Ding Ding Ding! Closing Bell To 2017. Results Are In!

Bye Bye 2017.

666) bye bye.jpg

As I turn my back on 2017, I can’t help but think that its really been a bittersweet year.

Dunno if I should be happy or disappointed.

My benchmark has always been STI ETF. The rationale is that if over the long term, I can’t beat a passive, idiot proof way of investing, then why bother? Yet, STI ETF has been a tough competitor. I suspect most people trading their way around actually fail to beat STI ETF. Most don’t even bother to keep track, so they wouldn’t even recognize their fallibility.

Anyhow, this is what STI ETF has done in 2017:

667) STI ETF.jpg

21.29% IRR.

That’s really a monster year. I give STI ETF the benefit of not including the effects of any transaction fees, nor does the passive index have the holding costs of cash. So the odds are piled against me.

But still, I was hoping to beat the index year in, year out. (Bill Miller style)

It was a pretty close fight up to Q3:

FY17Q3: STI, TTI Is Hot On Your Heels!

I was hoping for a final kick in Q4, much like UCC:

Alas. Life is not like the movies. No fairytale ending here.


TTI’s portfolio performance in 2017 generated an IRR of 19.12%.

Total assets grew substantially from $943,815.80 at the end of 2016, to $1,295,279.61

Of this $1,295,279.61, approximately $372,240 is in the form of US stock options, Japanese equities and currencies USD and SGD.

668) Options Dec 2017.jpg

(Based on the exchange rate of USD-SGD 1.3375)

The rest are in the form of SG equities:

668) SG portfolio.jpg

Now in any given year, I’d pop the champagne with a 19.12% IRR. In fact, I’d gladly take a 19.12% return every year for the rest of eternity if I’m given the choice right now.

For 2017 though…. I just can’t feel happy with a performance that’s lost out to passivity. I can’t wrap my brain around the fact that a complete investing idiot who decided to throw his weight behind STI ETF at the start of 2017, would’ve beaten me after 1 year.

Ouch.

That’s the bitter part.

The sweet part is that AUM really swelled this year, jumping to $1,295,279.61 in SGD terms. And I didn’t even put much capital into my investing portfolio this year, choosing instead to channel into my property fund.

In an earlier post (TTI Is Banking On The Eighth Wonder Of The World), I put up a projection that shows what a 20% compounding rate over a 35 period would do for you, assuming you start with a $1mil capital:

Yr Beginning Capital Capital at Yr End
1 $1,000,000 1.2 $1,200,000
2 $1,200,000 1.2 $1,440,000
3 $1,440,000 1.2 $1,728,000
4 $1,728,000 1.2 $2,073,600
5 $2,073,600 1.2 $2,488,320
6 $2,488,320 1.2 $2,985,984
7 $2,985,984 1.2 $3,583,181
8 $3,583,181 1.2 $4,299,817
9 $4,299,817 1.2 $5,159,780
10 $5,159,780 1.2 $6,191,736
11 $6,191,736 1.2 $7,430,084
12 $7,430,084 1.2 $8,916,100
13 $8,916,100 1.2 $10,699,321
14 $10,699,321 1.2 $12,839,185
15 $12,839,185 1.2 $15,407,022
16 $15,407,022 1.2 $18,488,426
17 $18,488,426 1.2 $22,186,111
18 $22,186,111 1.2 $26,623,333
19 $26,623,333 1.2 $31,948,000
20 $31,948,000 1.2 $38,337,600
21 $38,337,600 1.2 $46,005,120
22 $46,005,120 1.2 $55,206,144
23 $55,206,144 1.2 $66,247,373
24 $66,247,373 1.2 $79,496,847
25 $79,496,847 1.2 $95,396,217
26 $95,396,217 1.2 $114,475,460
27 $114,475,460 1.2 $137,370,552
28 $137,370,552 1.2 $164,844,662
29 $164,844,662 1.2 $197,813,595
30 $197,813,595 1.2 $237,376,314
31 $237,376,314 1.2 $284,851,577
32 $284,851,577 1.2 $341,821,892
33 $341,821,892 1.2 $410,186,270
34 $410,186,270 1.2 $492,223,524
35 $492,223,524 1.2 $590,668,229

OK, so if everything goes to plan it means TTI would be worth $590mil when I’m 70 years old.

LOL!

It also means when I’m 69 years old, it’d be the most exciting cos I’d grow my assets by almost $100mil that year alone.

Anyway, 2017’s results means I’ve very comfortably, “cleared” the 1st year’s year end capital requirements of $1.2mil. In fact, it’s actually quite close to the 2nd year’s requirement. I probably can top that with a simple cash infusion right now.

Also, aside from investing, on the business front, 2017 has been a really really good year. My personal investment holding company, which holds private equity stakes in healthcare companies mostly, and some minority stakes in other related businesses, reported record revenues in 2017.

And by record revenue, I mean it’s at an all time high in the past decade, since incorporation in 2007.

I mean, everything’s literally BOOMING right now. BOOM TIMES are here!

This is a complete surprise to me. I remember distinctly, feeling that 2017 will be a very tough year for business. I remember brainstorming ideas at the start of 2017, and things look bleak. The news was constantly blasting about how SG’s economy is sick, and will likely under perform relative to our peers in the region.

There has been absolutely zero indication that this year would’ve been a bumper, record year.

Yet, we started 2017 with a bang, and I was expecting a slowdown, which never really came. In fact, Dec 2017 is very likely to be a record month for us. I’m still awaiting final figures from the accounts, but it’s highly likely to be the highest monthly revenue reported in the past decade.

Totally unexpected.

This leads me to think that this current rally, IS supported by growth in earnings. Everyone’s really doing well. It’s not some sham price rises based on interest rates, or share buybacks or other financial shenanigans.

This also shows how hard it really is to forecast and make such economic predictions.

And now, here I am, at the start of 2018, and I’m feeling it’s just as pessimistic as the start of 2017. It’s always after a bumper, record performance, where the next year becomes harder.

Just look at Leicester after they won the EPL.

I’m not sure where we’re gonna find the revenue in 2018, to match that of 2017. I look back at the monthly figures for 2017, and I’m really wondering how 2018 will match those numbers.

I’d be glad to be proven wrong in the end of 2018.

On the property front, as indicated in some earlier posts (somewhere way earlier, I’m lazy to go back to find it), I’ve said I’m looking out for another bigger place for personal use. The plan is to shift nearer to the kids future school, while renting out my current place. I’d also have to sell my current investment property, as I’d be hit with much higher taxes for the 3rd property.

For the uninitiated, a couple can own 2 properties (1 under each person’s name), without getting hit by the higher taxes for “investment properties” (ABSD and property taxes). I don’t know the specifics right now, I remember sorting it out some time ago and the conclusion is to just not have more than 2.

So I was literally willing the property market to crash, and for a long while, the odds seemed to be in my favour.

Hey, I thought we are in the midst of a long term secular property market decline?!

That’s what the experts said.

Suddenly we have record en bloc sales, and the market is BOOMING. All these guys lucky enough to sell en bloc, will now be flush with cash, looking for another place.

There goes my chance.

There are literally no good deals or firesales in the D9,10,11 region right now.

So much for the downturn. It’s so minute, and so transient, that I hardly felt ANYTHING.

Argh. I do not have luck in the property market. Like really. Zilch. It never goes my way.

I bet if I give in and buy right now, the market will crash the next day after I’ve signed.

Anyway, in view of the booming market, instead of buying in 2018, I’d likely sell my investment property sometime after August when the tenancy is up. The best case scenario is that the property booms like what the experts say, and after august, hmmm or make it November (give a couple of months to conclude the sale), and the market absolutely crashes.

I need something to precipitate a crash.

Come on bitcoin! Help me out a bit. Crash and burn at end 2018 k. Please?


I thought of going through and reviewing each of my SG equity holding here, but… kinda lazy to do that now. Anyway, I think I’ve just recently reviewed.

The only changes I guess are the addition of 100,000 shares of Alliance minerals at $0.365, and 40,000 shares of Q&M Dental at an average of $0.6075.

I don’t think I can say anything much about Alliance Minerals that hasn’t already been said. It’s in the news so much. I’m just awaiting it’s value to be recognized, once it starts producing, and that’s gonna come real soon, in Q1 of 2018. Lithium plays are likely to be in a long term secular uptrend. These things don’t fade that quickly. Unless electric vehicles and smart phones become obsolete.

I won’t talk much about Q&M Dental, except to say that its not a typical value play. Even though the PE has come down a lot from its heydays of what PE 50? 60?… to the current PE 17 or so, it’s still not exactly cheap.

But the company has been doing share buy backs, and the CEO NCS himself has been buying shares through Quan Min Holdings.

I have my own rationale from my understanding of the business and the industry, and I’m betting on a special event that’d occur within 2018. Perhaps even a general offer and a buyout of sorts. Don’t think I should write too much about it here right now.

In any case, I think the downside is protected with the share buybacks by the various parties. Aside from the visible guys like the company and the CEO buying back shares, I know there are other deep pocketed, related drs, who are accumulating quietly.

So let’s see how it all plays out.

On top of that, my recent foray into Japanese steel makers have so far turned out exactly how I expected them to.

TTI’s New Core Position: Shinsho Corporation & Kobe Steel

I currently own 2,000 shares of Kobe Steel, and 2,500 shares of Shinsho Corporation, a position worth a total of approximately SG $125,000.

As mentioned in my investing thesis, I’ve thrown my lot mostly behind Shinsho Corporation, with a tiny stake in Kobe Steel itself.

The rationale is that Shinsho Corporation was unfairly knocked down by its association with Kobe Steel. Shinsho derives approximately 30% of its revenue from Kobe Steel, yet with the Kobe Steel scandal, it’s share price dove hard and fast, despite not being directly responsible and hence, not liable, to any fallout from the scandal.

In the past month or so, Shinsho Corporation’s share price has recovered strongly, as the markets realized it has been unfairly knocked down, whereas Kobe Steel’s recovery has been more tepid, as more negative news of lawsuits and further suspensions start coming through.

669) Shinsho.jpg

670) Kobe Steel.jpg

I’m continuing to hold my stakes in both companies.

I expect Shinsho corporation’s share price to continue climbing upwards, such that it’s PE become a more normalized 9-10 or so.

Kobe Steel will take longer to recover, as the fall out and negativity from the scandal drags on, but I’m expecting record earnings to act as a catalyst.

Both though, are well supported by a booming steel industry in Japan right now. With the infrastructure boost from the upcoming Olympics, all the steelmakers are functioning at maximum capacity. That has helped to buffer Kobe Steel as its competitors cannot fulfill further orders from clients which may be considering jumping ship from Kobe Steel.

My investing thesis has played out thus far, and I’m waiting for bumper Q3 and Q4 results to be a catalyst (They have March year ends).

Alright, that’s it for this last post of 2017.

BYE BYE 2017.

Bring it on, 2018!

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13 comments

    1. Hi
      You can read this simple page to set up your own IRR calculation table using a simple Excel spreadsheet:

      https://www.experiglot.com/2006/10/17/how-to-use-xirr-in-excel-to-calculate-annualized-returns/

      If you see the above excel table in my post for STI ETF, STI ETF started the year at $2.94, and gave out dividends on the 2 dates 20th Feb and 16th Aug, that’s equivalent of taking out money from the system, so you put a “negative” sign in front.
      And at the end of the year, you put a negative sign and the total value, which is $3.45 in this instance.
      The formula in excel will automatically calculate the IRR for you.
      Simply type in:
      “=XIRR(B1:B11,A1:A11)”
      (depending on the columns you’re using)

      So throughout the year, every input of cash into your portfolio should be inputed into the table on the exact date, and as a positive number.
      If you make a withdrawal, simply put the date of withdrawal, and the sum withdrawn with a negative sign in front.
      And at the end of the time period, simply put the total portfolio value, with a negative sign in front.

      Cheers
      TTI

      Like

  1. Re your 100,000 shareholding of Alliance Mineral Assets. Welcome to the club of capitalists putting down some $ to ride on a global transition to EV. We are just at the dawn of the EV era, a changeover just like when the people who lived in the age of horse-drawn carriages took their first rides in a car.

    Like

    1. Hi CT
      Yes, I am also of the view that this trend towards EV is a large secular trend, it’s not going to go away, the only question is the speed of adoption.
      As with most changes in eras, there will be huge upheavals, and huge volatility, so I don’t think it’d be a smooth ride up.
      As with almost anything I look at, valuation matters. There are many ways to capitalize on this, so I’m continuing to look at the various other ways.

      Cheers
      TTI

      Like

        1. If it pulls back from here, perhaps, I might add to AMA. I won’t average up here cos it has risen quite quickly in a short span of time.

          I’m looking at several other related companies in the lithium sector, don’t have anything concrete yet.

          There’s a lithium ETF (LIT) if you want broad exposure without being committed to any 1 single entity, but it’s not a pure lithium play as it includes even lithium users (like Tesla).

          I haven’t finished looking at all the different companies, but currently, my preference is to find 1 that is already in production, and has room to grow production more, as opposed to a total greenfield project.

          Even if I invest in a greenfield company, it won’t be a large investment as it’s very volatile, and hard to predict how the project will execute.

          Yet another way would be to buy other companies that mine or manufacture the other components of batteries, but I haven’t looked into that in detail

          Like

        2. Just to add on what I wrote earlier…
          currently my thoughts are, if you’d like something higher risk, Sayona Mining is still relatively cheap. But they are nowhere near production, and if everything goes on schedule, they’d only start production in 2H of 2019.
          So it’s still almost 2 years away.

          If you’re looking for something that’s already producing, amongst all the names, I prefer Orocobre. They are producing lithium via lithium brine, not mining. So their operating costs is a lot lower than the traditional miners. Their margins are as high as 60%!
          Problem is they had to push back expanding their production, so the markets have punished their shares. Orocobre has risen, but still much slower than their peers.
          So I think if anything, there’s an opportunity there.
          On top of that, they are exploring building a lithium hydroxide plant in Japan.
          Lithium carbonate is what most miners would get after processing the ores, but this has to be further refined to lithium hydroxide.
          I don’t have the exact figures yet, but the hydroxide form can garner much better margins and prices. So Orocobre is potentially expanding into other forms downstream.

          Cheers
          TTI

          Like

    1. Hi kk
      No, I am not.
      Although I have some experience with mining companies (Alliance Mineral, Geo Energy), I prefer commodities that have a functional use.
      This makes it easier to analyze the macro trend and the demand and supply situation.
      For eg. with coal, I can analyze the end client demand from China, Indonesia and India etc.
      With gold, we can’t really assess the demand. So the dynamics of analyzing is very different, and in fact, I have no idea how to. Obviously the fortunes of the gold miners depend to a large extent, on the price of gold. So if we can’t have a basis to analyze the macro picture, it adds a lot of uncertainty.
      Cheers
      TTI

      Like

  2. Prof. Aswath Damodaran answered, “I’ll be ok with it, I enjoy the process so much, I got a lots of fun doing it” when some students asked if he couldn’t beat S&P500 when he is an old person lying on the bed, I fully agree this statement.

    So I don’t feel anything embarrassing, as a retail investor, unable to beat benchmark index, as that is only part of the story.

    Like

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