Tuesday, March 8, 2016

The Value Portfolio - Recent Actions and Views - Post 7

I guess it is time to update my portfolio after an "action packed" February.

The total number of stocks when from 20 to 25!

There is a number of reasons behind it:
- I started looking at companies with Price to Book Ratio at less than 0.500. For these companies, I am looking more at Net Asset Value with a very big margin of safety. However, these companies most probably will not pass my scorecard or may have huge debt. For these companies, I am expecting "High Risk, High Returns" and I deem them as "Deep Value Stocks".

- Although STI has fallen ridiculously low (prior to the recovery), but how many blue chips can you buy/average down (since our funds are limited)? So I decided to try to find "other stocks". Thus, I started on the journey to find "Deep Value Stocks".

- I realised companies that pass Triple S Scorecard is rather stable and consistent. They will not rise significantly nor fall drastically, especially during this downturn. We may need to wait a while before we see any significant return. Thus, I decided to put aside this portion of the portfolio and "let them sleep". I will be actively monitoring these "Deep Value Stocks" instead.

What I realised after going on a "hunt" for "Deep Value Stocks":
- Many properties (off-shore/onshore developers) and construction firms will appear due to their asset-heavy nature. 

- Offshore developments provide better yield. These investments are normally within South East Asia and has 8% to 10% yield. This could be due to the branding of being a "Singapore Developer" and going to an emerging economy to build homes/business hubs. With at least 50% margin of safety, even if the developments are located overseas and we can't be very sure about its prices, we should be relatively safe from any unforeseen devaluation of the developments.

- Onshore developments may only able to provide 5% to 8% yield, but as Singapore's land is scarce, the property price should be more stable. Even if property prices are going downtrend, the margin of safety will sufficient to cover any fall in share price.

Do note that if you look at my current portfolio, it is pretty heavy on developers and construction firms despite a worse-off property industry in Singapore. However, most of the construction firm I have on hand do have infrastructure structure projects to provide a stable income coupled with development "lumpy" earnings. Most of them are also not high on debt. Thus, I am pretty comfortable with my portfolio. 

However, I do notice this trend and has already adding non-construction/developers firms in the portfolio. You will see them in my recent purchases.

The following stocks are in my portfolio:

5) LHT Holdings Limited
10) Suntec Real Estate Inv Trust
11) Oversea-Chinese Banking Corporation
12) CH Offshore Ltd
14) ST Engineering Ltd
16) PSL Holding Ltd
18) Hock Lian Seng Holding Ltd
19) Fischer Tech Ltd
20) Ellipsiz Ltd
22) LTC Corporation Ltd
23) DeClout Limited
24) Fu Yu Corporation Ltd
25) IPC Corporation Ltd

Sold Keppel Corporation Ltd - The recent rise in price gave me an opportunity to offload this company as I am very uncertain about its future. Furthermore, with this new journey to find "Deep Value Stock", I decided to offload them to increase my funds.

Bought Ellipsiz Ltd - This company pass the Triple S Scorecard and is also a Deep Value Stock. However, the company is has a huge intangible non-current asset. Part of it are licenses. In addition, this is not a property or construction firm. So I bought it.

Bought BBR Holding (S) Ltd - Solely due to its huge discount to Net Asset Value as previously stated in the write up.

Bought LTC Corporation Ltd - A construction firm with $118 Million worth of investment properties. Bought solely for its huge discount to Net Asset Value too. 

Bought DeClout Limited - A punt. Previously, it was announced that there maybe a possible spin off of one of its subsidiaries. With its extensive expansion, it is possible that the company may need the spin to grow bigger. Hopefully if all goes well, the price will shoot up when the spin off is confirmed.

Bought Fu Yu Corporation Ltd - Barely pass Triple S Scorecard. In addition, company has many properties in Singapore, China and Malaysia. Recently it also announced dividend for 2015 and has a huge cash pile. Deem as a Deep Value Stock instead to be more actively managed.

Bought IPC Corporation Ltd - One of the deep value stock with developments in China. 

On my previous write ups:

So if you are interested in my Triple S Scorecard, contact me through my blog or message me on my T.U.B Investing Facebook Page

As for the online course, its on! Contact me if you are interested. Furthermore, we are thinking of changing it into a full fledge course (still in the mist of preparing).

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