THEIR MOOD is cautious but there is definitely optimism. The five participants in our well-read Stock Challenge have reached the mid-point of the six-month virtual game, and their portfolios are either in either good shape or just slightly in the red.
The market has turned from being cruel to being benign - or even outright kind to a few of them.
Sebastian Chong has consistently led from the starting block three months ago, and now his virtual portfolio (starting capital of $100,000) is up by 20%.
DanielXX is in second place with a 7% gain.
The five participants had contributed $100 each to a prize pool. At the end of six months, the top 3 prizes to be awarded are $350, $100 and $50.
Details of their portfolios as of end of January '09:
| Stock | Number of shares | Purchase price ($) | Jan 30 closing price ($) | Value of holding ($) | Percentage change (including dividend*) |
| SGX | 4,000 | 4.46 | 5.18cd | 20,720 | +16.1% |
| Jardine C&C | 2,000 | 8.20 | 10.80 | 21,600 | +31.7% |
| Capitaland | 2,000 | 2.47 | 2.40 | 4,800 | -2.8% |
| KepLand | 3,000 | 1.49 | 1.40 | 4,200 | -6.0% |
| Wilmar | 3,000 | 1.87 | 2.90 | 8,700 | +55.1% |
| Sino-Environment | 20,000 | 0.425 | 0.485 | 9,700 | +14.1% |
| Straits Asia | 8000 | 0.825 | 0.94 | 7,520 | +13.9% |
| Mercator | 50,000 | 0.115 | 0.13 | 6,500 | +13.0% |
| Li Heng | 20,000 | 0.20 | 0.265 | 5,300 | +40.0%* |
| Yanlord | 5000 | 0.74 | 0.95 | 4,750 | +28.4% |
| Metro | 10,000 | 0.37 | 0.31 | 3,100 | -16.2% |
| Bukit Sembawang | 1000 | 3.61 | 3.81 | 3,810 | +6.6%* |
| Synear | 20,000 | 0.115 | 0.265 | 5,300 | +130.4% |
| Ascott REIT | 10,000 | 0.555 | 0.56cd | 5,600 | + 1.0% |
| CapitaRetailChina Trust | 10,000 | 0.565 | 0.725cd | 7,250 | +28.3% |
Cash | 1,120 | ||||
| Total | 119,970 | +20.0% |
Sebastian Chong has invested actively in equities since the 1970s. He is managing director of Financial Info Analysis Pte Ltd, a company he founded after he retired as an accounting professor at the National University of Singapore. He now runs his popular investing website, www.shareowl.com
Sebastian says:
On 30 Jan 2009, the Straits Times Index closed at 1,746.47. This compares with 1,761.56 on 31 December 2008 when my portfolio was up 20.1%. Both the STI and my portfolio value remained flat between 31 Dec 2008 and 30 Jan 2009.
However, this apparent stability belies the volatility during the month. The intra-month high in January for the STI was about 1,960 points which represented an 11.3% gain since the start of 2009.
If I had sold off everything on that day in January and held only cash, the cash balance would have been at least $135,000. And I could do a lot of fresh buying of stocks at the start of February at bargain prices.
Again, I could use the difficulty of timing the market as an excuse for not taking profit in January. But with hindsight, it was not too difficult after all. I saw SGX rose to $5.85 right in front of my eyes. I saw Capitaland hit $3.70 on the computer screen and now it is $2.40.
Yes, Keppel Land was trading at $2.00 and now it is $1.40. Sino-Environment touched 70 cents and now it is 48.5 cents. It is still above my cost of 42.5 cents but that is not consoling enough.
The non-realization of the extra potential profits in January was inexcusable, I thought. I used the Warren Buffett approach to long term investing since the inception in late October 2008 of this round of Stock Challenge and made 20% to date. Why didn’t I take profit on every stock and increase my overall return to between 35% and 40%?
This time I am not going to say that it is not easy to transact on the basis of hindsight. I believe that the market will continue to zig-zag for the next few months at least. So if the STI goes above the 1900 level again, you can bet that I am going to take heavy profit.
And when it pulls back to 1,750 again, I am going to buy back more or less the same stocks at considerably lower prices. Well, we shall see whether my proposed strategy is that easy to implement. Yes, we shall see. Even if I mess it up in the weeks or months to come, we will learn at least something from the experience.
*****
| Stock | No. of shares | Price bought at $ | Jan 30 price | Total shareholding value $ | Vested dividend S$ |
| SMB United | 227,273 | 0.11 | $0.125 | 28,409 | - |
| CH Offshore | 113,636 | 0.22 | $0.25 | 28,409 | - |
| Celestial | 64,103 | 0.39 | $0.35 | 22,436 | - |
| Tat Hong | 43,478 | 0.575 | $0.605 | 26,304 | 0.035 |
| Total | 105,558 | 1,522 (Total) |
DanielXX is a 30-something investor who is well-known in certain online investing forums as well as for his blog, where his writings on investing reflect depth of thought and analysis.
DanielXX says:
As of Jan 30, the total value of my portfolio = shareholding value + dividends = $107,080.
It is up by 7%. My view is that we could have seen a bottom hammered out during Oct-Nov 08, unless we witness a bigger event ---- such as default problems at a developed nation. Another possibility is political problems at neighbouring countries.
SMB United - upcoming results will be interesting, to see the dividend payout. If it maintains its past generous dividend, we could be looking at 10-15% yield.
CH Offshore - If there’re no contract cancellations, it’s a potential multi-bagger.
Celestial - too cheap to ignore, in view of its large operational scale for an S-stock. Let’s see if there’s a dividend for FY.
Tat Hong - could benefit from infrastructure theme. Weighed down by AUD weakness, though.
*****
| No. of shares | Price bought at | Jan 30 price | Value of holding | |
| Swiber | 37,701 | 0.495 | 0.48 | $18096 |
| China Taisan | 107,142 | 0.140 | 0.130 | $13928 |
| SMRT | 15723 | 1.590 | 1.590 | $25000 |
| Capitaland | 5474 | 2.740 | 2.400 | $13137 |
| Cash | $30000 | |||
| Total | $100,161 |
Kennysjq is a young investor whose investing approach involves studying company fundamentals with a mid-to-long term horizon in mind. He advocates risk taking with caution because he knows we can’t avoid it. Enjoys his daily Business Times, especially so with an americano expresso.
Kennysjq says:
My portfolio’s profit stood at $161. I added 2 more buys SMRT and Capitaland in January.
Decided to purchase $25000 worth of SMRT shares at Friday's closing price of $1.590 giving me a holding of 15723 shares.
Investing in a fundamentally strong and recession proof corporation. Looking forward to the opening of the Boon Lay extension as well as the first phase of the circle line. Domestic plans aside, personally feel SMRT's entry into the China market will be beneficial in the long run.
Capitaland
Bought $15000 worth of Capitaland shares at $2.740 giving me a holding of 5474 shares.
Capitaland's profit margin has been increasing over the last 10 years and I especially like the CEO Mr Liew Mun Leong's flair for management and his management style. May be a bias buy?
*****
Stock | Number of shares | Average Purchase price ($) | Jan 30 close ($) | Value of holding ($) |
China Milk | 20,000 | 0.39 | 0.38 | 7,600 |
| China Taisan | 100,000 | 0.145 | 0.13 | 13,000 |
China Zaino | 20,000 | 0.21 | 0.225 | 4,500 |
Sino Techfibre | 20,000 | 0.18 | 0.18 | 3,600 |
Cash | 69,900 | |||
Total | 98,600 (-1.4%) |
Gary Teh, 39, is Asia sales director for a semiconductor company. He graduated from Melbourne La Trobe University School of Economics with a Bachelors of Economics with an accounting major in 1991. As for his stock market passion, he has been greatly influenced by his dad who, despite a modest income as a government servant in Malaysia, managed to accumulate a nestegg for a comfortable retirement by investing in stocks for over 30 years. Penang-born Gary has been buying and selling stocks, mainly on the Kuala Lumpur Stock Exchange, since he was around 16. He is married and lives in Singapore.
China Milk: I've always like this company and have been watching it for a while now and when the melamine scandal broke, I thought that it would have been a good inflection point for the company since it came out with flying colors. However greater macro economic concerns outweigh the prospects for this company's shares which is a total disconnect from the fundamental value of this company.
The forward PE ratio of 3 is not exactly low by S chips standards but it is a great business and long term (5-7 years out) this is probably a ten-bagger. This is a typical Buffet buy - great business at a fair price with a big moat.
China Taisan: This is probably the most under valued of all the S chips by comparison. It is essentially a Taiwanese company with manufacturing base in China. Given that it supplies to most of the top sports brands, the valuation it is fetching from the market is absurd by any given standards. I would call it a proxy to China Anta and Lining with both given much higher valuations.
China Zaino: Probably the "Li Ning or Anta" for backpacks and its foray into the luggage sector bodes well for its future. Its forward PE is well below 3 and I'm confident that the even with a gloomy retail outlook China Zaino can sustain a 10% growth for 2009.
Sino Techfibre:
1. Trading at Net Current Asset - what else can I say...
2. PMP prospects in FY09
3. Supplier to government organizations People’s Liberation Army and others.
*****
Stock | Number of shares | Average Purchase/ Short price ($) | Jan 30 close ($) | Value of holding ($) |
Bright World | 141000 | 0.293 | 0.25 | 35,250 |
| UOB | 4000 | 13.56 | 11.88 | 17,568 |
DBS | 21000 | 9.051 | 8.82 | 42,864 |
| Cash | 858 | |||
| DBS rights | 3500 | 2.95 | -10,325 | |
| Total | 96,540 (-3 .46%) |
Level 13 is a 31-year-old investor and a business analyst with 4 years of investing experience. Check out his blog for insights on financial matters (mainly equities).
In Jan 2009, I bought back 3500 shares of DBS rights issue at $2.95 to cover for the shortage due to my shorting of DBS shares. The amount is deducted straight from the cash balance.
I am confident that DBS will trade at around $8 the next week. My conclusion is based on the anchor price of $8.37, which is the theoretical trading price for DBS post rights issue. There is a high chance of DBS price going lower than $8 after the announcement of weak Q4 results in mid-February.
Archive of other Stock Challenge stories here.
