Author: (The) Boring Investor

How Long Would You Hold A Value Stock?

Posted by (The) Boring Investor | Jun 25, 2017 | Shares & Derivatives |

9 years and 11 months! That is how long I held on to a value stock known as Frencken. I recently sold it in Jun at $0.515, having first bought it in Jul 2007 at $0.535 when it was still known as ElectroTech. In between, I averaged down twice, at $0.33 in Jul 2010 and at $0.365 in Jul 2014. The figure below shows the share price performance since May 2005. Frencken Share Price Performance Since 2005 As you can see, for a very long 9.5 years, the share price never recovered to its previous levels, until only recently....

Fundamentals of Stock and Bond Picking

Posted by (The) Boring Investor | Jun 18, 2017 | Fixed Income |

You have probably heard of the study in which monkeys throwing darts on a dartboard with stock names on it could produce portfolios that outperform those picked by professional investors. A few reasons were given for the outperformance, such as size of the companies, Price-to-Book valuation of the stocks, etc. I wonder if the same study were to be repeated for bond picking, would monkeys still outperform professional investors? There is no study on the above, but my answer to it is probably not. When you pick a stock to buy, you are expecting it to change in the...

How to Avoid Cleaning Out Your CPF Balance When You Take a HDB Loan

Posted by (The) Boring Investor | Jun 11, 2017 | Property |

When you apply for a loan from HDB to buy a flat, it will take all the money from your CPF Ordinary Account (OA) before giving you the loan. This is to reduce the loan amount that you need to service. If you wish to avoid an empty OA account, you can temporarily transfer some of your OA balance out of CPF before you apply for the HDB loan. The pros and cons for either approach are discussed in Clean Out CPF Balance When Taking HDB Housing Loan? A reader recently asked me how to temporarily transfer some of...

Comparison of Singapore Shipping Corp with Shipping Trusts

Posted by (The) Boring Investor | Jun 4, 2017 | Shares & Derivatives |

Shipping trusts are not the only stocks that buy and rent out ships for recurrent income. There is another stock that does so — Singapore Shipping Corp (SSC). I used to own this stock, and unlike the shipping trusts, I have fond memories of it. What are the similarities and differences between SSC and the shipping trusts like First Ship Lease Trust (FSL) and Rickmers Maritime and will SSC face similar difficulties as the shipping trusts in future? First, a brief introduction of SSC. SSC has 2 business segments, namely ship owning and agency & logistics. The bulk of...

Differences Between First Ship Lease Trust and Rickmers Maritime

Posted by (The) Boring Investor | May 28, 2017 | Investing |

For investors in First Ship Lease Trust (FSL), the question at the top of investors’ minds is: will FSL go the way of Rickmers Maritime and be wounded up? This is my third time investing in FSL and the previous 2 attempts have ended in major losses. I certainly do not wish to lose money on it a third time, which explains this series of blog posts on shipping trusts. Rickmers is currently in the process of winding-up, after their failure to secure re-financing of their loans. Although this is the triggering point for winding-up, it is not the...

A Comparison of Shipping Trusts’ Business Models

Posted by (The) Boring Investor | May 22, 2017 | Shares & Derivatives |

You might be wondering why I am still writing about shipping trusts’ business models when there is only 1 shipping trust left. This is because for investors in First Ship Lease Trust (FSL), it is useful to understand the differences between the business models of FSL and Rickmers Maritime to assess whether FSL would go the way of Rickmers Maritime and be wounded up. On the surface, both FSL and Rickmers are shipping trusts, however, their business models (at least in the initial stages) are quite different. As an analogy, supposed you wish to become a Uber driver but...

Sustainability of First Ship Lease Trust’s Cashflows

Posted by (The) Boring Investor | May 14, 2017 | Shares & Derivatives |

Last week, I blogged about the estimated current valuation of First Ship Lease Trust (FSL) and mentioned that since the current market value of the ships exceeds the loan amount, the probability of successful refinancing is quite high. However, the more important factor in determining successful refinancing is whether future cashflows are sufficient to meet the loan obligations. In this post, I will estimate the future cashflows of FSL and determine whether it is a viable business going forward. For FSL to be viable, its cash inflows must be sufficient to cover its cash outflows. On a Bare Boat...

Valuation of First Ship Lease Trust

Posted by (The) Boring Investor | May 7, 2017 | Shares & Derivatives |

A reader recently alerted me to the undervaluation of First Ship Lease Trust (FSL). It is a stock that lost a lot of money for me, having bought it at $1.27 in Oct 2007, averaged down at $0.42 in May 2009, before finally throwing in the towel at $0.225 in Jan 2012. Together with Rickmers Maritime, the shipping trusts were the worst investments in the 19 years that I had invested in the stock market. However, despite the heavy losses, I am prepared to relook at it 5 years after I sold it. FSL is in the business...

Globalisation, Technology and the Home Bias

Posted by (The) Boring Investor | Apr 30, 2017 |

I have both active and passive investments in my cash account. The active investments are in local equities while the passive investments are in global/US equities. Part of the reasons is because I understand that passive investments, especially using index funds, can lead to better performance over active investments. In recent years, I have come to realise that there is another important reason for having passive investments that are invested globally. It is the increasing disadvantage of the home bias in the face of globalisation and technology. Since my active investments are in local equities, I am highly susceptible...

Possibly The Worst Time to Invest – 3 Years On

Posted by (The) Boring Investor | Apr 23, 2017 | Investing |

This is an annual blog series that I started 3 years ago to document the worries about investing at the wrong time, which would bring losses and headaches. The blog series track the performance of 2 passive portfolios invested in index funds using the portfolio rebalancing strategy. Both portfolios comprise of 70% allocation in stocks and 30% in bonds. The plain vanilla portfolio invests in global equities and global bonds while the spicy portfolio invests in US equities and Asian bonds. The first portfolio was started in Dec 2013, while the second one was funded progressively over 2015. ...

Early Retirement Maybe A Luxury That I Cannot Afford

Posted by (The) Boring Investor | Apr 16, 2017 | Personal Finance |

I have blogged about early retirement in the past 2 years, but I really do not intend for this to be an annual series. Moreover, I do not intend to retire early and sit back and do nothing. Nevertheless, there are fresh insights on this topic and it is good to write them down for future reference. In the past 1 year, I have read a few books such as “Capital in the 21st Century” and “Rise of the Robots: Technology and the Threat of a Jobless Future”. I am concerned about automation and robots taking away jobs. By...

Breaking My Valuation & Position Limits

Posted by (The) Boring Investor | Apr 9, 2017 | Investing |

It is official! I have broken my valuation limits on buying & selling stocks and position limits on individual stocks! Previously, I mentioned in What is My Target Price? that I have valuation limits of 1.8 to 2.0 times book value for buying stocks and 3.5 to 4.0 times book value for selling them. In Jan this year, I had broken these rules with the purchase of M1 at 4.7 times book value and Singtel at 2.5 times book value! Also broken were my position limits on individual stocks. I have an initial position limit of $15K to $20K...

I Didn’t Let My Alma Mater Down

Posted by (The) Boring Investor | Apr 3, 2017 | Career & Education |

How time flies. This is post no. 208, which makes it the 4th birthday for this weekly blog. This is a time for celebrations and reflections. Today’s story is about my studies in the Singapore Management University (SMU)’s Masters in Applied Finance (MAF) programme. I enrolled in the programme in Jul 2004. The stock market had just recovered from a 3-year slump due to the dot.com crash in 2000, Sep 11 terrorist attack in 2001, accounting scandals in 2002 and the Severe Acute Respiratory Syndrome (SARS) in 2003. After a prolonged slump, the market staged a strong recovery in...

The Investigative Approach to Stock Investments

Posted by (The) Boring Investor | Mar 26, 2017 | Investing |

There are a couple of quantitative methods for analysing stocks, such as the Dividend Discount Model (DDM). A lot of people use them for stock analysis and investment as they are relatively simple to use and do not require qualitative analysis of the business strategies, competitive environment, corporate governance, etc. For a very long time, I was also a keen user of such methods, looking at only earnings, dividends, cashflows, debts, book value, etc. to identify value stocks. Such an approach has served me well in the past. However, there are times when this approach turned up value traps...

Challenging Times Ahead for Starhub’s Dividends

Posted by (The) Boring Investor | Mar 19, 2017 | Shares & Derivatives |

When M1 announced its results in end Jan, I went to buy both M1 and Singtel, but I did not buy Starhub. The conventional wisdom is that between M1 and Starhub, Starhub would be better able to manage the competition from the fourth telco, as it has Pay TV, broadband and enterprise fixed services besides mobile services. That is true provided the other business segments are generating stable, recurrent cashflows. However, is that true? First of all, let us look at the revenue contribution from its 4 business segments. Fig. 1: Starhub’s Service Revenue Breakdown Excluding equipment sales,...