Month: August 2016

Track Record Of Dividends From 2012

LTC Corporation just released it’s FY16Q4 results today, and this concludes the earnings season for my portfolio. I haven’t looked in great detail, but I did notice LTC Corp declared a 1 cent dividend. This is a surprise as they declared dividends at the end of Q3 in previous years, except this time.

Anyway, with this dividend declared, I updated my personal dividend track record, which I’ve been keeping track of since 2012.

Here it is:

2012
23/5/2012 Asia Enterprise Holdings $945.00
11/6/2012 Wells Fargo $195.70
16/7/2012 Tesco $1,771.64
17/8/2012 Metro Holdings $6,000.00
22/8/2012 Boustead $1,800.00
12/12/2012 Boustead $2,000.00
28/12/2012 Tesco $1,799.93
$14,512.27
2013
20/5/2013 Apple $528.00
20/5/2013 Hock Lian Seng $1,800.00
28/5/2013 Sing Tao $1,257.46
24/6/2013 Flyke International $415.00
1/8/2013 Metro Holdings $8,000.00
20/9/2013 Sing Tao $1,515.00
20/11/2013 Lion Teck Chiang $1,300.00
12/12/2013 Boustead $1,039.60
$15,855.06
2014
19/02/2014 Hopewell Holdings $393.00
22/05/2014 Hock Lian Seng $10,610.00
10/6/2014 Lion Teck Chiang $2,376.00
18/7/2014 ICBC $14,034.00
12/08/2014 Metro Holdings $20,900.00
18/08/2014 King Wan $14,900.00
09/12/2014 King Wan $6,930.00
23/12/2014 Tesco $471.56
$70,614.56
2015
28/01/2015 Boustead scrip dividend (15,189 shares)
21/05/2015 BBR Holdings $13,568.00
21/05/2015 Hock Lian Seng $39,880.00
22/05/2015 CDW Holdings $3,661.81
12/06/2015 LTC Corporation $2,376.00
26/06/2015 Dutech Holdings $2,509.65
11/08/2015 Metro Holdings $20,880.00
18/08/2015 King Wan $9,900.00
20/08/2015 Boustead Singapore $1,012.64
15/09/2015 Libra Group $454.00
18/09/2015 CDW Holdings $2,811.60
02/10/2015 Restaurant Brands International $292.00
$97,345.70
2016
05/01/2016 Restaurant Brands International $177.12
27/01/2016 Boustead Singapore NA
20/05/2016 BBR Holdings $6,930.00
20/05/2016 Hock Lian Seng $18,630.00
30/05/2016 CDW Holdings $3,787.94
24/06/2016 Dutech Holdings $5,643.00
17/07/2016 Libra Group $635.60
19/08/2016 Boustead Singapore $1,025.52
CDW Holdings
LTC Corporation
$36,829.18

As you can see, the total dividends received in 2014 and 2015 massively increased compared to 2012 and 2013. What happened?

Leverage.

The leverage I discussed previously (The dirty “L” word – Leverage) boosted my dividend returns greatly. And that’s just the dividends, not counting the capital appreciation. It’s certainly been profitable, as the boosted dividends alone has covered my cost of capital.

Now that I’ve eliminated leverage this year though, the dividends has dropped drastically.

Of course, this is a simplistic way to look at it, as there are other factors such as the fluctuations in the dividend declared and the timing of my investments and divestments.

It says “NA” for Boustead as I took scrip dividend instead, as well as a dividend in specie.


On a separate note, I’ve revamped the portfolio performance page and gotten even more transparent by listing my transactions in a separate page. This makes me accountable. The transactions will only be updated prob at the end of the month though.

Initially I thought it’d just be a matter of cutting and pasting since I do keep such records on my own. But it’s proven to be much harder, given my lack of experience in writing a blog and my non existent tech abilities. Simple stuff like aligning the tables or adding a column can’t be done directly here. I think.

I don’t think there are any errors, but if there are, I blame Excel completely.

I also bought back the 70,000 Dutech shares that I sold just a few days ago. This little bit of trading around my positions netted me a very nice $1,400 in 3 days. Not too shabby. Even my broker texted me a thumbs up. LOL. Like I mentioned earlier, I am still highly optimistic about Dutech, and my investing thesis has not changed a bit.

I view this trading as just a way to capitalize on the emotions of the market: some report comes out, the media gives it a bit of attention, there’d probably be some chatter about the company in some forums, and it dies down after that, until the next news comes out.

It’s the same with the highly exuberant opinions in the email I received after HLS won the project tender. I mentioned that it’s crazy to suddenly think valuations have shot up over a single, albeit large, tender win. (See comments in earlier posts) The share price went up because of the news (logically), and has since come down a little as I expected.


My SPY shorts are finally starting to turn green today after spending a month or so in the red. I have previously mentioned in earlier posts my pessimism, and my short positions, established at around 217. (Note to self: Timing is crucial when shorting!!!)

Well, the S&P 500 is dropping the past week, and is still dropping hard tonight as I type this.

This is how in my mind, things will hopefully turn out: Yellen raises rates once in 2016 (I’d love twice, but I think they’d raise just once and see the markets go crazy, and they’d panic and back down), the markets drop, volatility increases, the USD strengthens greatly, share prices drop, my shorts go up.

If this scenario plays out, perhaps not even exactly, but just half of it, I’d be a very happy investor. Why so?

  • SPY shorts go up
  • I’ve a few call options that I sold for nice premiums. Hoping they’d expire unexercised.
  • With all the documented divestments, I’m cash rich and waiting for valuations to come down.
  • USD-SGD currency pair increases
  • After almost 3 months now, I’ve finally narrowed down and am doing intense due diligence on 1 company. Will start to accumulate if the DD checks out. Going into the finer details now, and that’d take me another 1-2 weeks tops. If markets tank now, it’d really help me greatly.

As mentioned earlier, 2H2016 is thus far turning out rather nicely for SG TTI. TTI’s portfolio is likely to beat the given benchmark in 2016, thanks to the recent strong performance of Chesapeake Energy and Valeant.

The timely divestments of long held, major holdings Hock Lian Seng and Metro Holdings have also helped a lot. It’s been some months, and both are still trading below my divested price, with Metro in particular, having literally tanked very substantially in the weeks since I’ve divested. ($0.895 currently vs divestment price of $1.03)

I am not looking at taking up any positions in these 2 anytime soon though, as my reasons for divestment are still valid/not addressed.


I’ve also recently came upon an opportunity to buy a distressed commercial asset. This is something I’m doing intense DD on, as my initial thoughts are that it’s a great opportunity. This is because my initial research tells me that not only is the price a distressed sale price, I think I can asset enhance it and that’d raise the yield substantially from the current yield. (The rent has not been raised in the past 8 years!)

The hesitation I have comes from the fact that:

  1. I have no prior experience in commercial assets
  2. As with all properties, the quantum is huge. As mentioned in earlier posts, the property game is like hunting elephants with a shotgun with a single shot. (There are numerous advertisements about buying properties with $0 cash blah blah blah. That sure is an attractive headline to attract eyeballs, but I’d like to think that SG TTI is a bit more sophisicated to believe that.)
  3. I’ve pretty much just eliminated leverage. Taking on this deal means committing (once again) to a large mortgage.

If I do go ahead, a disproportionately large portion of my OVERALL portfolio will be in property. That’s never been my intention. I’m probably a much much smarter equity/bond investor than property investor.


 

So obviously, much work lies ahead. Well, I said work but I can’t even describe how much fun I’m having currently. It’s a little scary knowing that being a concentrated, deep value investor, every major decision I make from here are big moves. They’re intended to make a big impact. That cuts both ways, good or bad.

I’d end this with a quote by Jack Ma:

199) If you're still poor.jpg

I’ve only 1 year left.

Portfolio Updates – 23/08/2016

Divestment of 70,000 shares of Dutech Holdings

This was done just yesterday at $0.51. I still own 500,000 shares of Dutech. This in no way, reflects any bearishness on the company’s prospects. (I still own 500,000 shares anyway)

I felt compelled to divest partially as the share price has risen almost 100% since I first vested less than 18 mths ago.

191) Dutech Holdings share price 23082016.jpg

I felt that the rise has been too rapid, and that part of the rise has been attributed to the latest analysts’ reports. I do agree with the analysts’ reports and their target price of $0.61 is fairly close to my own fair value estimates.

As always, I’m always reminded that there are many other participants reading the same reports as me, and while my fair value is a tad higher, I’m happy to take some profit now.

Holding 500,000 shares reflects my optimism about the long term prospects of the company. It also reflects the lack of opportunities for me to deploy capital. Having divested several of my major holdings, I am holding a disproportionately high amount of cash while looking for a home for this capital.

A gain of 85.5% in 16 months (first vested in April 2015) is one of my best ROI thus far. Hopefully, in time to come, I’ll be able to report figures even higher than that. Again, I’d emphasize that all investment returns have to be time weighted, so hopefully it won’t be too far away.

Hock Lian Seng & Metro Holdings

Since my divestments, the share price has hovered below my divested price (Even after accounting for dividends paid), and thus far, my decision to divest seems to be correct.

(Post-mortem of Metro Holdings DivestmentPost-mortem of Hock Lian Seng Divestment)

In addition, I predicted that HLS’s share price would likely hover around $0.35, and thus far, that has been true (+- $0.02).

I don’t take any particular pleasure in being right though, since it doesn’t add an iota to my returns. I’d rather be wrong and HLS crashes to $0.2, giving me an opportunity. Doesn’t look like that’s going to happen though.

I’ll keep my eye on these 2 divested companies though, and hopefully  maintain a level of awareness about these 2 companies that’s higher than existing shareholders.

Valeant

WOW. In the past 2 weeks, Valeant single handedly added approximately 47%, and generated a quantum of close to $80k.

I’m pleased with how it’s doing, but I still think the true value is far far far FAR away from the current share price. I’m still in the red in this, but selling of both call and put options have brought my break even much closer.

The one lesson I’ve learnt last year (see my disastrous return in 2015, caused single handedly by Valeant), is that in the US markets, once a company loses the confidence of the general markets, the fall can be quite crazy. Volatility is certainly much higher than in SGX.

I’m still highly confident of my research though, and am sticking to my guns. Going forward, I think the risk is on the upside rather than the downside, so I’ll be only selling far out of the money call options, while being comfortable selling closer to the money put options.

Chesapeake Energy

Another great performer these past couple of weeks. Lawler is still performing magic, and their productivity is the top of the industry. They’re drilling the longest laterals amongst all comparable peers, while cutting costs to the bone.

I was somewhat disappointed at their recent divestment for $0, but it did cut their future obligations greatly. I can only trust that Lawler knows what he’s doing.

SPY Shorts

This has not worked out thus far. I shorted at around the 217 mark, and have watched it trudge higher on a daily basis. It’s almost ridiculous to me.

Company earnings have been terrible, yet the S&P 500 adjusted PER is currently 25.15 as I type this. All because of money printing.

I really wish I knew how it is going to end, and how to capitalize on it. I only know that someday, all this is going to hell and we’re going to have to pay for it. I still cannot figure out how best to capitalize on it.

Shorting is only good if you have an idea of the time frame when it might occur. I have no idea when the chickens are coming home to roost.

I’m still holding my shorts as I believe the Fed will have to raise rates at least once this year, and going by the bullishness, when they do, it might take the  markets by surprise.

Miscellaneous

2H2016 is shaping out to be a monster half for me in terms of ROI for my portfolio. If this keeps up, I’m likely to beat my benchmark this year (STI ETF) by a healthy margin.

Thus far, my limited experience in deep value investing is exactly how I envisioned it to be: Huge volatility marked by periods of extreme under performance, and  at other times, periods of extreme over performance.

Having hunted for opportunities for the past 2-3 months (Ever since divesting HLS), I think I’m close to finding one. I’m currently working on one of the ideas, having narrowed it down from a few. It’s going to take some time to complete though, and yet longer to accumulate a sizable position, so I won’t be writing about it here anytime soon.

I intend to engage management on this with some suggestions.

On a personal note, I’ll be off for a long trip to Europe in 2 weeks. (The recent terrorist activities is starting to make me a tad worried). While I’ll still be connected, it’s unlikely I’ll be putting up any in depth analysis during this time.

Thanks for all the emails, TTI always strives to reply all of them promptly and to the best of my knowledge. Honestly, sometimes, answering your questions also helps me to consolidate my thoughts.

As always, I always welcome counter arguments (politely please), ideas that you may have and any suggestions to improve. Cheers.