Thursday, May 7, 2020

May 2020 - Portfolio & Transaction Updates


No.
 Counters
No. of Shares
Market Price (SGD)
Total Value (SGD) based on market price
Allocation %
1.
Silverlake
197,000
S$0.27
     53,190.00
30.0%
2.
Lendlease Reit
  70,000
S$0.58
     40,600.00
23.0%
3.
CDL Hospitality Trust
  39,000
S$0.94
     36,660.00
21.0%
4.
Jardine C&C
    1,400
S$20.20
     28,280.00
16.0%
5.
Valuetronics
  16,000
S$0.62
       9,920.00
6.0%
6.
GA Pack (HK)
    9,000
HK2.90
       4,790.00
3.0%
7.
Ho Bee Land
       300
S$2.05
          615.00
1.0%
8.
Warchest
  
              0.00
0.0%






Total



   174,054.00
100%

We are now slightly more than 1 month into the Circuit Breaker into the month of May.

While I feel a bit not used to working from home in the beginning, it's starting to feel like the norm now and I might just suspect I can do this forever if needed. Of course, it's still good to have the social interaction and breathe fresh air outside once in a while.



Ok! So for the month of May's update, I have continued to pump in capital in various couple of positions which I think provides good value.

What I am looking for is essentially dividend protection and potential near to mid term upside, so I am still avoiding companies like the airlines (ok I bought Delta in Mar and sold it off at a loss thereafter) or related companies like SATS and Comfortdelgro which I think has a longer runway to recover.

I bought into more Silverlake and Lendlease, which I detailed in a separate post.

I also bought Jardine C&C after they release their interim statement that their business is going to be significantly affected because of Covid. Their business model should recover earlier once consumer's demand is back to normal because they are going after the middle to upper class consumer. At a normalized yield of 6.1%, earnings yield of 12% and PER of 6x, it is also reasonably cheap for a potential rebound. Of course, it is all trailing right now but I don't think it will be the new normalized ratio in the next few years.

I also added a bit into Valuetronics because most of the manufacturing activities have resumed back. Also, with the strong net cash on hand (42 cents worth), they should have no problem maintaining their current high dividend payout to shareholders.

I've also added a small stake in GA Pack from the HK market based on their cheap valuation compared to historical. While dividend payout might be lower this FY, their significant exposure to the China market means they are likely the first few to recover (China is recovering swiftly and are starting to reopen their economies faster than the rest, pending no second wave).

2020 Networth Update

I've started the year with an equity equivalent of $106k (Link Here) when the STI indices was at 3,252. My goal back then was to achieve an equity equivalent of $200k at the end of the year and it was incredibly difficult to allocate capital when most of the companies are not cheap to begin with.

The unprecedented Covid pandemic has given that opportunity to investors who wish to accumulate at lower levels.

At one point in March, my portfolio was down lower by $30k+ from the February peak before it rebounded strongly after that. Both in March and early April, I was applying some leverage plays to take advantage of the cheaper valuation which thankfully has paid off nicely. 

Seeing the market has rebounded even more now, I have taken a conscious decision to remove the leverage play while still being 100% vested in the market. 

The portfolio is now at $174,054 worth while the STI is still ranging between 2,500 and 2,600 which I believe is still reasonably cheap. I will continue to pump in more capital this month when my salary and other income comes in.

Current warchest is completely depleted at 0%.


I'll write my thoughts in a separate article on why I think it's good to buy when the market is cheap (and not cheaper) because no one can ever predict the bottom of the market.

If anyone says they do, it is a chance of probability at most and you cannot be sure that the prediction is going to be right (no one knows that 23rd March will be the market low year to date for now).

In this regard, the strategy is to buy cheap, and continue to keep buying while the market gives us this opportunity.

Meanwhile, the sell in May and go away might probably takes effect which is probably what the market participants is waiting once again.


Thanks for reading.




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8 comments:

  1. Hi B,

    Could you share the rationale for the investment in Silverlake Axis. I read your article on LendLease but realized that there is none previously on Silverlake / except in 2015 when you commented that management might not be acting in the best interest of shareholder.

    Has alot changed since. I understand the value of the company in terms of captive market in banking backroom technology. But am suspicious of management at the same time.

    ReplyDelete
    Replies
    1. Hi Verseun

      Sorry for the late reply, apologies.

      I guess you already know and we'll versed the core recurring income that they have so I don't have to repeat again on that one.

      The company has very significantly reduced their reliance on intercompany transactions since the short seller report attack 5 years ago but they are still doing it. To be honest, what they are doing is not illegal because everything is on an arms length basis and they disclose it. What concerns me and the shareholders is perhaps seeing how much of those newly injected subsidiaries or acquisitions can be yield accretive to the business. Because of this, I still have my suspects when it comes to management.

      But apart from that I think good valuation to the underlying business and I like their deep end of the software supporting core.

      Delete
  2. Since your cash holdings are depleted, will you consider opening a share financing account, or do you think it's too risky at this stage?

    ReplyDelete
    Replies
    1. Hi J

      At this valuation, I think it's a bit half half, I'd like to see it going cheaper before considering to leverage again. At the moment, happy being fully vested while continuing my capital injection from my income next month.

      Delete
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  4. Hi B,

    What do you think about Silverlake Axis' recent price action? Seems like fundamentals alone do not seem to work for this stock at least in the short term.

    Regards,
    M

    ReplyDelete
    Replies
    1. Hi M

      I have a few lengthy discussion with some others on Silverlake on a personal email. You can email me if you'd like to hear the views.

      Delete
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