Author: 10% Per Annum

‘New’ Counter: InnoTek Ltd

It is not everyday that Mr Market offers you a 30% profit on a counter and sells you back the exact same counter for the original buy-in price 2 months later. Strange as it sounds, this was exactly what happened for me with InnoTek. April 2017 Initiation Thesis Almost exactly 1 year ago in April 2017, I had purchased InnoTek for S$0.375 a share on a turnaround thesis. While InnoTek continued to generate profits and free cash flow, the turnaround was not as smooth as I hoped for (that is a nice way of describing my misguided optimism) and it soon...

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Book Review: 6 reasons for businesses to fail from Scott Fearon’s Dead Companies Walking

About the Author: Scott Fearon is the founder and president of Crown Capital Management, a hedge fund that both longs and shorts stocks. Since its inception in 1991, the hedge fund had only one down year and has averaged an 11.3 percent annual return after all fees, thus outperforming the index. Interested investors can read more from Scott Fearon on his personal site (here). About the Book: This book details 6 key reasons for corporate collapse (apart from fraud) as well as Scott’s general investment philosophy. Each reason is illustrated with real-life case studies from Scott’s long career as...

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FY17 (Apr17 to Mar18) Portfolio Review – A Great Year

Trading in Hong Kong and Singapore are both closed for Good Friday holiday today, meaning that FY17 has officially came to an end. As a result, it is time for my second full year report since I begun investing in April 2016. Portfolio Results Time-weighted returns – 118.96% (+63.53% half-on-half, +84.95% year-on-year) All-time XIRR – 58.93% (+31.55% half-on-half) Perhaps it is fitting to begin by congratulating myself after such a great year as my portfolio had reaped amazing returns beyond what the index could have provided. Even if I were to take into account the lack of returns from cash...

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New Counter: Riverstone Holdings

Equity: Riverstone Holdings (SGX: AP4) Business: Glove manufacturer Markets exposed: Global Stock exchange: SGX Purchase price: 1.03 (including transaction costs) Purchase month: March 10% per annum thesis:  Riverstone Holdings is a solid fast grower with moat particularly in gloves used in cleanroom environment which commands higher margins. Introduction: Riverstone Holdings is primarily a nitrile glove manufacturer that sells its gloves around the world. Gloves sold cater to 2 main segments – cleanroom environment and healthcare. Considerations: 1) Governance and Management Founder, CEO, and Executive Chairman Wong Teek Son also doubles up as the largest shareholder with 50.75% of total shareholdings....

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Portfolio Update: Took loss on Sapphire

Summary Well, Sapphire clearly isn’t the gem that I thought it was – it is now officially the 2nd counter out of my 12 divestments for which I have lost money. All divestments made in 2018 by Author, price includes transaction costs Divestment Rationale – Sapphire In my initiation report (here), I wrote the following about Sapphire: “Sapphire Corporation is a turnaround that is now poised to be a fast grower.” 1 year on, I think it is about time to admit that they have neither turned their business around nor grown their business. Let us just leave the...

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New Counter: Hop Hing (HKG:0047)

Equity: Hop Hing (HKG:0047) Business: Quick Service Restaurants (QSR) Markets exposed: North-east China Stock exchange: HKex Purchase price: HKD 0.198 (including transaction costs, excluding FX costs) Purchase month: March 10% per annum thesis:  Hop Hing is a well-managed, high-quality F&B business. I see it as a steady slow grower that is currently undervalued by the market. Introduction: Hop Hing was started as a business selling edible oils. In 2013, the founders bought out its edible oils business and left the company listed as a Quick Service Restaurant pure-play. Hop Hing currently operates 2 main brands in North-east China –...

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Portfolio Update: Took profit on InnoTek and Micro-Mechanics

Summary I have decided to sell out on my positions in both InnoTek and Micro-Mechanics as they appear fairly valued given the risk-reward stand off at this point of time. All divestments made in 2018 by Author, price includes transaction costs However, I continue to like both counters and will continue to monitor them closely on my watchlist. Divestment Rationale – InnoTek I last wrote about InnoTek after their mid year results were released in August last year (here). Then, I mentioned that InnoTek was facing a difficult time securing demand for their office automation and consumer products, and that...

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Book Review: 5 things I learned from Joel Tillinghast’s Big Money Thinks Small

About the Author: Joel Tillinghast is a protégé of Peter Lynch who has managed Fidelity Low-Priced Stock Fund since 1989. Today, the fund manages over US$40 billion and owns over 900 counters. Despite its massive size, the fund that has outperformed both the S&P500 and Russell 2000 by an average of 4 percentage points per year. About the Book: From companies to avoid to stock selection, Tillinghast discusses all his investing philosophies in his book “Big Money Thinks Small”. Published in 2017, the book provides both recent examples that younger investors can identify with, as well as the classic...

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Some reasons to be bearish that make sense

I wrote about some reasons to be bearish that don’t make sense last week. Since then, the Dow Jones Industrial Index had posted its worst week in two years with 2 days of free fall exceeding 1000 points. In fact, had the Dow lost any ground on Friday, it would have been the index’s worst week since the financial crisis in October 2008. I guess this provides the perfect context for discussion on reasons to be bearish that makes economic sense. 1) Treasury Bond yields are rising 10 year treasury bond yields have accelerated since the start of the year...

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Why some reasons to be bearish don’t make sense

Equity markets are off to a great start in 2018 with stock indices around the world scaling new heights. In fact, January 2018 was not just a good month for stocks, it was a great month even by the average “good” standards – the Standard & Poor’s 500 stock index gained 5.62%, its best January since 1997. As the bull market runs further and longer, many investors are finding new reasons to be bearish. However, here are some recent ones that don’t make sense: 1) Trailing P/E for US indices are too high relative to history Price to Earnings...

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Book Review: 5 things I learned from David Einhorn’s Fooling Some of the People All of the Time

About the Author: David Einhorn is founder and president of Greenlight Capital, a value-oriented hedge fund that returned 16.5% a year from 1996 till 2016. He is best known for correctly identifying Lehman’s balance sheet deficiencies ahead of their downfall in 2008 though his track record of spotting accounting fraud extends far beyond Lehman. About the Book: This book details Einhorn’s struggle to expose fraud at Allied Capital despite his possession of overwhelming evidence. “But the most troubling material concerns an issue that is bigger than Allied and Einhorn’s battle: it’s the way criticisms of corporate behavior are received...

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The Fall of Singapore Post since 2015

2017 was a fantastic year for all investors as prices went up across almost all asset classes. This was true for most investors in Singapore’s stock market unless you somehow managed to pick up duds like.. Singapore Post. At S$1.25 per share, SingPost’s share price had declined 41.6% from its peak in January 30th of S$2.14. Frankly, it is quite amazing that a company with monopoly in mail management and a hand in logistics and ecommerce can fare this badly in a bull market that had picked up other logistics players like Global Logistics Property (GLP) and Poh Tiong...

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5 takeaways from Guy Spier’s The Education of a Value Investor

About the Author: Guy Spier is perhaps best known for co-bidding with close friend Mohnish Pabrai to win idol Warren Buffett’s charity lunch in 2007. As a fund manager himself, Guy Spier is no slouch. His Aquamarine Fund boasts of a cumulative return of 463% from 1997 till 2014 compared to S&P 500’s 167%. $1 million invested in the fund would therefore be worth $5.63 million in 2014, versus $2.7 million if it had been invested in the S&P 500 over the same period. About the Book: While the book does covers Spier’s philosophy towards investing, investing itself is...

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New Counter: Emperor Capital (HKG:717)

Equity: Emperor Capital (HKG:717) Business: Financial ServicesMarkets exposed: Mainly Hong KongStock exchange: HKexPurchase price: HKD 0.582 (including transaction costs, excluding FX costs)Purchase month: December 10% per annum thesis:  Emperor Capital is an undervalued fast grower. Earnings growth in the coming quarters might serve as a catalyst for revaluation, which in turn has the potential to transfer Emperor Capital into a multi-bagger. Introduction: Emperor Capital is a boutique financial services firm with the following 4 main segments: Financing, Brokerage, Placing & Underwriting and Corporate Finance.  Its operations are mainly in Hong Kong, where it has 10 branches. The firm also...

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Book Review: 5 types of Moat from Charlie Munger – The Complete Investor

About Charlie Munger: Charlie Munger is best known as vice chairman of Berkshire Hathaway and the ever affable partner of Warren Buffett. However, Munger was already well established as an outstanding investor way before becoming Buffett’s right hand man – Munger actually ran a partnership from 1962 to 1975 and achieved average annualized returns of 19.8%. About the Book: This Book is titled ‘The Complete Investor’ and author Tren Griffin does not disappoint. From the basics of the Graham value investing system and Munger’s pieces on human psychology to important investors’ attributes as well as key points to look...

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