Of course as you get more experienced you will study alot more information like fundamentals, valuation metrics, etc. However, for a start just buy a few lots of businesses that you are familiar with. I use Mapletree Commercial Trust (REIT) as an example. They own Vivocity and I love shopping there and am impressed with the locality of the mall. So I bought the shares of the REIT. It really is as simple as that!

2. Passive Participation in Stock Market
- There is another way to begin your stock journey albeit in a more passive manner. You may not yet have the confidence to choose the stocks that you like but you would still want to participate in the stock market. This is where an Exchange Traded Fund (ETF) is most useful. This is a passive investment vehicle whereby it purchases and replicates the stocks on the Stock Index. What you need to do is just to purchase units of this ETF to get a broad based exposure of the overall stock market. As this is not meant to be a sponsored post I shall not mention which ETF or product is most suitable. Nevertheless, a quick google on "Singapore Equity ETF" will definitely help provide you more information.

- Another passive option is through Unit Trusts that invest in the equity markets. Tip would be to identify funds that are able to consistently provide superior alpha returns (ie returns above what is expected of the market). This is not an easy task but one that can potentially reap superior rewards if done well. Do note the slightly higher costs and fees that are involved with unit trusts that are in exchange for professional investment management and stock picking.

Sincerely hope that the above sharing has helped. As can be seen, accessing the stock market is not as daunting as it seems. It's all about starting somewhere and increasing your exposure and understanding of the financial markets that will eventually empower you to be a better and wiser investor.

Signing Off
Transitioning Stock Investor

Market and My Portfolio

This week has broadly been a good week with a little bitter sweet taste in my mouth. Most of the positions in my portfolio have been resilient and have recovered some of its drops seen in June. I sold off 1000 shares of Raffles Medical to fund a recent watch purchase last week and lo and behold this counter shot up into the hemisphere yesterday and finished at a crazy price of $4.90. I'm glad I still have 1,022 shares of this counter but lament the fact that I probably should have let go of some of my loss making Sembcorp Ind. holdings instead. Oh well, we all don't have a crystal ball do we but lessons learnt. Nevertheless my portfolio should always be looked at as a Long Term proposition and no more of such monkey business (although I have a nicely added watch to my collection lol).

I'm gonna post some comments of some of my holdings.

1. Raffles Medical - I seriously don't know what happened to this stock. It shot up c.4% yesterday and now I'm sitting on a nice 24% profit on this position. I definitely will look to add on in further but does anyone know what caused the sudden uptick in this counter's price movement? I O/W this company provided at more sensible prices.

2. Comfortdelgro - I added on 300 shares at $3.06 yesterday to this counter. This is after I took some money off the table 2000 shares at $3.21 before the Greek crisis unravelled. This turned out to be a pretty good move and I'll be looking to add on more shares to this company which I still favour alot (stable and strong ROE, strong cashflows and balance sheet, solid and diversified business model). I look to continually O/W this company.

3. Capitamall Trust - It was in the news recently regarding two sets of updates. Firstly it announced that it would be buying over Bedok Mall from its parent company Capitaland. Most of this will be funded by debt and some by issuance of additional units to its parent. Now, I'm not too excited about this move and whether the purchase adds significant value to CMT's portfolio. My parents still stay in Bedok and I frequent the mall occasionally. Let's just say that I have doubts that this is a superior mall and that the crowds that I witness are fantastic. The projected yield of c. 5% from this mall also is similar to the current yield of CMT's portfolio so again I don't see much of a quantum leap. Anyways, we wait with abated breath on how this develoment takes shape.
The second development is CMT's announcement of either refurnishing or divestinf Funan Digitamall. This to me is a good move as I have never been a fan of Funan and struggle to understand what is the added value of this IT centric mall. It has also seemed to be positioned awkwardly as people still somewhat flock to Sim Lim for IT related stuff. Get rid of this holding I say and so be it.
The above two developments just set me thinking on CMT's positionings and the retail landscape in Singapore. I currently U/W this sector and will not be looking to add unto my REITs positionings except probably for Mapletree Comm. whereby I see positive developments for Vivocity.

4. OCBC Bank - It was reported in the news recently that our 3 local banks, DBS, UOB and OCBC will be expected to report stable and good earnings. Let's see but I strongly feel that the current price of OCBC at $10.33 is grossly undervalued and has a long way up to go. I am looking to O/W this holding.

What else do you guys think? Let me know :)

Signing Off
Transitioning Stock Investor

Market Catalysts and Quick Portfolio Update

Looking at the current market today, there will be some short term catalysts that will be of interest.

Firstly, it has just been confirmed that an agreement has just been reached on a Greek bailout plan. This deal when voted into the Greek government will hopefully keep Greece in the Euro and Grexit will not occur. In fact, it further shows the solidarity of the Euro and keeps the other countries that went through austerity (ie Spain, Portugal, etc) happy. I see this as a positive catalyst.

In the Chinese stock market, I see a longer term systematic issue. Nevertheless, the recent moves by the Chinese government to steady the ship and prop the market up has went some way to steady the market. To me, in the long term the Chinese investor needs to learn from past lessons, but at least for now things look better than a few weeks ago. I similarly see this as a positive situation.

In terms of the local stock market, a slew of companies are poised to announce earnings with the next month. All of the stocks in my current portfolio are slated to announce earnings during this time period. I attach a nice screenshot of the positive price action today:

Watchlist of My Current Stock Portfolio (Source: sgx.com)

I await better results especially from the less performing companies: Sembcorp Industries and Jardine Matheson. I hope that my trust in these companies will pay off in terms of better earnings numbers.
I continue to be fairly confident in the earnings of the core companies in my portfolio: Singtel, OCBC, ComfortDelgro and Raffles Medical. I similarly expect the REITS in my portfolio to continue their good performance: Capitamall Trust and Mapletree Commercial Trust.

I will be taking a break from adding to positions in the current month as I continue to build my warchest. I recently sold a holding of Raffles Medical (at a profit of c.S$700) to fund a watch purchase. Oh well, all work and no play makes Jack a dull boy, but I definitely look to lessen such activities moving forward.

The markets do look very interesting now and some of the positions in my portfolio looking prime for adding, especially Singtel, ComfortDelgro and Raffles Medical. Will closely monitor these positions and update accordingly when I make stock additions. As of now, I relaxingly sit back and let the portfolio recover and continue to churn out its dividends.

Signing Off
Transitioning Stock Investor

Lessons that need to be learnt from the Chinese Stock Market Crash

General foolhardy market euphoria, Utter disregard for fundamentals, Retail Investors jumping in based on total speculation.

The above sounds all too familiar ya. Yes, the above is what I would use to describe what happened to the Chinese stock market over the last 1 year or so. Almost everyone in China who could invest, went into the stock marker with wild abandon. Chasing stock prices as they went higher. Buying stocks like it was a roulette game in a casino (red or black). Interestingly, this phenomenon was warned about in the book which I shared about in my previous post. And ex-post everytime this phenomenon occurred it was bound to end up being pretty ugly, which is what we are currently seeing in the Chinese stock market as we speak. It certainly was also a reminder of what we saw in 2008, where markets crashed discriminately and spectacularly.  

Over the last one week, around half of the stocks in the market were halted for trading by their own companies. We have seen certain stocks drop by levels that would have rendered most people bankrupt if they had marginalised their positions, something in which many Chinese investors did. Mutual funds were not spared as many of the Chinese A shares they invested in were similarly suspended. I did a quick study of some of these suspended stocks and some of the names just bewildered me (as there was a good mix of unfamiliar and relatively well known names). 

All the above just goes to show a few important points, which are closely correlated with behavioural finance. If you would like to invest and to do it well, understand the business you are buying into. Also, do not allow greed or emotions to drive your decision making. Never follow a trend based on hearsay or following your inner herd instinct. In the stock market a stock that everyone is chasing up is not necessarily a good investment idea. In fact, often times the stock price does revert to mean somewhat and you end up with a bruised position and sometimes ego. Put real effort and analysis into your investments and you will reap the harvest in the long run. Learn to look through the mess and stay focussed in finding quality businesses selling at reduced prices in the days to come.

In other words, Stay Calm and Invest On my friends.

Signing Off

Transitioning Stock Investor

Two Simple Yet Powerful Investing Lessons Learnt Over Time

Now this is something I struggle with, right. Building a warchest to take advantage of opportunities. In such uncertain market environments, it makes alot of sense to have a sizeable warchest to buy on market dips. However what I struggle with is whenever I think I have a warchest, I end up vesting into another position. Guess it takes as much discipline to invest as not to invest.

In any case, I'll most probably be looking to enhance my warchest over the next few months as a way to build up capital to invest on market dips.

In the meanwhile I'll stay on the sidelines and wait out the current market volatility. One thing I really did realise versus my previous investment experiences is that when you have a solid quality portfolio, market volatility does not hit you as badly. Yes, your portfolio does take a hit but it sure is much more bearable compared to what I used to own when I was years younger (penny and speculative positions). I guess experience really does help build knowledge over time.

So in summary, just reiterating two simple yet important lessons I have gathered as I age and become more mellowed and wise in all things investing.

One, always have a sizeable warchest to capitalise on market weaknesses. Two, always invest in quality and solid businesses that you understand and are comfortable with. Both of these help to capitalise and ride out market volatility, values which are extremely important for any investor. It really is as simple as that.

Signing off
Transitioning Stock Investor

Thoughts on the Market - with an Iced Milo Dinosaur on hand

Arrr, sipping on my iced milo dinosaur, I've decided to write this post casually and share my thoughts on the market. As I'm enjoying the Sunday break of course.

What do we have this week? Firstly, is the Greek referendum. Let's see how markets react to the decision tonight but my guess is the impact shouldn't be too much as most of this news should have been priced in.

The China stock market continues to unravel itself and its still a black box on how the market will continue to behave this week. I expect more continued volatility.

In terms of the local stock market, it's been pretty quiet and I think with the lack of much catalysts like earnings announcements and such, probably a lacklustre market environment should remain for the near term.

What's important as I realised is probably to take a break from the stress and obsession from monitoring your portfolio and to just take a break and relax. Enjoy life abit, forget about dividends, earnings, profits for the time being. Just soak in life and enjoy life's simplest pleasures, like an iced Milo dinosaur over the weekend. A break well-deserved which is good for the long term, as remember investing is an enjoyable marathon and never a sprint.

Signing off 

Transitioning Stock Investor

Value Investing - Recommended Book - Must Read for Investing Enthusiasts

I love sharing a great book when I see one and this is it, 'The Intelligent Investor' by Benjamin Graham, who is widely known as Warren Buffett's mentor in investing. I'm sure some of you have heard of or have also read this book before. 

I read it around a year ago and it was what got me started in Real Value Investing. It was a fundamental breakthrough for me as it shifted me away from how I used to 'Invest': alot of emotion, timing, speculation, eagerness to make a quick buck, short term mindset, lack of awareness about the stocks I bought, the list goes on. This book basically addresses the paradigm and helps adjust your mindset towards investing. Alot of the time the problem really lies with us and how we view investments as a whole. Even till today, as I read alot of investment blogs, I only see a handful of fellow investors who truly appreciate and value what real value investing represents. 

I would strongly strongly recommend anyone who is serious about investing and doing it well and wisely to pickup this book. Be forewarned that some parts are very detailed and complicated to understand but I shall sum up the gist of the book in 3 main points that I have understood and apply regularly.

1. View Investments as Businesses not Stocks

- This is critical. When we buy a stock we usually treat it as a ticker or symbol, something that we just play around with. This mindset sets an obstacle to true investing. When we buy a stock, we need to think of it as buying shares in a BUSINESS. We need to think of the investment as a stake in the company, as a business. We need to be acutely aware of what the company actually does, does it have long term prospects, etc. Another important point shared in the book was to identify business with large moats (ie high barriers to entry, sticky businesses, hard to replace). Additionally, de-linking the thought of buying a stock and thinking of your investment as a part stake in a business will immediately set you thinking differently and more importantly, strategically. One great example I always think of is Singtel and how people are constantly glued to their mobile phones, evolution of apple watch, 4G to 5G, etc. There is so much potential to this company based on simple representations of everyday life and use. This gives me great confidence in investing in this business for the next 10, 20, even 30 years.

2. Always Have a Margin of Safety

- Now, this is easy to understand and say but extremely difficult to apply. Basically what this means is to find stocks that are trading at a price level that is at a deep DISCOUNT to its intrinsic value. So even if you purchase the stock and it does drop, the potential drop in price is minimised. Basically buying good stuff for cheap prices (being a stock cheapskate lol). Why I say its hard is because of two things.  Firstly, it's really hard (not impossible) to find cheaply value stocks. Usually you would find them when the market corrects, dips, or there is a temporary disjoint between what the market feels about the company versus its current price. Secondly, the other problem is what you define cheap as and this is intricately linked to the calculation of intrinsic value for the stock. There are some ways taught in the book on deriving intrinsic value and one simple formula that can be used is the following:

3. Invest Long Term, be Disciplined & Patient

- Last but not least, understand and accept that investing is a long term process. Stay the course, delay gratifications and be disciplined. Invest regularly into your portfolio, reinvest your dividends into your portfolio, basically doing all the 101 things and refusing to do stuff like contra trading, market trending, speculation stuff. Learn to stay the course over tine and reap the full benefits of your investments. Remember Warren Buffett only made his billions when he was in his 50s so alot of the businesses he bought years ago, he still owns today. PATIENCE in investing is a key virtue and a very important one at that.

There are plenty of other lessons to be taken away from the book but the above 3 have impacted my investment philosophy immensely and given me a new found paradigm and empowerment to investing. This to me is best reflected in my current portfolio and I am immensely glad with how it looks and will continue to be. And it also brings me great joy to share this knowledge with you. 

Sincerely hope the above sharing has positively helped you in some way.

Have a great weekend ahead!

Transitioning Stock Investor

Thoughts on Jardine Matheson Holdings

Good Thursday Folks

Since I have recently purchased some shares of Jardine Matheson, what better time to write about the company.

The Jardine group is indeed a complex web of companies with Jardin Matheson owning part of Jardine Strategic and vice versa. This structure was purposefully formed to prevent adverse takeovers something which the group was subject to previously. 

I shall not dwell too much about the company's long history or further corporate complexities as it is simply too long and complicated to elaborate here. I will just share 3 points that helped make my decision to take a tiny stake in the company.

1. Valuation

- The current valuations for the company all look within range and are values that I am comfortable with paying for. P/E is around 12x and P/B is around 1.1x, both of which are reasonable levels for me.

- The price has also dropped around 15% since the beginning of the year, which also makes this a relatively discounted price for me.

2. Business Model

- The group has a diverse range of businesses. Again I like the fact that when I buy this company I have access to Astra, Dairy Farm, HK Land, Jardine Lloyd Thompson, Cycle and Carriage, etc. These are all great businesses in which alot of us have a good deal of exposure to both on a regular and long term basis.

3. Cashflow US$

- The company has grown its dividends steadily over time and these will be in US$. With the eventual rise of interest rates in the US$, we should expect to see a nice headwind in terms of dollar strength. This gives me a nice potential FX kicker for future cash flows (dividend and capital gains) which will be in USD and translated into SGD at potential higher values.

There definitely were some concerns that I had with regards to the investment. The group is quite tightly held by the Keswick family so alot of its fortunes are tied to the ability of the family to grow the large and complex group of businesses. There is also the FX exposure in US$ which may go against me in future in the unlikely scenario that my hypothesis about future FX rates is incorrect.

Nevertheless, I like the company and its potential enough to take this initial position. I'm really glad to have bought into this stock and I hope I can add on more in future.

Also, I've decided to stick to just the 8 companies that I own at the monent and just continue to add unto those for the forseeable future.
Remember it's the quality and not quantity that counts!

Signing Off

Transitioning Stock Investor

Update: New Stock Holding added!

After a long deliberation and much thought, I have added 100 shares of Jardine Matheson Holdings today at a cost price of US$57.10. Translated into S$, the amount is around $7,750.

I'm really glad to have added this stock to my portfolio as I really like their portfolio of businesses. It ranges from automotive sales, supermarkets, hotels, insurance, property, financial services amongst others.

I really have not felt so excited in a while about buying a particular stock and I am also really happy with the look and structure of my portfolio now. I'm also glad to be a beneficiary of the smaller lot sizes as previously I was not able to take positions in this stock due to its high price. I may add more positions in this counter moving forward, we shall see.

Will update my portfolio structure in due course. What do you guys think about the Jardine group of companies? Do let me know!

Signing off
Transitioning Stock Investor