Portfolio Changes – May 2016

May has been a very very busy month in terms of changes to my portfolio, with the complete divestment of one of my largest and longest held components – Hock Lian Seng (HLS) and a partial divestment of Metro Holdings (MH)

As my portfolio is intended to be one that is deep value oriented, focused, with minimal turnover, May is considered to be a huge month with very substantial changes to my portfolio, having sold all remaining 750,000 shares of HLS and 150,000 shares of MH. I still own 200,000 shares of MH.

The following are the main changes:

• Divested Hock Lian Seng completely. Sold 750,000 shares of Hock Lian Seng at prices between $0.360-$0.375, after collecting dividends of $0.025.
• Sold 150,000 shares of Metro Holdings at $1.06
• Increased position (slightly) in BBR Holdings. 
• Continued selling a combination of sell and put options on Valeant and Chesapeake Energy
• Traded in USD-SGD forex. I’ve also capitalized on the volatility in the USD-SGD after the markets’ speculation in the Fed funds rate. I’ve kept my positions flexible, and sold when the USD-SGD rises and bought back the position when it fell. It makes sense to do this as I have a substantial portion of my portfolio in USD anyway, having options in Valeant and Chesapeake Energy.

It’s actually been rather difficult to exit Hock Lian Seng (HLS) without affecting the share price. As my portfolio involves holding concentrated positions, the large position sizing  (At one point, I held 1,000,000 shares in HLS) means that on many days that I’ve tried to sell HLS, I pretty much accounted for a sizable portion of the shares traded on that particular day. On the 25th May 2016 for example, there were 884,700 shares that traded hands. Of this, I alone accounted for 395,500.

I guess that’s a risk with having a concentrated portfolio, with this concentration in small to mid caps.

This is something that I didn’t put too much emphasis on previously, but going forward, I’d have to consider to a certain extent, the liquidity of the companies. Cos with low liquidity and large position sizing, I’m having trouble both when accumulating, and when liquidating.

Similarly, it’s been very difficult to increase my position in BBR Holdings. Whenever I placed an order, someone has been placing another order just 1 basis point ($0.001) higher. If the person is you, pls drop me an email :) Let’s talk.

On top of that, the liquidity has been low. As a result, I’ve ended up accumulating some shares this month, but paying a disproportionately higher brokerage fees due to the low number of shares purchased each time. To reduce the transaction costs, I’ve always aimed to make sure the quantum of the transaction in any 1 counter is always >$50,000 each time. This has not been the case for BBR Holdings.

I’ve also collected tons of dividends this month, and am awaiting for more to come. I’ve yet to decide if I’ll be collecting my Boustead Singapore dividends in cash, or convert it to more shares. I guess I’ll have to see the conversion price. As stated in my Boustead analysis posts, this is intended to be a long term holding. Most of the companies that I own are held for >3yrs on average.

This month is the reporting season for most companies. As of now, I’ve only finished studying 5 of the companies that I own. And these are the easier ones to analyse too.

Metro Holdings share price went crazy with the release of their Q4 results, probably due to the all time high dividend of 7 cents. I didn’t have much difficulty exiting this position due to the high liquidity, but the fluctuations were pretty wild.

I’ve taken some profit off the table with regard to MH, but still own 200,000. The 7 cent dividend is very juicy, I have not decided if I’ll still be selling the remainder or collecting the dividends.

Both HLS and Metro have been highly successful investments, and I’ve held on to both for the past 3 yrs or so.

Being true to the investing philosophy and the tagline of this blog, I think my current investments in BBR Holdings and Valeant are exactly that. Truely contrarian. Truely deep value. Both are at all time lows. Both have been forsaken and unloved. I’m betting that the price does not reflect the value currently.

I’ll update my portfolio performance page at the 2H2016 mark.

With these 2 big moves, suddenly my portfolio is very cash rich. I may not deploy the cash in the near term, unless I happen to find something compelling.

But for sure, I now have a sizable amount of capital to put to work. I’m looking for only 1 good, big idea to work on.Just 1. But it has to be very very compelling. It typically takes me about 2-3 months to fully research and understand a company.

If anyone has a fantastically bright idea, that’s deeply undervalued, preferably with a clear catalyst in the short to mid term, please please please share it with me. My elephant gun is loaded and I’m on the hunt.