Sunday, December 9, 2018

Ultimate Scorecard Will Have A Revamp!

This follows my previous post on back-testing.

Ever since I started back-testing and read this article, I kept thinking about how I could further improve Ultimate Scorecard.

Some of the improvements I feel that Ultimate Scorecard should achieve:
- Too many choices may not be able to give the users the best choices
- Different combination of criteria may not result in the best choices

Furthermore, for such a year like 2018, the probability of choosing a company that will make a gain, after keeping for at least 4 months, has dropped very low to below 50%.

In addition, I believe the timeline to keep the companies has rise from 4 months to more than 1 year.

Imagine you bought the company on Dec 2017, there is a high probability you are still "out of money" after keeping for almost 1 year.

So how do I intend improve Ultimate Scorecard?

Before I proceed, it is important to note that I will keep Ultimate Scorecard "as it is". This is because other than providing the value score, Ultimate Scorecard breakdowns the company into different areas as stated in this post. Thus, it will also highlights the area which the company is lacking.

The first improvement will be call "The Top 5 Criteria" test.

This test reduces the number of Criteria to only 5 different ones. This test will eventually pick companies that are able to produce free cash flow constantly with a very low gearing ratio, that are undervalued at that moment. Dividend not taken into account.

A back test is done to look at the probability of choosing the right company rather the total gain. 

Do note that there are 2 different versions to "The Top 5 Criteria" test.

HK Market

JAPAN Market

SG Market

US Market

As you see from the picture, do note the following:
1. These 2 tests significantly limit the number of companies that pass.
2. Although years 2008, 2009 and 2010 are taken out, but some years are still missing from the pictures. This meant that there are years that no company will pass the test!
3. Holding period is deem to be at least 1 year.
4. The possibility of choosing a company that pass the test and make a gain after a 1 year holding period range from 0% to 100% for any particular year (This sound super stupid but it is important to note this!)
5. The "Top 5 Criteria" test only works for SG Market and Japan Market.
6. For SG Market, the possibility of choosing a company that pass the test and make a gain after a 1 year, and keeping to this strategy for a period of over 7 years, is significantly high at 73% to 80%!
7. For Japan Market, the possibility of choosing a company that pass the test and make a gain after a 1 year, and keeping to this strategy for a period of over 7 years, is significantly high at 86% to 100%!
8. The amazing thing is the Top 5 Criteria Test Version 1 achieved a 100% for the Japan Market in choosing a company that will pass the test and make a gain after a 1 year!

The second improvement is TUB Score, which I mention in the previous post.

Do note that there are also 2 different versions to "TUB Score" test. 

HK Market

JAPAN Market

SG Market

US Market
As you see from the picture, do note the following:
1. This test will be used for Hongkong, Japan, Singapore and USA Market. 
2. TUB Score Version 1 allows more companies to pass than TUB Score Version 2.
3. Although years 2008, 2009 and 2010 are taken out, but some years have no company that pass the test!
4. Holding period is deem to be at least 1 year.
5. The possibility of choosing a company that pass the test and make a gain after a 1 year holding period range from 0% to 100% for any particular year.
6. TUB Score Version 2 does not work for US Markets and HK Markets.
7. Excluding the above, the possibility of choosing a company that pass the test and make a gain after a 1 year, and keeping to this strategy for a period of over 7 years, range from 57.65% to 89.47%!
8. TUB Score works especially well for Japan Market ~ over 70% for both version.

In Short

With these improvements, the ultimate scorecard will eventually have a few tests:
- The Value Stock Scorecard
- The Estimation Valuation
- The Top 5 Criteria Test Version 1 *New and Only for SG and Japan Markets
- The Top 5 Criteria Test Version 2 *New and Only for SG and Japan Markets
- TUB Score Version 1 *New and for SG, US, Japan, HK Markets
- TUB Score Version 2 *New and for SG and Japan Markets

Thus, just imagine if a company passes all the test, it will definitely shouts "BUY ME!". 

Eventually, I believe a good scorecard provide only the best choices for its users, especially those "In the face" choices!

But at the end of the day, I must emphasize that any company that passes the scorecard must still go through additional due diligence by the user, such as understanding the business and reading of annual report.

This upgrade will be in Ultimate Scorecard next year!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, December 4, 2018

10 Years Of Back-testing on Different Investing Strategies

The whole of last week I have been back-testing my fundamental scorecard theories.

This exercise allows me to review my scorecard and give me more confidence in my scorecard theories. This also give me additional confidence to address my subscribers and readers about the fundamental scorecard theories.

I have broken down the scorecard theories into the following:
  • Easiest to Pass Ultimate Scorecard Criteria Strategy
  • Cash Strategy
  • Value Investing Strategy
  • Moat Strategy
  • Growth Strategy

Do note that this back-testing is based on at least 1 year of holding period.

These are the findings of the back-testing exercise:

1. Regardless of which strategy you choose, your portfolio will reflect a loss in 2008, and a huge gain 2009 and then a slight gain in 2010. Furthermore, this will be the same regardless of where you invest (Singapore, Hong Kong, Japan or USA). The interesting perspective is that the strategy with the smallest loss in 2008 is Value Investing Strategy.

2. With the above findings, years 2008, 2009 and 2010 will be taken out as they seem to be outliers. Only years 2011 till 2018 are taken into accounts for the pointers below.

3. Scorecard theories works for Singapore market. The lousiest strategy will still at least register at 6% gain per year. It works especially well for cash and value investing strategy, registering at least 10% of gain per year. For Cash Strategy, it is also noted that it will take 2 years to make a gain.

4. For Hong Kong market, it mainly works for Cash, Moat and Growth Strategy with a over 10% gain per year. But it does not work for Easiest to Pass Ultimate Scorecard Criteria and Value Investing Strategy.

5. As for Japan market, Easiest to Pass Ultimate Scorecard Criteria Strategy does not work for them. But everything else create at least a 20% gain. This is a very interesting perspective. We all knew this is probably due to many companies in Japan has been undervalued for the longest time. This signal me that it is time to take a look into Japan companies.

6. Sadly, all strategies except Cash Strategy, does not work for US market. Many people told me US market is a different creature and this probably explains why. A further understanding is that for US market, it seems that it will be hard to make a reasonable gain if we do not consider companies taking on leverage. I will take note of this in future when assessing US companies.

7. For each strategy, it is important to note that there are companies making losses as well as making gains each year. I also realize the lesser criteria I inputted, the better the gains. This is because there are more choices. This is bad in a certain way because you may end up picking the wrong company despite a good strategy. Therefore, fundamental scorecard theories may restrict choices, but I guess it is for the better as it tries to allow the user to choose the best companies.

In Short

Regardless of the amount of back-testing that was done this week and the indication of the gains I could achieve, I will also like to express that there are limitations in all back-testing. Back-testing is mainly based on an ideal situation that the investor will act in a certain way however the market changes. However, for the average investors, this will not happen.

As investors, we are always affected by our emotions and experience. For example, some of us believe a major crisis will arrive soon and has went 100% cash. For me, I do not like leverage and avoid high leverage companies. This is based on experience and each of our investing theories.

The most important factor is that we stick to our investing strategies. In time, you will be able to achieve good returns.

As per Simple Investor once said, it is better to be “roughly correct than exactly wrong”.

Finally, I had also created a new scoring system which I deem as TUB Score. It is still under testing and will probably be revealed in due time.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, November 27, 2018

Big Idea 11

Okay… it has been almost 2 weeks since I wrote anything. It is easy to just state that I was busy. However, it is probably due to me, wanting so time off the market, in order to give myself a break from all the hectic work online and offline.

Nevertheless, I continued to share on my Facebook page and significantly on our Fundamental Scorecard Telegram Group. Thus, a lack of write up here does not meant that I have been on the sidelines.

Thus, I had delayed the write up of Big Idea 11 up till now.

Currently, as of this post, I had already mention about 11 big ideas despite my target to reduced number of companies in my portfolio. But do note that I had already fully sold Big Idea 4 and Big Idea 6. Thus, I should only be holding 9 different big ideas.

Big Idea 11 is a new company in my portfolio since I only purchased it in October this year. However, I used to talk about this company in this blog and had sold it at a 70% gain at the end of 2017.

Reasons Why This Counter Qualifies as a "Big Idea"

1. Technology Company in a Different Industry

I deem this company as a technology firm that is in an industry that many will not associate with the word “Technology”. Recently, it has even went into 3D Printing in such a laid back and manual industry.

In my opinion, it is the forerunner in its industry in terms of technological advancements. With such continuous innovation, I believe the company has create a huge competitive edge against many of its peers.

The important factor is that many companies will innovate at the expense of net profit. But not for this company, it continues to make positive income over the years.

2. High Order Book

As of its latest 3rd Quarter 2018 report, it has S$607 million of order book that will last till 2020.

In May this year, it was awarded 3 civil projects – 2 schools from MOE and a 10-stories polyclinic and long-term healthcare facilities from MOH – due to its competitive advantages. These 3 projects already amount to over S$151 million of order book.

This could also be an indication that the company is the 1st choice among its competitors for such civil projects.  

3. Property Developments in China

The company has 2 main property developments in China. The first development has already been 92.1% sold. The 2nd project is a longer-term project that will last till 2020. It is currently 69% sold.

However, the sales of these properties have been slower lately due to China’s cooling measures. In addition, these properties seem to be sold at a slight loss lately.

Nevertheless, I believe that once the citizens get used to the measures, the sales will pick up again.

4. Future growth, Current Cost

The company has entered into a joint venture which had 2 Enbloc purchases in 2017 and 2018. The expected net margins of each development will probably be in the range of 10% to 15% from the calculation of the construction costs and Enbloc prices.

In addition, the company has also purchase lands in Malaysia to expand their production capabilities.

All these factors will eventually leads to future growth. But this could also be a double edge sword as the company will need to service the costs of these projects currently. In the event, it tries use leverage to support the costs of these projects. It could be bad in view of the rising interest rate environment.

In Short

I purchased Big Idea 11 based on the positive reasons above, and of my understanding of its competitive edge and the industry.

However, there are still risks involved in investing in such a company, especially when its industry is not in a good shape either.

This is also reflected in the share price of Big Idea 11 as it has been on a downtrend since the peak in July 2018.

Please do your own due diligence before you invest this counter (if you knew what it is).

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Sunday, November 18, 2018

Looming Crisis

This article contains information from the 3rd Scorecard Newsletter written on 30 Oct 2018 for my Moat Scorecard subscribers. However, do note that the future Scorecard Newsletter will be only created for the Moat Scorecard Subscribers.

This 3rd issue was released earlier than usual because I want to release this information earlier to the public because I felt they are important and I had to inform the readers. 

As of today, Straits Times Index is at 2966.45. The market had dropped 14.9% since the start of 2018.

It has not only happening to Singapore Market, but also in Hong Kong, China and Japan Market.

Hang Seng Index has fallen 19.4%, SSE Composite Index has fallen 23.3% and Nikkei Index has fallen 9.5% since the start of 2018.

On the other hand, USA Market seems like nothing has happened. Dow Jones Index has only fallen 3.05%, Nasdaq Composite has only fallen 1.1%, and S&P 500 Index has also only fallen 3.3% since the start of 2018.

Thus, if your portfolio is not in red for 2018, you are either heavy in cash, invested heavily in the USA Market or just a real damn good investor.

For me, I am no guru. This is because I am currently in the red zone too.

But why is this crisis occurring?

Many of you may think that this is due to Trade War or Fed Rate Hikes.

If you have been living in a well, then you probably wouldn’t know the stated issues.

Trade War

Trade War, as per Wikipedia, is about ongoing trade war between China and United State (US) as each country has introduced tariffs on goods traded with the other. US President Donald Trump had promised in his campaign to fix China's "longtime abuse of the broken international system and unfair practices". Starting in January 2018, it imposed a tariff on solar panel imports, most of which are manufactured in China. On July 6, US specifically targeted China by imposing 25% tariffs on $34 billion of imported Chinese goods as part of Trump's tariffs policy, which then led China to respond with similarly sized tariffs on US products. A tariff on an additional $16 billion of Chinese imports was added in mid-August, with China responding proportionately. A further tariff on $200 billion of Chinese goods went into effect on September 24, to which China responded with tariffs on $60 billion of US goods.

Fed Rate Hikes 

Federal Reserve System (Fed) has raised rate hikes for 3 times this year already. This has caused the low interest environment globally to rise significantly as well. For example, if your Singapore property mortgage has been on floating interest rate, you would have received the bank’s letter informing you that your mortgage interest rate has increased.

But should we be afraid?

In my opinion, we should look at the past to understand what has caused the 2008 crisis.

It is good to take note that 2008 was a global event.

You can read it all here.

From my perspective, I believe Collateralized Debt Obligation (CDO) that were sold globally was the main cause. In short, when gains become huge, it creates a bubble. When Lehman Brother collapsed and counter-parties to many CDOs are gone, Banks had to do write offs. When so many assets are being written off globally in various banks and companies, it escalates the crisis and many markets around the world collapse as well.

Then for a while, the world becomes quiet and business activity slows down till it almost stopped. If US didn’t proceed with the quantitative easing and pumped money into the economy. The global market will not have recovered so fast.

This brings me to the point of a topic I wrote last year – Money Supply . I believe money supply in the world is constant unless someone constantly print them or someone removes them from the world.

In the case of 2008 financial crisis, money was written off from each companies’ balance sheet around the world.

However, as of now, I do not foresee money is being written off companies’ balance sheet (Maybe only for companies’ doing ICO?). It has only been transferred. Thus, I do think that there will be no global crisis. It is more of a global transition period – from moving towards free trade to starting a trade war, and from a low interest rate environment to a slightly higher interest rate environment.

These are factors that can create major changes in the world, but once the world gets used to it, a new norm will be formed.

Nevertheless, prior to this new norm forming, the market will be uncertain and volatility will arise. Investors will probably need to be assured of their strategy and think long term.

On the other hand, I also realize there are potential global crisis factors forming around the world – and it is not related to US.

Yes, US started the trade wars, build walls and trying to keep everything to themselves. This will definitely create a short term strengthening of its economy. Thus, maybe that is why their index seems to be in a much better shape than other indexes around the world.

It is like the movie – Attack On Titan. Once you get too comfortable within the wall, bad things will then happen. Only time will tell.

Then what are the possible potential global crisis factors?

1. China’s debt and the shadow banking industry within the country.

China’s companies’ taking on increasing leverage is dangerous. As of a Bloomberg’s’ article, China has RMB 34 trillion debt. Just look at how HNA Group has been trying to reduce their debt!

However, the amount probably did not include the leverage within China's shadow banking industry. Companies in China lend among themselves. Overseas companies, even those from Singapore, lend to Companies in China too.

For Overseas companies that lend to companies in China, I do believe China companies that took these loans do not necessarily need to report them on its balance sheet. As for Overseas companies that lend to these China Companies, they reported interest earned. Thus, there is a gap between the asset earned and the liability declared. In the event, the China Companies’ defaulted on the loan, S-Chip kind of scandal will start to appear.

In spite of the above, let’s be less worried on this issue, as Xi has been encouraging reporting via The Three Board Listing, as well as cracking down shadow banking. In addition, China has also been cracking down on the P2P Industry.

2. Deutsche Bank

As per Wikipedia, Deutsche Bank AG (DB) is a German investment bank and financial services company headquartered in Frankfurt, Hesse, Germany. It is reported to have Euro 1.475 trillion in assets in 2017.

In 2016, there has been a report that stated DB is one of riskiest bank in the world.

As of today, you should have also read about the Euro Debt Crisis that start in 2009 and became very bad in 2012. Currently, there are many weak countries within the continent that has taken on the support from other countries or the European Union. All these happened because the big brother in Europe, Germany, gave them the support.

Therefore, it seems to me that, in the event Deutsche Bank falls, Germany that has a GDP of $3.677 trillion, will be in a bad shape. This could re-activate the “muted” Euro Crisis again.

Nevertheless, it has been good to know that DB understand this risk and has been cutting their leverage exposure.

But let’s hope it does not get sucked into the next topic.

3. Collateralized Loan Obligation (CLO)

As explained on Investopedia, “A collateralized loan obligation (CLO) is a security backed by a pool of debt, often low-rated corporate loans. Collateralized loan obligations are similar to collateralized mortgage obligations (CMO), except that the underlying loans are of a different type and character.”

So how is this different from CDO/CMO? I doubt so. Generally, I do not think people learn. Once the margins increase significantly, more financial companies will get on board.

Just read the following headlines and amount for the month of Oct 2018 (other than the last article):

Article 1 – “…market-leading forecast for 2018 CLO issuance to $130B”  – This is for 1 year only.

Article 2 – “…a pair of fixed-rate tranches in its new €412 million…”

Article 3 – “…second securitization of short-term mortgages…$597 million…”

Article 4 – “…weekly volumes…$1.7Bn…”

Article 5 – “7.4 billion euros of new issue priced from July to September”

Article 6 – “C.L.O., a cousin of the mortgage-related product that malfunctioned a decade ago, has become one of the hottest investments on Wall Street.”

Article 7 – “…$133.7 million will headline a commercial real estate collateralized loan obligation (CLO), wrapping $462 million in debt overall…”

Article 8 – “Singapore…”

OMG, I am speechless. The scariest fact is that this was not reported widely, especially towards the mass market.

In short, how should retail investors protect themselves?

In terms of strategy, you can re-read my post here.

Regardless, from my personal standpoint, I believe there is no need to go full cash as some investors did. But it is good to stay cautious and hold some cash to act as opportunities start to arise.

On the other hand, if you are looking to create a watchlist, I will suggest to look for a company that is (1) debt free, (2) high cash or high free cash flow, with (3) low liabilities and (4) HIGH MOAT.

I hope you had learnt something from this article.

Good Luck!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Monday, November 12, 2018

Fundamental Scorecard Is Already 1 Years Old!

Dear Readers,

It has been some time since I wrote something on my blog. I had a very busy 2 weeks.

Last Friday, Simple Investor and I had our FSC Exclusive Meet Up in celebration of Fundamental Scorecard being 1 year old!

Firstly, we like to thank everyone whom came, especially those that came on VERY SHORT NOTICES. THANK YOU VERY MUCH!

Secondly, this was a tab too late as Fundamental Scorecard had already been around since September last year. Nevertheless, we had a wonderful time and we hope everybody enjoyed as well. 

At the Exclusive Meet Up, we asked for feedback in order to service you better and be able to produce products that you want.

We had also announced our new Telegram Group to have a more intimate sharing of details with our subscribers and readers. In fact, anyone can join the Telegram Group. If you are interested to join, do click on this LINK.

We also wanted to conduct full day courses and asked for suggestions. Hopefully what we eventually came up for will be to our subscribers' and readers' liking.

Here are some pictures from the event:

Once again, Simple Investor and I had a great evening that day and hope everyone whom attended also had a great evening!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Thursday, November 1, 2018

The Tech Powerhouse Face-off

This article contains information (except the companies' name) from the 2nd Scorecard Newsletter written on 29 Sep 2018 for my Moat Scorecard subscribers. 

For the 2nd issue of Scorecard Analysis, I like to bring you attention to 2 Tech Powerhouse listed in SGX – Company A (Coy A) and Company B (Coy B).

As taken from their website, this was how they describe their business:

Company A

“We are a precision engineering group which specializes in manufacturing high precision front-end semiconductor components and perform complex electromechanical assembly and final testing services. Included in our core business is the production of modular and integration systems for original semiconductor equipment manufacturers. Aside from semiconductor industry, we also cater to other industries including in electronic, machine tools, aerospace and oil & gas industries.”

Company B

“Coy B provides handling and test solutions to the most advanced manufacturers in the world.  We help our customers deliver many of the most successful products in the 5G economy including microprocessors, high speed communications, IOT devices, and solar cells.”

Despite having slightly different business, they are technically in the same industry – the semiconductor industry.

As we knew, the Semiconductor industry has been a very hot and popular industry for traders and investors in over the last 2 years.

However, their share price has been dropping drastically. WHY? 

Company A

Company B
One of the reasons could be semi-related to the trade war. Investors might be worried that the trade war could potentially affect the future revenue of the semiconductor giants in USA for the long term. Thus, these investors could have sold their shares in these semiconductor giants.

With that in mind, it is important to note that Coy A and Coy B  main customer is actually a major US listed corporation.

Coy A – Company C (Coy C)
Coy B – Company D (Coy D)

So, could it be that Coy A and Coy B share prices were affected by the share prices of their customers?

Coy A (Red) and Coy C (Blue) Share Price Graph
Coy B (Red) and Coy D (Blue) Share Price Graph
Do note that only 1-year graph has been taken in view that relationship between Coy B and Coy D has only been 1+ year only.

From the graph, we can see that the co-relation between Coy A and Coy C is higher than that of Coy B and Coy D as Coy B share price has risen too much. This could be due to investor’s insane expectation of Coy B relationship with Coy D in the past. 

Despite having a high co-relation between Coy A and Coy C, another blogger (unable to disclose link) had actually stated that revenue of Coy C does not really affect Coy A. 

This meant that Coy A share price is potentially more affected by NEWs of its major customer rather than actual facts! 

As for Coy B, the share price could have fallen due to previous high expectation. After all, the company has already announced that their relationship with Coy D in the following year will not be as strong as the past years.

With that, does this mean that we should buy on dip? 

If that is the case, let’s see which company is actually better. I will be using the different scorecards to conclude which company is probably a better investment at this point in time.

Nevertheless, do note that each scorecard method is based on a certain strategy and even if the company did not pass that scorecard, it does not necessarily mean the company is not a good investment.

Full Analysis Scorecard

Company A

Company B
The Full Analysis scorecard is focused on looking for growth. It also looks for causes of concerns that investor should look out for as well as if the current share price is close to its value.

Overall the scorecard seems to deem Coy B as a more growth-focused company. In addition, Coy A seem to have more causes of concern. 

Aside to the revenue, net profit and operating cash flow graphs, it also seems to suggest that Coy B as more growth oriented as compared to Coy A graphs which are more consistent and flatter.

Winner: Coy B!

Ultimate Scorecard 

Company A

Company B
The Ultimate Scorecard is looking for companies that are undervalued at that share price base on a series of criteria. It gives a score to each of the criteria. By summing up the score, if a company scores more than 8 points, it is undervalued. Do take note that this scorecard also has a focus on cash related criteria.

Based on the value stock score, it seems that Coy A is more undervalued than Coy B. However, as per asset value, both of them are still priced higher than their book value. 

On the other hand, Coy B also seem to generate more cash than Coy A in recent years. This also relate backs to the growth Coy B is generating in recent years.

Nevertheless, based on the criteria listed, Ultimate Scorecard will have preferred Coy A.

Winner: Coy A!

Moat Scorecard

Company A

Company B
The Moat Scorecard is the latest addition to the scorecards we created. It mainly focused on qualifying something qualitative into a quantitative number. This will provide users to understand if the company has a competitive advantage in its industry. Do note that this number is not plucked from the sky. It is a conclusion of calculation of numerous quantitative figures of the company.

In view of the pictures above, the scorecard seems to suggest that Coy A has more competitive advantage as compared to Coy B. One of the reasons that Coy A could have a better competitive edge was because it has a more consistent and longer history with Coy C. As stated above, Coy B started its relationship with Coy D only for about more than 1 year.

This can also interpret that the relationship between Coy B and Coy D is not as strong as Coy A and Coy C considering the number of years they are together. Sounds like some relationship advice!

Thus, the Moat Scorecard deem Coy A as having more competitive advantage.

Winner: Coy A!

In Short

As per the 3 scorecards’ theories above, Coy A is the more preferred company. The main reason will probably be that Coy A has a longer and consistent working relationship with its main client as compared to Coy B.

This also bring about another factor that Coy A performance, in terms of revenue and net profit, has been flatter as compared to Coy B. It could also be an indication to Coy B’s investors of how the revenue of Coy B may continue if it continues to work closely with Coy D only.

Nevertheless, we should not discount the possibility that either company could find other major clients and break out of the cycle of working closely with only 1 major company.

For these 2 companies, it is also very important that they continue to innovate with more research and development. If not, their moat will probably be eroded soon enough in this time and age, and their share price will suffer as a result.

With that, I bring this newsletter to a close and hope you like what was written.

Please do your own due diligence before you invest this counter (if you knew what it is).

Confused with Coy A, Coy B, Coy C and Coy D? Then Sign Up with our Moat Scorecard using InvestingNote now!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

Oh... and do remember, please like our Facebook page (T.U.B Investing & Fundamental Scorecard) and follow me on InvestingNote.

Tuesday, October 23, 2018

My 15% Portfolio - Changes After 3 Quarters

I must have been too busy lately - juggling too stuff and having too many things on my mind.

This is because I realise I have forgotten to put up a post on the update for my portfolio. Thus, here is a short post on my update.

Please do note that this update is as of today, which is already 23 days off from 3rd Quarter 2018.

Prior to taking a look at the changes in my portfolio, let me emphasize on the following:

1. This portfolio review is calculated from 26 Dec 2017 and the aim is to review the total portfolio gain after 1 year.

2. The counter's initial share prices are their respective share prices on 26 Dec 2017.

3. The gain and loss stated is just a simple calculation of the difference in share prices, ignoring the transaction fees.

4. At times, if stated, the gain could include dividends.

5. This review will include my overseas counters in USA and Hong Kong.

End of 2nd Quarter 2018
End of 3rd Quarter 2018
Singapore Telecommunications Limited
Singapore Telecommunications Limited
Chuan Hup Holding Limited
Chuan Hup Holding Limited
Captii Limited
Sold All At 24% Loss
Japan Food Holding Ltd
Japan Food Holding Ltd
The Trendlines Group Ltd
The Trendlines Group Ltd
Starhill REIT
Starhill REIT
HongKong Land USD
HongKong Land USD
Ellipsiz Ltd
Sold All At 25% Loss
Sysma Holdings Ltd
Sold All At 5% Gain
Singhaiyi Group Ltd
Singhaiyi Group Ltd
The Hour Glass Limited
The Hour Glass Limited
Powermatic Data Systems Limited
Powermatic Data Systems Limited
The Walt Disney Company (USA Counter)
The Walt Disney Company (USA Counter)
Quarterhill Inc. (USA Counter)
Quarterhill Inc. (USA Counter)
Win Hanverby Holdings Ltd (HK Counter)
Sold All At 27% Loss

Additional: APAC Realty Limited

Additional: New Big Idea!

Additional: New Big Idea!

Additional: Facebook, Inc. (USA Counter)

Additional: Alibaba Group Holding Limited (USA Counter)

Do note that I do realize that it is almost impossible to make a 15% gain in the current market conditions. In addition, I have continue to sell the companies that no longer fit my strategy even at deep losses.

I had managed to keep my portfolio at 16 companies -  just 1 additional company from my last portfolio update. There are also 2 new big ideas which I will state in the future. One of the existing companies have also been upgraded to a big idea. For the Big Ideas Investing Theory, the current 11 companies contribute to over 70% of my portfolio.

In Short.

Despite my big losses reported for my last 2 updates, my overall portfolio is down at about 6.96%. As per my historical return, I believe that once I continue this strategy for at least 2 years, I will eventually make a gain for the portfolio.

Thank you for reading.

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote

Monday, October 15, 2018

A Consolidation of Different Thoughts

Dear Readers,

It has been some time since I wrote my last post. Thus, I will be consolidating many of my thoughts over this time in short articles below in this post.

Happy Investors Despite A Bloody Market

Picture taken from Moltey Fool
STI had went down from over 3100 points to the current 3045 points as of today. Although you still seem to notice people stating that they had exit the market with “many bloody wounds”, but its seem that there are also many people looking forward to this drop.

For myself, I basically went through excitement, panic and indifferent in a few days. Since then, I have stayed indifferent to all the market downturn as I felt maybe there are still many people looking to enter the market.

On the other hand, my portfolio has since dropped about over 6.5% since 26 Dec 2017. This is almost similar with the drop in STI ETF (including dividend). In any case, I am still not performing better than the market. But I believe I will get there.

Anyway, I have added a tab where I will be updating my portfolio performance on a weekly basis for my own tracking. You can see how the performance of my portfolio changes over time.

Summary of Big Ideas Investing Theory

As for the Big Ideas Investing Theory, the following is a short review of what have happens to the companies:
  • Big Idea 1, 2, 3, 5, 7, 8, 9, 10 – Remains in the portfolio.
  • Big Idea 4 and 6 – Sold Fully (read it here)
  • Big Idea 11, 12, 13 – After selling the Big Idea 4 and Big Idea 6, I had re-deploy some cash into these 3 big ideas. Big Idea 11 is an existing company in my portfolio that has been upgraded to a Big Idea. Big Idea 12 and 13 are new additions. I will be writing about these companies in due time.
Currently, there are 11 different companies within the Big Ideas Investing Theory and contributing to over 65% to 70% of my portfolio.

Diversification in Strategy, not Companies

Picture taken from mnacritique
This was something I shared during the last seminar organised by IN.

Previously I use to have over 25+ companies. In my view, that was one of the way to diversify being a value investor. Do note that I was having a smaller warchest to invest with at that time.

After creating the Fundamental Scorecard Website and being somehow influenced by Simple Investor, I decided to consolidate my portfolio. I sold many companies in my portfolio despite making losses.

Even with lesser companies in the portfolio, I still managed to diversify my portfolio via different strategies.

If you have read about the Fundamental Scorecard website and Moat Scorecard via IN, you will know that Simple Investor and I had create 3 different scorecards using 3 different investing style.

By understanding the theories behind each investing style, I am able to diversify simply by investing in the companies that passed each scorecard method. 

When I Sell

Similarly, during the seminar, someone also asked us a question of when I sell. For me, the answer is simply selling the number of shares that is on and above my core holdings of the company, assuming nothing fundamentally has change, when the share price increases above my intrinsic value.

For example, I have 5000 shares of core holdings for Singtel at 3.40 and I believe the intrinsic value of Singtel is $3.40. When the share prices falls drastically to $3.20, I bought an excess holdings of 3000 shares in Singtel. When the share price rises to $3.50, I sold all my excess holdings of 3000 shares of Singtel. In this way, my core holdings’ average share price will eventually get lowered every time I buy below my intrinsic value and sell above m intrinsic value.

Buy Core Holdings: 5000 x 3.4 = 17000
Buy Excess: 3000 x 3.2 = 9600
Initial Average Price: 26600 / 8000 = 3.325
Sell Excess when Share price Rises = 3000 x 3.5 = 10500
New average price = (26600-10500) / 5000 = 3.220

Furthermore, I will sell all my holdings of a company, including core holdings, in the event (1) Fundamentals has change, or (2) New and BETTER Opportunities Arises.

Basically, that's all my thoughts for now. I will be writing about the new big ideas in the next few posts. 

I hope you look forward to them. Thank you for reading.

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Wednesday, October 10, 2018

The Road Less Traveled To Destination Unknown

This post was actually named as "Crazy Crazy Asian". This is because I am not rich YET. But I am sort of crazy.

That is what some of my friends said about me.

Firstly, they commented that there is no logic in my recent choice of employment.

"So you went from a bank to a FI and now a fintech... this is not a path one will take."

Next, they asked me, "how did you find time for all these other stuff I am doing?"

Other stuff: Being a blogger, an investor, intending to have a fund, a co-founder to fundamental website, doing all sort of seminar, and also all these collaboration.

Finally they commented that every crazy move has a plan. But my moves seem to be all over the place.

After hearing about all these comments and some self reflection, I do realize that I am quite CRAZY.

Thus the term - "Crazy Crazy Asian".

I do seem to be taking on the road less traveled. In fact, I believe only a few traveled.

But where is the destination? Why am I doing all these?

At the start, my aim was to eventually be a Crazy Rich Asian. I tried all sort of possible way to earn extra income. But it was in vain.

Then I eventually start to blog to just share some of my investing journey.

But as I blog, I started to learn too. Then as I share, a hobby became a passion. Then I realize I seem to be "okay" at it. Then I thought I should try to start to earn from this passion.

As time passes by, investing has become something that is so intertwined in my life that I believe my destination will have something to do with it.

Therefore, I thought of a dream plan not long ago - which I hope can be my destination and lead me to possibly becoming a Crazy Rich Asian.

The dream plan is:

I will teach with a database of methods for you to subscribe to. Eventually I will also somehow start my private fund.

Thank you for reading my post.

With that I like to apologise for the lack of post once again, I will try to come up with a better one soon!

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.

Tuesday, October 2, 2018

Big Idea 4 & Big Idea 6 - SOLD!

I have officially disposed all my positions in Big Idea 4 and Big Idea 6. Since I have already sold, I will reveal what Big Idea 4 and Big Idea 6 are.

Big Idea 4 is…Ellipsiz Ltd.

In my last post, I have stated that “In 2 months’ time, it will announce its full year results and more answers on the use of its cash pile could be reveal in its financial report. Therefore, I will decide then on what to do with this company….”

After the release of the annual report and receiving a reply from the investor relations, I have decided to offload all my position in Ellipsiz Ltd at a loss. Nevertheless, do note that this loss was based on my re-entered price. I had previously made a 280% gain on the company prior to selling all at its peak.

So what were the factors that caused me to sell off this Big Idea?

1. Annual Report
Abstract from Latest Annual Report
In the above abstract, it seem like the Lums are intending to use this company as their investment holding firms. Other than investing in Kalms, they had yet to do anything else with their cash hoard.

In my opinion, the strategy seem to be a bit directionless. It sounds like “I will invest in any undervalued opportunities”. It is not a wrong strategy but I believe there are other better/more established investment holding firms for me to invest in.

2. Reply From Investor Relations
My Question

Their Reply

If you read through the reply, you will probably get the W** feeling. "Say like never say". Maybe even they do not have an answer?

Thus, the above factors made me consider my holdings in Ellipsiz Ltd seriously and I decided its time to offload the company fully.

Big Idea 6 is… Sysma Holdings Ltd.

I did not talk much about the company because StockResearchAsia has already wrote a lot on the company.

Despite the positive vibe in the blog posts by StockAsiaReport, I still decide to sell the company due to the following:

1. Dividends below expectations

Despite having so much cash, the company only increased the dividend from 0.5 cents to 0.8 cents. I was expecting a much higher dividend payout but I guess the management had other plans.

2. Lack of Catalysts

I do not foresee any other catalysts in the next year for the company, other than using its cash to acquire other companies. Furthermore, with so many en-bloc condo purchases by the developers, I do not foresee Sysma Holdings Ltd having significant opportunities in its niche market - the construction of GCB projects.

3. Other Opportunities

Better opportunities in other construction companies has arise and the time seem right.

Thus, in view of the above reasons, I decided to sell all of Sysma Holdings Ltd at a slight profit!

Please do your own due diligence before you take any action on the above counters.

If you are interested to know more about The Ultimate Scorecard or Full Analysis, do visit the Fundamental Scorecard website for more information! 

We have also released the Moat Scorecard with InvestingNote. Do take a look!

Oh... and do remember, please like our Facebook page (T.U.B Investing) and follow me on InvestingNote.