DBS Group Holdings' crazy rise in price

Monday, 22 January 2018 20:27
Posted by owq 0 comments
It wasn't too long ago that there was fear in the market and DBS was selling at below book value. Now the price has almost doubled from those days and according to ycharts, is at around 1.5 price to book value, a 5-year high. Fear or greed? Certainly book value may not be the best indicator of value but I would think that 1.5 is a bit too high.

If banks are flourishing but their prices are too high, one proxy to consider is companies that provide software services to banks.

Alternative to Google Finance portfolios

Posted by owq 0 comments
Google Finance will retire their portfolios feature soon. I have been using it for a few years and even built an application to import from them to calculate dividends and rate of returns. I had a few requirements: easy to enter transactions, especially for SGX stocks and must be able to export to an open standard in case service halts. Indeed the export feature became useful as they really decided to stop service.

I tried a few alternatives and finally decided on KMyMoney. My focus is really on portability and ease of use, and although KMyMoney has a few quirks, it is reasonably easy to use. One con that I have to deal with is that I have to enter the stock name and details manually (at least for the first time). Updating of prices is also not in real-time but rather on demand but actually that turns out to be an advantage. It is no longer as easy to track prices in real-time which means I can focus more on the company itself, and also fundamentals, rather than fluctuating prices. The profit gains for each investments is also less obvious hence there is less of an anchor on past prices. I can focus more on current value. I believe this will help in long-term investing. Even though this is a desktop application, the data file can be easily put on the cloud. (For the IT inclined, the data is saved in an XML file which is easily deciphered. Hurray for open standards!)

Farewell Croesus Retail Trust

Friday, 7 July 2017 21:59
Posted by owq 2 comments
Yet another of my stock bites the dust. Fourth delisting! Not so long after internalization of the manager, someone decides to buy over the whole thing. It was around 20% premium to NAV, which I thought to be quite reasonable, so I sold it immediately at offer price. I'm fine with forfeiting the dividends as time is money. I'm left with a grand total of 1 share from DRP. Don't worry guys, I'll vote no to help with the headcount condition (lol)

I actually wanted to put the proceeds into Dasin Retail Trust, another business trust holding retail assets. With the latest acquisition of Shiqi Metro Mall at a huge discount to market value, the pro-forma NAV blows up to around $1.48, giving us a PB ratio of about 0.54! Even without the income support, the yield might be worth it. Then I thought, the shares were too illiquid and I don't really know how Zhongshan will develop... I still don't understand why the sponsor sold the property at such a big discount? I'll bank on my domestic bias and buy Capitaland Mall Trust instead. I have been wanting to buy it for a while but it was always too pricey. Seldom buy REITs at price above book but I really like their properties...

Farewell ARA Asset Management

Thursday, 23 March 2017 19:52
Posted by owq 0 comments
Yet another delisting of a quality company from SGX. This is my third delisting since I started investing in September 2014.

First was Select Group which I only managed to hold for 3 months before it got taken over.

Second was China Merchant Pacific Holdings which I only managed to hold for 10 months before it got taken over.

And now ARA which I managed to hold for 1 years 4 months and even subscribed for their rights issue.

Wonder who's next?

Diversification of risk: marriage, property

Sunday, 26 February 2017 19:53
Posted by owq 0 comments
Inspired by http://www.my15hourworkweek.com/2017/02/14/thank-you-my-mrs/

He was talking about how marriage is like putting all his resources into one egg... It's true. You put a lot of your time, emotions and money into one person. Usually the guy puts in more, because let's face it, even though there's supposed to be gender equality, guys are still expected to take most of the risks and girls actually end up with more power now. But I digress. I'm not here to rally against marriage or girls but rather to encourage a more rational look at relationships in general. I'll talk about this from the viewpoint of a guy but the other side is somewhat similar.

A long-term relationship is not as costly as a marriage but the terms are similar. You're expected to invest emotionally and sexually in only one person as doing otherwise is considered cheating. Sure you may have your own life and your own friends but in general you'll end up spending most of your resources on this person, because if not then what is the relationship for? So something to consider is the risk of putting everything in one egg. You have spent all your time and resources on this girl. What if she leaves you? What if she becomes a liability? "Someone to take care of you" is a double-edged sword. Love conquers all? In sickness or in health? Sure... But girls change their mind and they are notoriously more so than guys. No guy married a girl thinking that she'll leave him! Same for the girl! But it happens, and girls initiate the divorces more often than guys. So the risk is there. At my company we have a 60% divorce rate already (this is just for fun as sample size is too small). Anyway what I'm saying that we need to consider the downsides as well. The possibility of your spouse leaving you amicably, leaving you with a host of lawyer debts and stolen stuff, getting sick, or even treating you badly. If you're in a marriage, never take it for granted. Anything could happen, and I'm not trying to scare you. And when you're in "love", you never think that your loved one could treat you so badly. So we need some adjustment for the "in love" state.

Now, usually, marriage comes with property, in typical Singaporean fashion. And chances are, you get a flat quite early on with debt. A FLAT IS NOT A SURE WIN THING. It can be a good deal, but don't forget the debt. Usually debt is required in some way as couples don't earn enough to pay in full. And that means most of your assets is stuck in ONE property. With corresponding liabilities to boot.

So now you have all your emotional needs invested in ONE person and your financial assets in ONE property. How is that not risky? You tell me.

Sino Grandness Rights Issue

Sunday, 8 January 2017 12:03
Posted by owq 0 comments
I sold my Sino Grandness shares at 0.37 when they first announced a rights issue. I was planning to hold the cash to buy some shares back after the rights issue but my hands got itchy after waiting for so long without any news, I decided to buy some at 0.33. A week after they announced the amendment of the rights issue with some ridiculous terms and the price dropped all the way to 0.21 which is the new rights issue offer price.

I am still holding. This is a stock which I have been buying since I started investing and I've seen it go from 0.50 to 0.23, and to 0.79. I've always maintained a core position because I believe it was undervalued. Well, there are a lot of red flags but I feel that it's worth the risk. At least I'm not gambling with more than 10% of my money.

Now, the first time they announced the rights issue it was underwritten by UOB at a commission of around 6%. Huang also undertook to subscribe for his whole allotment. This time there's NO underwritting, and Huang will subscribe for a variable amount of shares subject to the amount of uptake. I'm not an expert, but this is really disgusting. What are they thinking? If they really need the money, how will these terms ensure they get what they need? There seems to be some cashflow problems at the company. I am getting mixed feelings about this counter.

ARA Asset Management takeover by Scheme of Arrangement

Sunday, 1 January 2017 11:52
Posted by owq 0 comments
And yet another stock is being taken over by private equity. I have only invested for 2 years and a lot of my stocks are being delisted. First, Saizen, then China Merchants Pacific, and Select Group.

I'm not selling ARA yet and I will definitely vote no. This is because the offer is by scheme of arrangement, where number of investor count also plays a part. So there's a good fighting chance for the minority investors. I would probably have sold if it was a general offer. Anyway the price is around 1.70 right now. It is about a 4.7% at the takeover price, which is worth the wait anyway even if the deal passes. It is likely that the deal will pass by at least June 2017. So close to 9.4% p.a. return.

Furthermore, the company has good prospects and I'm unwilling to sell it cheap. Especially after they announced such a good set of results and increased their AUM by so much. The PE right now is at least less than 20x. And in 2007, they IPOed at 43.6x. Granted PE might not be the best way but if we look at the AUM I definitely feel that the company is worth more.

There is no other comparable company on SGX that has a business model like ARA. So if ARA really gets delisted it'll be hard to find a replacement. For now I bought Frasers Centrepoint (FCL) as a pseudo replacement in case ARA is sold. I like the recurring cashflows of FCL even though it is not as asset-light as ARA.