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July 2009 can be classified as an interesting month, as there was some news flow from the companies I owned and there were also two annual reports to read and digest, namely from Tat Hong and Boustead. It was also another month of reversion to the mean in terms of valuation metrics, as Price-Earning Ratios (PER) started to normalize across the board, causing sharp increases in the market prices of most blue chips as well as second-liner companies. If one does a study of the average (mean) PER of companies trading on the Singapore Stock Exchange, one would realize that the period from Oct 2008 to March 2009 represented one of extremely depressed valuations representing a huge doomsday scenario. During such periods of time, if one can suitably identify investment opportunities in stable and solid companies, then it would be the best time to invest as margin of safety would be maximized.
On the matter of valuation adjustments, news flow came in the form of sharply increased economic activity in Singapore, as well as improved earnings in the USA which outperformed expectations; resulting in a sharp and sudden rise in price levels for shares listed on NYSE and NASDAQ as people’s expectations started to re-align. While some people may argue strenuously that nothing much has changed fundamentally and that the economy is still in shambles, the issue of the “worst being over” and is “unlikely to recur” would imply that things can only get better from now on; and higher valuations and expectations are predicated upon optimism and an improved macro as well as micro (corporate-level) outlook. Though this may take several more quarters to fully manifest and materialize, nonetheless investors and speculators have already begun bidding up prices of securities. The careful and cautious investor should remain prudent in his choice of appropriate companies to invest in to ensure margin of safety is not compromised, and that he still has sufficient upside while protecting his downside.
There were no opportunities open for me to add to existing positions, and my time was severely constrained in the area of searching for companies to invest in; thus I made no purchases or sales for this month. I realize time is a very valuable commodity for a value investor, as he cannot possibly analyze ALL possible leads and prospects. By focusing his attention to analyzing just one company, he may inadvertently leave out many other potential ones along the way. But such is the nature of the individual retail investor with limited resources on hand, and who wishes to embark on a do-it-yourself approach to investing. For me, it challenges, motivates and energizes me to see myself getting a decent return on my investment as a result of my hard work.
A detailed Tat Hong AGM review will be prepared soon after my maiden visit to Tat Hong’s offices to attend their AGM. Many questions were posed to the Management and the replies were documented by me either on paper or memory in order to serve as a record of my attendance, and to properly record down what transpired. In addition, the CEO Mr. Roland Ng also kindly gave all shareholders an update on the business and current and future prospects. It was a good learning experience for me and I hope to continually apply Phil Fisher’s “scuttlebutt” approach to speak to Management and stakeholders as part of my investment philosophy.
Moving forward, August 2009 will be a month to look forward to as corporate earnings for 2Q 2009 will be released for Swiber and China Fishery, as well as 1Q 2010 earnings for Tat Hong and Boustead. It will be good to get an update on the corporate situation and developments and to see if there are signs that credit is more easily available and if the recession is showing tentative signs of easing. Read more...[caption id="attachment_3089" align="alignright" width="150" caption="Musicwhiz July Portfolio"]
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July 2009 can be classified as an interesting month, as there was some news flow from the companies I owned and there were also two annual reports to read and digest, namely from Tat Hong and Boustead. It was also another month of reversion to the mean in terms of valuation metrics, as Price-Earning Ratios (PER) started to normalize across the board, causing sharp increases in the market prices of most blue chips as well as second-liner companies. If one does a study of the average (mean) PER of companies trading on the Singapore Stock Exchange, one would realize that the period from Oct 2008 to March 2009 represented one of extremely depressed valuations representing a huge doomsday scenario. During such periods of time, if one can suitably identify investment opportunities in stable and solid companies, then it would be the best time to invest as margin of safety would be maximized.
On the matter of valuation adjustments, news flow came in the form of sharply increased economic activity in Singapore, as well as improved earnings in the USA which outperformed expectations; resulting in a sharp and sudden rise in price levels for shares listed on NYSE and NASDAQ as people’s expectations started to re-align. While some people may argue strenuously that nothing much has changed fundamentally and that the economy is still in shambles, the issue of the “worst being over” and is “unlikely to recur” would imply that things can only get better from now on; and higher valuations and expectations are predicated upon optimism and an improved macro as well as micro (corporate-level) outlook. Though this may take several more quarters to fully manifest and materialize, nonetheless investors and speculators have already begun bidding up prices of securities. The careful and cautious investor should remain prudent in his choice of appropriate companies to invest in to ensure margin of safety is not compromised, and that he still has sufficient upside while protecting his downside.
There were no opportunities open for me to add to existing positions, and my time was severely constrained in the area of searching for companies to invest in; thus I made no purchases or sales for this month. I realize time is a very valuable commodity for a value investor, as he cannot possibly analyze ALL possible leads and prospects. By focusing his attention to analyzing just one company, he may inadvertently leave out many other potential ones along the way. But such is the nature of the individual retail investor with limited resources on hand, and who wishes to embark on a do-it-yourself approach to investing. For me, it challenges, motivates and energizes me to see myself getting a decent return on my investment as a result of my hard work.
A detailed Tat Hong AGM review will be prepared soon after my maiden visit to Tat Hong’s offices to attend their AGM. Many questions were posed to the Management and the replies were documented by me either on paper or memory in order to serve as a record of my attendance, and to properly record down what transpired. In addition, the CEO Mr. Roland Ng also kindly gave all shareholders an update on the business and current and future prospects. It was a good learning experience for me and I hope to continually apply Phil Fisher’s “scuttlebutt” approach to speak to Management and stakeholders as part of my investment philosophy.
Moving forward, August 2009 will be a month to look forward to as corporate earnings for 2Q 2009 will be released for Swiber and China Fishery, as well as 1Q 2010 earnings for Tat Hong and Boustead. It will be good to get an update on the corporate situation and developments and to see if there are signs that credit is more easily available and if the recession is showing tentative signs of easing. Read more...
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July 2009 can be classified as an interesting month, as there was some news flow from the companies I owned and there were also two annual reports to read and digest, namely from Tat Hong and Boustead. It was also another month of reversion to the mean in terms of valuation metrics, as Price-Earning Ratios (PER) started to normalize across the board, causing sharp increases in the market prices of most blue chips as well as second-liner companies. If one does a study of the average (mean) PER of companies trading on the Singapore Stock Exchange, one would realize that the period from Oct 2008 to March 2009 represented one of extremely depressed valuations representing a huge doomsday scenario. During such periods of time, if one can suitably identify investment opportunities in stable and solid companies, then it would be the best time to invest as margin of safety would be maximized.
On the matter of valuation adjustments, news flow came in the form of sharply increased economic activity in Singapore, as well as improved earnings in the USA which outperformed expectations; resulting in a sharp and sudden rise in price levels for shares listed on NYSE and NASDAQ as people’s expectations started to re-align. While some people may argue strenuously that nothing much has changed fundamentally and that the economy is still in shambles, the issue of the “worst being over” and is “unlikely to recur” would imply that things can only get better from now on; and higher valuations and expectations are predicated upon optimism and an improved macro as well as micro (corporate-level) outlook. Though this may take several more quarters to fully manifest and materialize, nonetheless investors and speculators have already begun bidding up prices of securities. The careful and cautious investor should remain prudent in his choice of appropriate companies to invest in to ensure margin of safety is not compromised, and that he still has sufficient upside while protecting his downside.
There were no opportunities open for me to add to existing positions, and my time was severely constrained in the area of searching for companies to invest in; thus I made no purchases or sales for this month. I realize time is a very valuable commodity for a value investor, as he cannot possibly analyze ALL possible leads and prospects. By focusing his attention to analyzing just one company, he may inadvertently leave out many other potential ones along the way. But such is the nature of the individual retail investor with limited resources on hand, and who wishes to embark on a do-it-yourself approach to investing. For me, it challenges, motivates and energizes me to see myself getting a decent return on my investment as a result of my hard work.
A detailed Tat Hong AGM review will be prepared soon after my maiden visit to Tat Hong’s offices to attend their AGM. Many questions were posed to the Management and the replies were documented by me either on paper or memory in order to serve as a record of my attendance, and to properly record down what transpired. In addition, the CEO Mr. Roland Ng also kindly gave all shareholders an update on the business and current and future prospects. It was a good learning experience for me and I hope to continually apply Phil Fisher’s “scuttlebutt” approach to speak to Management and stakeholders as part of my investment philosophy.
Moving forward, August 2009 will be a month to look forward to as corporate earnings for 2Q 2009 will be released for Swiber and China Fishery, as well as 1Q 2010 earnings for Tat Hong and Boustead. It will be good to get an update on the corporate situation and developments and to see if there are signs that credit is more easily available and if the recession is showing tentative signs of easing. Read more...
