General

“I Sell Fried Chicken”

My previous post about my investor friend was super well received. So much so that I’m reluctant to even link it here anymore. I just dunno if he’d appreciate the sudden publicity.

Anyway, I said I’d share about another highly successful individual that I know personally.

Incidentally, I recently saw a Bloomberg report about him:

https://www.bloomberg.com/news/articles/2017-02-01/barbecue-chicken-seller-turns-tycoon-with-a-2-500-stock-surge

And now I’m kicking myself in the butt because I know this guy way way WAY before he started DoubleDragons Properties, and he even shared with me his vision for doing so.

Yup, I missed a 2,500% return, despite having good information from the founder himself.

Dunno why, never considered to investigate deeper.

I first met Edgar Sia several years ago. His good friend happened to be a major investor in the healthcare company that I worked in, and he came over for holidays with him and we had dinners together.

Edgar is as humble a billionaire as you can imagine. Yes, it’s official. He’s the youngest billionaire in Philippines, coming in at number 17 in the Forbes list.

http://josiahgo.com/edgar-sia-ii-is-youngest-filipino-billionaire-by-josiah-go/

When I first met him, I didn’t know what he did, and DoubleDragons didn’t exist yet. But he was already extremely wealthy from selling his Mang Inasal chicken chain. (I later saw his name in a Forbes Top 50 richest list for Philippines)

Yet at that time, when I asked him: “So Edgar, what do you do for a living?”

His reply?

“I sell fried chicken”

And then he went on to explain the SCIENCE behind selling fried chicken.

“Chicken is the cheapest meat per unit kg”

“Best time to kill the chicken for maximum profits in terms of meat vs feed spent, is when they’re about 2 months old”

And a whole load of other stuff such as the maximum time from killing the chicken to processing the meat so that freshness is maintained, how a day old chick looks like etc.

It was only much later, then I realized that when he said he sells fried chicken, he meant that he sells it through a chain of 460 restaurants that employs 15,000 people.

Right.

The last time I saw Edgar was a couple of years ago, just before he started DoubleDragons Properties. At that time, he mentioned to me that he saw an opening in the mid-tier cities in Philippines. He said that the major cities were over crowded with malls, and the land is very expensive.

The mid-tier cities though, have an opening as many developers have not caught on yet. On top of that, there’s massive rising spending power in these cities. The populace there is getting richer, and he foresaw that their spending needs were not met adequately. To top it all off, transportation links were not that great between the mid tier cities, and the country is dispersed through many land masses. People in the mid tier cities would likely keep their spending power within the locality.

Since then, he hasn’t been to SG anymore, probably busy with DoubleDragons. He’s been highly successful obviously, and I’m really kicking myself for not at least investigating this. Hell, I’ve the news before any other retail investor did, and I know the founder personally and we talked about this, albeit casually.

In my conversations with Edgar, I can tell he thinks very deeply about many things. Things that people may find trivial. Yet, he goes down to the minute detail. I mean, would you think there’re so many things to think about when talking about selling fried chicken?!

Anyway, congrats to Edgar. Knowing his personality (humble and easy going), plus his deep intelligence, he’ll probably be one of those folks that would be successful at anything.

Now I’m hoping he’s done with DoubleDragons so that he’d move on to the next venture. And for gods’ sake, TTI, please do the DD if he lets you know this time.

BTW, if you’re wondering why “DoubleDragons”, it’s cos he and his co-founder were both born in the year of the dragon, 12 years apart. (or maybe 24. I can’t rem exactly)


WARNING: GORY PICTURE BELOW. DON’T READ THIS POST IF THAT TURNS YOUR STOMACH.

On a very different note, I was recently chatting with a reader via email about his work and financial situation. (Yes, I’ve permission to talk about it, but not revealing private details, of course)

It’s been illuminating to me because now I can fully appreciate why many retail investors look to investing their portfolio as a means to attain “financial freedom” and quit their jobs. It’s refreshing to get a different perspective once in a while.

Steve Jobs’ famous speech is the one that’s often quoted to tell us to just do whatever we like, and if we keep at it, we’ll become very good at it and be successful blah blah blah.

It’s a great speech and all that, probably gonna last through the ages as an inspiration to many many many people.

Yet, it’s probably too simplistic to think of it just like that.

The truth is, many people will get stuck in jobs they don’t like, are not exceptionally good at, and they’d be stuck in it…….. pretty much for the bulk of their adult life.

Even Steve Jobs himself bumped around for a long while, and it was perhaps fortuitous that he started Apple. He himself didn’t know what to do with his life, and spent some time in India pursing Yoga to “find himself”

Hard truths. It takes a lot of luck to do something you like, are really good at, and yet get paid handsomely for it. Most people, I suspect, just settle into a zone where they’re OK with their jobs, don’t particularly love it or hate it, but it pays the bills. It’s a necessity.

So that’s where the bulk of my conversation with the reader went. And I’m sorry that I can’t provide better advice. But these sorta stuff are not really my forte. There are many other blogs that will dissect and talk about how you can use dividends to get financial freedom etc.

I have never even went for a job interview before. Or wrote up a CV before.

But I can empathize with a difficult working environment. Yes, I do get a lot of that. It sucks. I dunno what I’d do if I’m in his situation. I won’t try to act like a saintly hero and say just quit and do something you like as per the video above.

That’s not realistic. For eg. I like to play soccer with some mates. But what, can I go be a professional and play in the EPL anytime soon? It just doesn’t work out most of the time. (I’d have you know I’m not too bad either ok… LOL)

Having considered the financial restrictions of the above said reader, and the tough working environment, I think the only viable option, is to……. take an action that ironically makes his situation even harder temporarily.

Go upgrade and learn something that’s useful and valued by society. Investing in yourself is usually the best route to take in such circumstances. It can be something different, but preferably related to what you already know. It just makes the learning curve less steep.

I’m glad to say that the said reader is probably going to take that advice.


In the above conversation, I’ve also been asked about my personal financial situation.

Well, honestly, I don’t have any massive expensive wants. My only large expenditure, is travelling. I love to travel with family (not alone). I see that as a transaction where I’m swapping money and time for experiences and memories. Well worth it IMO.

And I value experiences and memories A LOT. Like this:

I Did Something Fun As A Kid… And Now It’s Worth 6 Digits!!!

Afterall, what’s the point of a big fat bank account on your death bed? Nobody ever talks about what their net worth is when they’re dying. And I do know many very wealthy folks.

Neither do I want to leave a fortune for my kids. I mean, my parents didn’t give me anything other than an education, so why should my kids have it better? I’d train them to be the best they can be, and that’s all that’s needed. (Plus I have a personal hypothesis that the richer you are, the worse off your kids tend to be in terms of achieving their maximum potential)

Hey, don’t just take all this from me, I never died before.

Take it from this guy, a fellow medical colleague, Dr Richard Teo, who has since passed away. This speech is given to a bunch of young dental students, and it’s as heartfelt as it can be.

I mean, he knows it’s stage 4 cancer when he gave this speech. He could’ve been lying in bed moaning. Or trying frantically to spend his wealth in his last days. But here he is, talking and sharing with younger colleagues-to-be in the fraternity:

https://www.youtube.com/watch?v=umLkfADe17s

It’s as heartfelt as it can be right?

On a personal note, I realized very few of my colleagues actually really retire. I’m sure they’ve reached “financial independence” long long long ago.

I think even I myself can be considered “financially independent”. It might be a stretch, and I might have to downgrade my housing a bit, forgo the beamer and take public transport instead etc, but my passive income would likely cover the entire household expenses if I wish to. (But I have 2 young kids so maybe I just haven’t realized how much it’d hit me when they get older… Experienced parents may correct me here)

The only colleagues I know who are really retired, are retired because of health reasons. Even the old foggy guy that works downstairs from me is still around. He must be what, in his 70s? OK, he comes in only 3 weekday mornings a week, but that’s not considered truly retired right.

But of course. Why would I retire when I can do this?

453-bone-pic

Yes. That’s bone. Don’t ask me where that is, it’s deliberately cropped out to not reveal where exactly. But there are hints :)

It’s really quite fun actually. It takes a certain character to take a knife to someone, and inflict a wound (even if it’s for the better, it’s still a wound), and yet at the end of it, stand back, look at it and feel proud at what you’ve done.

Weird, now that I put it this way, isn’t it?

Plus I get a lot of presents. Like this one that just came in today:

454) presents.jpg

Like a hell lot of them. Mostly food. Toys for my kids. Books even. I never ever had to buy any CNY goodies myself. The weirdest one I’ve received thus far, is a set of underwear.

Plus I get to spend most nights looking at various company financials in my other capacity as TTI. It’s like I’m Peter Parker in the day and Spiderman at night.

It’s as fun as it gets. Frustrating and tiring at times too, for sure. But as they say, you can’t have the rainbow without the rain.

And even if you can, you’d get bored of rainbows all the time anyway.

I try to remember all this whenever I have a shitty day. Most people will have shitty days, no matter what you do.


As the earnings reporting season is underway, I’m really excited about next week. That’s when I’m expecting some major results that’d make a significant difference to my portfolio.

Thus far, I’ve looked at the results of Asia Enterprises Holdings, LTC Corporation, Boustead Singapore and Boustead Projects, King Wan Corporation and am in the midst of digesting Metro Holdings’.

There hasn’t been much fireworks thus far. King Wan wrote off $2mil from its Dalian shithole again, but I was kinda expecting some write off there. If they maintain dividends though, by virtue of the low share price currently, the yield suddenly looks rather impressive. If they maintain dividends.

I’ve already written about LTC. Nothing unusual. Cash building up, they’ll probably burn some by expanding the USP operations. A reader sent me a link to an article that says LTC intends to invest 200mil MYR in USP. So I guess that’s where the FCF will be utilized.

AEH results, also nothing out of the blue. Still suffering. I’m not vested but I’ll continue to follow up. Surprisingly, they didn’t get as much of a boost from rising steel prices in Q4 as LTC did.

Boustead delivered a steady set of results. Better than I expected in fact. I think it’d be best to leave it to FF Wong to do his job. The depressed O&G markets have been quoted as the main reason for Boustead’s lagging share price. But it contributed like $5mil revenue (I think. Writing this off the top of my head) so I’m not so sure how much of a lag would this division be going forward. Even if it goes to 0, it’s still a small proportion of total revenues.

I’ll have to spend some time on Boustead Projects soon. The industry is still in a tough spot, but I can see real competitive advantages for BP.

Alright, that’s it for this post.

As always, happy hunting!

TTI’s Options Strategy – Results Thus Far In 2017

2017 has been kind to me thus far. Both my large positions in my recent investing ideas came out tops and their share prices exploded significantly.

Dutech Holdings is up about 85% since I bought it a year+ ago. I wrote about the company in June 2016, and  most recently updated my thoughts in a comprehensive series.

Dutech Holdings Investing Thesis

Dutech Holdings – What’s Next? Realize $117k Profit, Hold Or Add More? (Part I)

Massive FY16Q4 For Dutech Holdings – Digging Deep To Understand The Impact Of Metric Group Acquisition (Part II)

Dutech Holdings – What Lies Ahead? Part III

Dutech Holdings Part I’s title is no longer relevant. Cos the profit is no longer $117k with the run up. It’s more like $180k as I type this. Yet, I haven’t sold a single share.

Geo Energy Resources also performed spectacularly well, and is up a massive 75% since I bought it just 3 months ago

Geo Energy Resources Investing Thesis – Part I

Geo Energy Resources Investing Thesis Part II

Right now, I’m eagerly awaiting the upcoming earnings season to kick in (sometime this or next week), then it’s going to get real busy as I dive in to digest each result. I feel like a parent waiting for my kids’ PSLE results. These “kids” of mine are genuises. The rest of the market just hasn’t realized it yet. But they will come around eventually. Starting with PSLE.


446) option-1010899__340.jpg

I’ve also had a series of nice wins in my options strategies. I’ve utilized an option strategy for the US and other larger markets for the past 3 years or so now.

It’s been a long journey, but I’ve since developed my personal brand of strategy which has thus far (*touch wood) been working like a gem, generating consistent cashflow of between $3k-$8k USD every month for me, while putting $200k USD of capital to work.

When I started utilizing options, for a couple of months I had a series of nice wins. It encouraged me to commit more capital, and I got bolder and bolder, choosing contracts with high volatility and their accompanying large premiums, until 1 big fine day, 3 months into utilizing options, the markets turned against me and I pretty much lost ALL the gains I made… in a single night. (All thanks to Herbalife!)

Ouch.

That was extremely painful. I’m not used to a realized 5-digit USD loss in a SINGLE night.

Needless to say, I dived deep into analyzing my strategy and developing over the past 3 years, and now I’ve a certain brand of options strategy that is probably not commonly used, but is probably not unique to myself either. Anyhow, it works for me, and that’s all that matters.

I have previously mentioned about options in a simple guide, so if you’ve no idea what I just said, here it is:

TTI’s Basic Guide To Stock Options


Honestly, I’m not sure why very few people (to the best of my knowledge at least) utilize some form of option strategy. I guess people fear what they don’t know or understand.

But, IMO it’s really not that difficult to understand, although the specific nuances of it would probably need some experience too grasp, yet the rewards can be disproportionately large.

Best of all, I like the time decay portion. When WB bought Gillette, he said he likes to think that as America slept, there would be millions of guys waking up the next day with a bit more facial hair, needing Gillette’s products.

Well, that’s what I feel about options too. As I sleep, the liabilities (ideally) gets reduced by time decay, while I pocket the nice fat premiums and am free to re-invest the premiums.

I know that I’m not the only guy doing this, because in some of the Straits Times news feature on some investors, they mentioned something similar. There are some very wealthy individuals whom I know do something similar to what I’m doing too.

Sure, our strategies will probably differ a bit, but just from the simple few sentences they mentioned, I can tell we’re all probably on the same page somewhat.

Some of my friends have asked me to teach them in a cursory manner, and while I’ve attempted to, they don’t seem to really understand or dare to try.

I guess it’s not hard to see why. Options are derivatives with possibilities of leverage. And leverage, is akin to a bad word for many investors. It’s scary. Sure. There are horror stories everywhere when it comes to leverage.

Which is why, in my thinking, it’s all about managing risk. In fact, I had to seek advice and read some books on statistics recommended by my friend, who is an actuary. She also kindly explained to me what goes on behind the scenes when insurance companies come up with policies and how they determine their premiums. All very interesting to me.

Because, in a nutshell, my option strategy, means I’m essentially the insurance company selling insurance to anyone in the world who wants it.

In fact, my option strategy is even better. Because I can even choose to pass on the liability for the “insurance contract” to someone else, if there’s a likelihood of a claim on the insurance. Insurance companies can’t.

Of course, once in a while, stuff happens and as an “insurance company”, you’ve to start paying out. But the premiums you receive are supposed to far outweigh the payouts in the long run.

It’s all really just about stats and managing risk.


445) TTI's options.jpg

I track my options in a table that looks like this.

The “unshaded” rows are contracts that are still active, while the “shaded” ones are inactive/expired.

The coloured codes are for contracts that are related, i.e. selling and covering the same contract.

In Jan 2017, I collected a total premium of $6,819.54 USD

Amongst all the contracts, I’ve only had to cover 1 that was unprofitable. That’s the pink one for Valeant, in which I lost $43.10 USD. The rest were all highly profitable, with many contracts with high premiums totally expiring, which is kinda like an insurance policy that expired without a claim on it: the insurance company pockets the premium and kindly asks if you’d like to extend your coverage.

I’ve had 3 options assigned, resulting in a net purchase of 9,000 shares of Chesapeake Energy, and 400 shares of Valeant Pharmaceuticals.

The 9,000 shares of Chesapeake Energy though, are shares that I’ve held, and previously sold in another option contract that got exercised in Dec 2016. So I’m just sorta buying back what I’ve been contracted to sell previously.

All this while collecting premiums on both the buy and sell contracts. Fine piece of business I’d say.

The 400 shares of Valeant is a new addition to my existing position. I wasn’t contracted to sell previously. But I already have the intention to add to my Valeant position (this is recorded in the “Transactions” page) anyway, so getting this exercised is fine with me, plus I get to pocket the premium and I’ve swung to sell a Call Option on this (As shown in the table) (On a related note, I’m still getting whacked on my Valeant position, but I’m a damn stubborn guy and I still think I’m going to come out tops. We’ll see.)

You might also notice that practically all my options activities revolve around just these 2 companies.

This is because I believe that for it to be done safely, options still require the usual deep value analysis, and thorough investigation; no different from what I’d do before I’d buy the equity of the company.

Afterall, options ARE derivatives. And their intrinsic value is derived from the equity.


On a different, yet related note… (and I’m trying to illustrate something here with a real life example, not trying to identify anyone)

Around the time when my Dutech Holdings Part I thesis was posted, the share price then was around $0.45. Someone told me that I’d better sell cos the “trend is very bearish”. I very politely begged to differ. He ended with an ominous “All the best then”. (He meant it genuinely, I believe)

Now, I’d be an abject failure if my months of research into the company can’t provide me with the confidence or arrogance to dismiss naysayers. Particularly those who rely solely on the stars and godly celestial beings in the form of squiggly lines to tell them their fortune.

When the share price rose to $0.48 or thereabouts, the same guy screamed “its always wise to lock in profits when you can!”

When the share price rose yet further to $0.50, there’s a sudden change. Suddenly, he’s telling me “looks like it’d breakout! watch for it! If it does breakout, it may go higher!”

Wow. Seriously wow. That’s like a sentence only Donald Trump makes. Lots of words with absolutely zero meaning. Maybe I can come up with some of these myself:

“If it doesn’t breakout, it may go lower! But there’s also a chance it can stay flat here to provide some support! Be careful if it goes past this support though, because there’s a likelihood of it going much lower!”

Anyway, to conclude the story, finally, at $0.535 (today), he’s saying “Very bullish! This is going to go higher and higher! Likely to make new highs! Target Price: $0.XX <–“XX” is some new crazy large number that I think the gods told him.

The net effect of all this, is that NOW I’m starting to getting cautious about my Dutech position if even the gods think it’s going straight up to heaven…

The above is a true story. As ridiculous as it sounds. I edited the comments so that it’s not exactly the same, cos I don’t want to identify the individual.

In his defence, even the pros make such statements.

There’s a long statement by El-Erian some months ago about his outlook on the economy. And it’s so long it took up like 4 lines of the Bloomberg article, and basically it says “the economy can go up from here, but I won’t be surprised if it goes down either. There’s a small chance it can also flatline and trend, which investors would be wise not to discount…. blahblahblah.”

Well, not exactly like this, but similar. I tried finding the article to substantiate but it’s some time ago and I can’t pinpoint the exact title so can’t find it. But I remember sending that to some friends and we totally had a good laugh at it.

Imagine if doctors can act like that:

“There’s a chance that this radio-opaque lesion is cancer. We have to monitor it closely, but don’t be too worried because it may not even be cancerous either. It can grow and spread quickly, although I won’t be surprised if it stays the same when we take a review x-ray in future. We gotta remain vigilant though, and not forget that there’s always the likelihood of metastasis with this being fatal eventually, although at this stage this likelihood is not high.”

So when you’re on your deathbed, the doctor can tell you “I told you it can grow and spread quickly right? I told you there’s a chance it can get fatal right?”

How reassuring.