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
Hi Paul,
ReplyDeleteI've been following your recent posts, and am curious on a few things:-
1) Why sell shares in RMG if it's a good company? You are overweight on it after all and it's growing slowly and steadily.
2) What you described on CD sounds akin to opportunistic trading. Why not just hold on to your position and continue to average down on a good company? What is the rationale for buying CD and why is it attractive?
3) OCBC Bank - why do you feel it is "grossly undervalued"? Would be nice if you could share your rationale since you are into value investing.
Thanks!
Hi Musicwhiz
ReplyDeleteThanks very much for your questions and they are good ones which also hit the nail on the head. Note as I wrote my latest post I cite these 'stock movements' with a tinge of regret. For Raffles Medical it was purely reactional as I sold a lot to fund a recent watch purchase. The purchase was a little impulsive, emotion, etc so the resulting action of me selling Raffles was naturally not the wisest decision I could have made as all my holdings as you rightly pointed out are meant for the LT. But, I am only human and am subject to YOLO moments and as much as I love stock investing, I also aim to self-indulge whilst maintaining a generally delayed gratification mindset. For CD I took $ off the table as the price went to a point both price wise and market environment wise, whereby I personally found it wise to take some profits and wait it out. And it proved to be a good decision for me. For OCBC, i may need to write a lengthier post in future but my calculated intrinsic value for the company is around the $12 price range. Again, it's anybody's guess but I work in a bank and understand the business well enough to like OCBC as an O/W.
:) happy weekend
Adding unto my earlier reply I guess also in response to your query probably it does seem that I don't seem to look and sound like a value investor based on my supposed 'trading' behaviour, etc). Nevertheless:
Delete- I still am proud and look to be a LT value investor. However, even Warren Buffet does sell certain holdings when it's time to do so. And that's what I did and I remain glad I did.
- I'm stil a relatively young and of course imperfect value investor so traits of instant gratification still remain at times (like my recent watch purchase). As much as I am passionate about stock investing it is not everything that I do. Life is still too short to stick to yourportfolio day in and out and live around it. However, that DOES NOT mean that I am a proponent of ST trading, nor advocate it. And to me ST trading is akin to trading up or down or holding positions over a few weeks and then getting out. That remains one of the most inefficient ways to acces the market.
- Lastly, great to see your comments and keep them coming in. Cheers.
Hi Paul,
ReplyDeleteThanks very much for your comments.
Let me categorically state that it is not my intention to judge anyone's investment methods or purchasing habits (with regards to discretionary items such as watches). Perhaps I should explain my rationale for asking just to avoid any misunderstanding.
In portfolio construction, the amounts allocated are usually based firstly on conviction (that an underlying idea is worth allocating capital to) as well as the risk-reward ratio. Understandably, you are young and just starting out, therefore capital may be limited. This is where capital planning and allocation take precedence over idea generation - simply put, you have more ideas than cash! This would also naturally imply that you have to be careful on what you allocate to, as you are a stage where capital (and experience) are both limited.
From that angle, the building of the portfolio should therefore be a gradual process, incorporating a better understanding of businesses over time. In such a situation, an investor would carefully plan his capital such that monies which go into investments are for investment, and the rest of his "stash" is used for necessities or discretionary purchases. This method of allocation would ensure that you are not forced to sell out a position just to fund an ad-hoc purchase (such as the sale of RMG). I agree it's not an easy task and is always in flux, but the gist of what I am trying to say is - ensure that capital properly allocated in good companies does not have to be yanked out without warning.
Short-term trading is, of course, not a very reliable method of building long-term wealth as you are subject to the vagaries of the market and also miss out on the slow and steady growth of strong businesses.If a business is assessed to be fairly valued but generates good profits, cash flows and margins, then my view is that it should be held for an extended period of time; all the while the investor may find opportune moments to add on to his existing holdings.
I would think CD is such a Company, though I have not analyzed it deeply. Unless valuation has reached such an absurd level (and I don't think so for CD), then a Company should remain in one's portfolio as a "core holding". This is just my view and you are of course free to disagree.
Finally on your point about OCBC - if your calculated intrinsic value is $12, and the current price is $10.33, this would imply an upside of around +16.2%, which does not seem to suggest that it is extremely undervalued. I am actually curious to understand how you would value OCBC, and how it ranks against UOB and DBS in terms of valuations, ROE, NIMs and other aspects. The fact that you work in a bank would mean that you are more in tune with how a bank works (versus myself who has never worked in one!), so I look forward to your post on OCBC.
Thanks!
Don't worry about it :) It's insightful thinking that truly sets people improving and more importantly learning. I categorically agree with everyone one of your points, in fact I'm glad that someone out there shares this thinking.
DeleteI originally didn't want to dwell on the reasons why I sold RMG (seemingly on impulse) and bought the watch, etc. For the benefit of the younger readers probably I shall do so. This year, I lost two friends one of which left the world just around a week plus ago. That set me thinking, real hard. It's important to work hard and be disciplined (which is what I have always been trying to achieve) but I also realised it's fine to take care of yourself every once in a while. Life is indeed short, so at least for myself I choose to take good care of my portfolio but also allow myself times to just go crazy. (I do have a sizeable cash stash but didn't wish to touch it as I found it more viable to use some of the profits from RMG to buy the watch, which I had been delaying gratification for a LONG TIME).
In any case, where I'm coming from is that everyone has a different perspective to investing and to life for that matter. Warren Buffett and Benjamin Graham are my investment idols and they remain so. However, in life alot of things are not as perfect as they probably should be and I prefer to be as real as I can be and not try to portray myself to be a perfect value investor. A good one I aim to be, but probably not a perfect one. I'll definitely post about OCBC when I feel the time is right for the picking...
Take care my friend and thanks again for your insights! :)
Hi Paul,
ReplyDeleteSorry to remind you of the loss, and sorry to hear about your friends. Life is indeed short and very precious - I agree we should learn to balance the enjoyment of life versus working and investing hard.
Take care and look forward to your posts!