Wow, what an eventful recent few weeks we have had. We saw the Fed being dovish on rates, the China 'A' share market taking a nosedive 'again' and most importantly the threat on a 'Grexit'
So I ask myself again what should I be doing in such a market environment whereby it is fraught with 'Ifs' and 'Hows'.
I found it important again to remember this. Stay invested, buy on dips and keep a warchest for eventual corrections. I also realised that I have repeated this process over time and it always works. The key to success in investing is this: Know what you are buying, keep emotion out of investing, have a plan and always think LONG TERM. Avoid trading the market and you already have half the battle won.
Remember this again, be the tortoise and beat the hare at the investing race!
Signing off
Transitioning Stock Investor
Thursday, 25 June 2015
Monday, 22 June 2015
Sembcorp Industries - Updated Holdings
Hey Guys,
Quick update. I added 1 pop of Sembcorp Industries today at the price of $3.91. This brings my average cost of this counter down to $4.26 from $4.43. This position I'm fairly confident should pay off, especially when the following happens:
- Sembcorb's share price converges with the price of oil.
I did a simple comparison of the share price vs WTI oil and there is a obvious divergence seen. I expect some levels of convergence, something which when extrapolated over time has shown to recur consistently.
- Market realises that Sembcorp is good value currently
All ratios, be they P/B, P/E etc all point to good value for the company
- Sembcorp's businesses pick up
I know we have all recently read their declining margins, businesses not doing well, falling revenue and asset turnover etc. However i like their overall business and strongly feel that they will revert to mean in the long run. Most of their businesses, marine included are fairly important and I expect again mean reversion in the LT.
Shall monitor the market closely for other developments but feeling glad on the addition today. Again one must take a long term view for this view to true play itself out positively.
Signing off
Transitioning Stock Investor
Quick update. I added 1 pop of Sembcorp Industries today at the price of $3.91. This brings my average cost of this counter down to $4.26 from $4.43. This position I'm fairly confident should pay off, especially when the following happens:
- Sembcorb's share price converges with the price of oil.
I did a simple comparison of the share price vs WTI oil and there is a obvious divergence seen. I expect some levels of convergence, something which when extrapolated over time has shown to recur consistently.
- Market realises that Sembcorp is good value currently
All ratios, be they P/B, P/E etc all point to good value for the company
- Sembcorp's businesses pick up
I know we have all recently read their declining margins, businesses not doing well, falling revenue and asset turnover etc. However i like their overall business and strongly feel that they will revert to mean in the long run. Most of their businesses, marine included are fairly important and I expect again mean reversion in the LT.
Shall monitor the market closely for other developments but feeling glad on the addition today. Again one must take a long term view for this view to true play itself out positively.
Signing off
Transitioning Stock Investor
Tuesday, 16 June 2015
Portfolio Update #3 Sembcorp Industries
This is the 3rd instalment of my portfolio update and this is where it becomes interesting. I will be touching on Sembcorp Industries today, a stock in which I own 2 lots of. This stock represents the Industrials segment of the sector allocation within my portfolio.
Share Price
As can be seen above, the share price of the stock has been seeing a steady decline since Aug 2014 last year. This as we all know can be attributed mostly to the fall in oil price over the same period. The average cost of my holdings is $4.43, so this is around halfway of the peak to trough price.
Pros of Sembcorp
The reason why I commented that this post is interesting is because I truly do not know or have a good gauge where the share price of this company is heading to in the near future. On one hand I know that there is a solid business model in place for Sembcorp and I was not only focussed on their O&G businesses when I bought the stock. I also greatly favoured their utilities and waste management businesses, sectors which I found important and necessary in any market environment.
The dividend payout and yield of the company has been excellent as well and has been really consistent over the years.
Cons of Sembcorp
Neverthless, the company could not escape the eventual impact of a low oil price and its effect on its margins and marine segment of the business. I also re-studied their latest financial statements last evening and the numbers do paint a pale picture of their businesses. Overall, turnover and margins have been falling with also a drop in free cash flow generated. Debt levels are increasing for the company which is inevitable for a capital intensive company. Lessons previously learnt from a local water management company which can be read in my previous post on "Due Diligence" and the importance of throwing caution to capital intensive companies still ring fresh in my mind.
Valuation
Usually I have strong conviction in my portfolio holdings and when the price falls I usually average down due to that conviction. However, using the Graham's discount model (will not furnish the valuation here, as this is just used as an estimate) the fair value for the company that I have derived at is still at a level that is lower than its current share price. Do note that this is not a recommendation to you to buy or sell the stock but just a valuation guide that I have used to help determine my investment decision.
Summary
I may probably add holdings of this position if I see a turnaround in prospescts of the company moving forward. At the current moment, I'm adopting a wait and see approach as there are just too many potential headwinds and questions left to be answered.
Signing Off
Transitioning Stock Investor
 |
| Sembcorp Ind. 1 year share price (Source: Bloomberg） |
Share Price
As can be seen above, the share price of the stock has been seeing a steady decline since Aug 2014 last year. This as we all know can be attributed mostly to the fall in oil price over the same period. The average cost of my holdings is $4.43, so this is around halfway of the peak to trough price.
Pros of Sembcorp
The reason why I commented that this post is interesting is because I truly do not know or have a good gauge where the share price of this company is heading to in the near future. On one hand I know that there is a solid business model in place for Sembcorp and I was not only focussed on their O&G businesses when I bought the stock. I also greatly favoured their utilities and waste management businesses, sectors which I found important and necessary in any market environment.
The dividend payout and yield of the company has been excellent as well and has been really consistent over the years.
Cons of Sembcorp
Neverthless, the company could not escape the eventual impact of a low oil price and its effect on its margins and marine segment of the business. I also re-studied their latest financial statements last evening and the numbers do paint a pale picture of their businesses. Overall, turnover and margins have been falling with also a drop in free cash flow generated. Debt levels are increasing for the company which is inevitable for a capital intensive company. Lessons previously learnt from a local water management company which can be read in my previous post on "Due Diligence" and the importance of throwing caution to capital intensive companies still ring fresh in my mind.
Valuation
Usually I have strong conviction in my portfolio holdings and when the price falls I usually average down due to that conviction. However, using the Graham's discount model (will not furnish the valuation here, as this is just used as an estimate) the fair value for the company that I have derived at is still at a level that is lower than its current share price. Do note that this is not a recommendation to you to buy or sell the stock but just a valuation guide that I have used to help determine my investment decision.
Summary
I may probably add holdings of this position if I see a turnaround in prospescts of the company moving forward. At the current moment, I'm adopting a wait and see approach as there are just too many potential headwinds and questions left to be answered.
Signing Off
Transitioning Stock Investor
Monday, 15 June 2015
Portfolio Update #2
Following on from my previous portfolio update, I'll be commenting on some of the other stocks in my portfolio. I'll be focussing on OCBC solely for today, due to the amount of information I have to write on it.
1. OCBC Bank
- I currently am holding 2 lots of this bank stock, with some additional odd shares due to dividend reinvestment.
- For me a good portfolio should have some exposure to financials, as they represent the heartbeat of a robust economy. Businesses generally need cashflow and loans to function and this also spreads down to the common consumer like us be it in credit, investments or deposits.
- The thing I really like about OCBC is its healthy dividend yield and that I'm able to participate in the 'DRIP' program. For those who are unfamiliar with 'DRIP' it stands for Dividend Reinvestment Program, whereby you can elect to receive dividends in the form of shares. Much like how an 'accumulation' share class of a unit trust works. This program is really quite brilliant as I leverage on it to compound my portfolio returns effectively.
- What I also like about OCBC is its standing as a solid and safe bank, with good capital adequacy ratios. Its current P/E of 9.7 and P/B of just 1.23 represent fantastic value to me too. Its expansion in HK due to the Wing Hang acquisition looks to have been fully integrated into the business. NIM margins also are expected to be healthy due to the potential increase in US rates, most probably end of the year.
- There are some potential headwinds as well, most notably the general health of the global economy (Greek debt, potential Chinese A share bubble, amongst others). Also a slowdown in certain businesses such as loan issuances, higher defaults, etc pose some concern too. However, I do not expect these headwinds to pose significant or immediate threats to the business.
- In summary, I strongly feel that OCBC is pretty attractively valued at the current price of $10.03. Any price below $10 looks like a viable entry point. Again to me short term pricings should not matter as much but at the current price it does look prime for picking.
Alrighty, I've share my views on OCBC Bank which is one of the key holdings in my portfolio. What do you guys think?
Signing Off
Transitioning Stock Investor
1. OCBC Bank
- I currently am holding 2 lots of this bank stock, with some additional odd shares due to dividend reinvestment.
- For me a good portfolio should have some exposure to financials, as they represent the heartbeat of a robust economy. Businesses generally need cashflow and loans to function and this also spreads down to the common consumer like us be it in credit, investments or deposits.
- The thing I really like about OCBC is its healthy dividend yield and that I'm able to participate in the 'DRIP' program. For those who are unfamiliar with 'DRIP' it stands for Dividend Reinvestment Program, whereby you can elect to receive dividends in the form of shares. Much like how an 'accumulation' share class of a unit trust works. This program is really quite brilliant as I leverage on it to compound my portfolio returns effectively.
- What I also like about OCBC is its standing as a solid and safe bank, with good capital adequacy ratios. Its current P/E of 9.7 and P/B of just 1.23 represent fantastic value to me too. Its expansion in HK due to the Wing Hang acquisition looks to have been fully integrated into the business. NIM margins also are expected to be healthy due to the potential increase in US rates, most probably end of the year.
- There are some potential headwinds as well, most notably the general health of the global economy (Greek debt, potential Chinese A share bubble, amongst others). Also a slowdown in certain businesses such as loan issuances, higher defaults, etc pose some concern too. However, I do not expect these headwinds to pose significant or immediate threats to the business.
- In summary, I strongly feel that OCBC is pretty attractively valued at the current price of $10.03. Any price below $10 looks like a viable entry point. Again to me short term pricings should not matter as much but at the current price it does look prime for picking.
Alrighty, I've share my views on OCBC Bank which is one of the key holdings in my portfolio. What do you guys think?
Signing Off
Transitioning Stock Investor
Saturday, 13 June 2015
Portfolio Update
A quick update on my portfolio. As shared previously 1 lot of Singtel shares was added earlier this week. And the market subsequently recovered strongly after that, so that was a rather good call in terms of timing.
Nevertheless, at this mid-point stage in the year, my overall portfolio is looking in rather good shape. There was some recent volatility but with a long term view, volatile markets always represent opportunities rather than risks.
Quick commentary on some of my holdings and what transpired over the last week months:
1. Raffles Medical - Obviously, a strong catalyst for the recent share price strength was the news of its expansion in Shanghai and the collaboration on a hospital there. None withstanding this piece of news, I continue to expect strong organic growth from the business, especially in Singapore. I visited the sites that are being developed at both Bugis and HV recently and I was very impressed with the locality and scale of the projects. I also was impressed at the potential synergies that will be provided by these two developments in the healthcare industry moving forward. I will continue to add positions when there are price dips.
2. Singtel - As shared, a lot was recently added at $4.13. That was a very good price point as the share price has rallied towards the end of the week. Again, the scale that Singtel has, coupled with the heavy reliance on telecoms gives me strong conviction in owning this quality holding.
3. Mapletree Commercial Trust - Now, this is a stock that I currently have only 2 lots in. I will most probably add a couple more lots soon. Just go visit Vivocity over the weekend and you will immediately see why I have a strong conviction on this stock. The other holdings in the REIT are also quality ones, that span nicely across the south-central part of Singapore. That being said, Vivocity is the obvious jewel in the crown and I continue to love this mall and that is the main reason why I would be adding positions soon. (Not forgetting that this is a 'DRIP' applicable stock).
I will be writing more about the other positions I have in my portfolio in due course. I would love to hear from you as well and what other stocks interest you at the current moment. Keep those posts coming in!
Signing Off
Transitioning Stock Investor
Wednesday, 10 June 2015
Thoughts on the Market - 10 June 2015
Dear Friends,
Good wednesday afternoon! In the midst of the SEA Games which is being held in Singapore, our focus of course is still very much on the market.
In the recent market weakness, did any of you take the opportunity to add into your positions? I sure did, as shared in my previous posts, I was focussing on adding a position in Singtel and I did when the price suffered the recent correction. In Singapore we call this 'Lelong!'
Great stock at a cheaper price, so a lot was added. Really looking forward to its continued growth in the 4G space as well as its Digital Life offerings. Dividends galore!
Although my portfolio took a hit overall I was not worried much as I knew that I was invested for the long run. In fact I was pretty excited as I saw many great stocks trading at a lower price for the taking. Today, the market has recovered strongly and my portfolio's performance is looking nice.
Always remember, buy on dips and do not be afraid to add unto quality positions. Market dips are just a test of your patience and the conviction of the portfolio you have built over time. Those who have passed this small test, kudos to you!
Signing off
Transitioning Stock Investor
Thursday, 4 June 2015
Continuing Stock Focus - Singtel
I blogged a week ago about focussing on Singtel. Well, the price went down and has now rebounded to S$4.17 as of today's close.
This has proven and especially over time that having confidence in a stock really does matter. It matters, because as an investor when the price of the stock that you are confident in drops, you simply buy more of it. It really is not rocket science and sometimes investing is just that simple.
The hard part is to get to know the stock extremely well and that is why a concentrated high conviction portfolio does have its set of benefits.
I will be continuing to monitor the other stocks in my portfolio, especially those that have recently taken a hit and probably share which are the ones that I would be looking to add. Remember I am not looking to add new positions, but new holdings to my existing positions. This practice when done over time in a disciplined manner, does reap its rewards.
Signing off
Transitioning Stock Investor
This has proven and especially over time that having confidence in a stock really does matter. It matters, because as an investor when the price of the stock that you are confident in drops, you simply buy more of it. It really is not rocket science and sometimes investing is just that simple.
The hard part is to get to know the stock extremely well and that is why a concentrated high conviction portfolio does have its set of benefits.
I will be continuing to monitor the other stocks in my portfolio, especially those that have recently taken a hit and probably share which are the ones that I would be looking to add. Remember I am not looking to add new positions, but new holdings to my existing positions. This practice when done over time in a disciplined manner, does reap its rewards.
Signing off
Transitioning Stock Investor
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