If you remembered, I announced in March that I had ventured into deep value investing. Therefore, this portion of my portfolio is one which I have been actively monitoring as I deem them as “High Risk, High Returns”.
With the divestment of Vibrant Group Limited, I like to announce that this is the 2nd successful huge capital gain (above 25%) I had achieved over this short period of time.
So here are the deep value stocks that I have bought and sold since I start deep-value investing (Calculation ignore dividends that I may have collected and transaction fees):
Do note that I have not been updating of the changes in my portfolio recently. Therefore, some of the stocks here may not be have been mention in my blog before.
Fu Yu Corporation Ltd – Bought $0.164. Sold $0.194. Gain of 18%.
IPC Corporation Ltd – Bought $0.345. Sold $0.440. Huge Gain of 27%!
DeClout Limited – Bought $0.205. Sold $0.230. Gain of 12%.
Lafe Corporation Ltd – Bought $0.650. Sold $0.505. Huge Loss of 22%!
Multi-Chem Limited – Bought $0.470. Sold $0.505. Gain of 7%.
Vibrant Group Limited – Bought $0.305. Sold $0.420. Huge Gain of 37%!
As shown above, this strategy of investing in deep value stocks has huge potential in achieving extraordinary returns but it also has significant risk involved.
An example is the sale and purchase of Lafe Corporation Ltd which have wipe out half of my gains.
Another deep value stock, USP Group Limited, is already sitting on huge paper losses of almost 50%.
In short, these losses made me realise that a stock that is priced at such huge discount to its net asset value per share will always have a reason. To minimize the downside risk, we need to understand:
1. the business behind the company;
2. the reason behind the stock's low price; and
3. a possible/potential catalyst for the stock price rise prior to making the investment.
Significant due diligence have been done on the stock first.
If you are thinking of looking at other less "risky" stocks for the long term, do give my initial Triple S Scorecard a try. It's still a good tool!
I will only be releasing the Enhanced Version of the Triple S Scorecard for those that attend My 1st Sharing Session with T.U.B. If you are interested to attend, do not hesitate to contact me directly.
Oh... and do remember, please like our Facebook page - T.U.B Investing.