Sponsored Links

To retire by age 45, start with a plan.

"Is early retirement the right financial choice?" Jim Ellis discusses long-term financial growth strategies. I have blogged a...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.

Archives

"E-book" by AK

Second "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

Wilmar and China Minzhong: Time to go long?

Tuesday, June 5, 2012

My ill fated investments in Wilmar and China Minzhong are 30% and 45% down, respectively. The decision to be vested in these two counters were based on macro ideas and technically, they looked like they were resting on supports.

As regular readers know, I do not have cut loss prices and would seek to add to long positions if the technicals are favourable. Favourable? Yes, I look for higher lows in the momentum oscillators as share prices move lower.

Today, I added to my long positions in Wilmar and China Minzhong as their charts show me rising momentum oscillators while their share prices are retreating. The trading volumes have dwindled as well which led me to think that a floor could possibly be forming, if not the bottom.


Wilmar's share price is currently sitting on a golden ratio and if this should break, we could see $3.30 or even $3.08 tested next. Although the momentum oscillators are rising, the OBV is in decline which suggests that distribution activity is ongoing. I won't be too ambitious in adding to long positions.


China Minzhong's chart is similar to Wilmar's and if the Fibo lines I have drawn are any good, we could see 51.5c tested next. We could be seeing more selling although the the trading volume suggests that the action might not be as intense as before.

In both cases, it is not a good time to sell. Indeed, it would make more sense to stay vigilant for opportunities to buy in.

My strategy is to nibble and increase my additional purchases at lower prices if the technicals suggest that it could be a good idea. Of course, there is no way we can be absolutely sure and we can only call a bottom after it has been formed.

23 comments:

Ah John said...

Any view from FA perspective for Minzhong? I thought it is good but loss 33% too.

OT83 said...

Hi Ak,

Long time no post here! How are you? haha. I am sorry but the first thing that came to my mind when I see this post is "AK has deep pocket and can keep average down. So he will always win."

That's why small fry like me must strive to earn more captial :)

AK71 said...

Hi Ah John,

Well, I like the fact that the CEO is buying in and in no small amount too. His interests are aligned with shareholders'.

Fundamentally, the demand for China Minzhong's produce is robust. The higher capex which translates into higher capacity will drive sales.

Its numbers suffered really due to the late winter season which caused delays in the cultivation of important crops which account for a large proportion of the company's revenue.

What this means is that sales has been pushed backwards and we should see sales figure in the following quarter improving.

China Minzhong's share price is going through a rough patch but if my reading of the technicals is right, we could be near a strong floor, if not the bottom.

AK71 said...

Hi OT83,

I am doing OK. Thanks for asking. :)

Building up our reserves so that we can take advantage of mispricings in the market is definitely a good idea. You are on the right track. ;)

Ray said...

something funny happened today.
All indices around the world rose by 1 - 2% but SGX actually went into the red by noon. So strange... its like something in Singapore alone...

AK71 said...

Hi Ray,

Well, Mr. Market will do what Mr. Market does, strange though it may seem. ;)

Ray said...

I know Mr Market can be perverse sometimes but I have observed SGX always like to follow the HSI of HK. But today it went off wandering on its own. And without any bad news (that I can find anyway). Anyway, just ranting :)

AK71 said...

Hi Ray,

Absolutely and Mr.Market is more perverse today than usual. ;p

Unknown said...

Hi AK

These 2 counters are of goood fundamental, they are down because of China slowing down, as they are commoditiy counter.

I believe they are good for long. Do not feel bad, since their fundamental are good, we need not worry over it.

victor

AK71 said...

Hi Victor,

Thanks for the consolation. :)

Of course, it is never a good feeling to lose money but I have come to accept that it is a total package in investing. Overall, if we make more than we lose, we are ok and that is all I aim to do.

This is where my strategy of being mostly invested for regular income works. I can stomach temporary paper losses as I receive regular income from most of my investments.

We have to stay clear headed, more so in times of great volatility and having a more resilient portfolio helps. :)

Howyuan said...

No matter how attractive, i will still stay away from Chinese companies listed here and in other exchanges. I don't trust them.

:P

AK71 said...

Hi Howyuan,

Unfortunately, they do seem to have a reputation. Haha.. ;p

Do whatever you are comfortable with. Peace of mind is priceless. :)

JK Holdings said...

I bought China MinZhong and Wilmar for the first time at $0.545 and $3.46 .... Let's see how they go from here ... :)

Unknown said...

Hi

For long term invester , we are looking 10 years beyond, so we shd see beyond euro crises.

Thomas A Orecchio, said today's price is not your price, your price is 10 to 20 years from now, but unfortunately most market invester don't always see thing that way.


And in the mean time you still get to have your div. more of less.

This is no consolation, this is true. So why worry over it.

victor

Unknown said...

Hi

Just to share, stock big up move coming...read

http://seekingalpha.com/article/648561-financials-on-verge-of-a-turn?source=email_macro_view&ifp=0

victor

AK71 said...

Hi JK,

Nice entry prices. Good luck to us all. :)

AK71 said...

Hi Victor,

Thanks for sharing the link. :)

JCK said...

Just ventured into Chinaminzhong at SGD0.555

AK71 said...

Hi JCK,

Nice number. ;)

JCK said...

i hope the decimal jumps to make it nicer! :)

AK71 said...

Hi JCK,

Haha.. Yes, let us stay optimistic.

I believe that the selling is overdone and that the Company's share price would take some time to find support. At the current prices, there is a greater margin of safety. :)

JJ said...

Good day to AK & all,
Me in Chinaminzhong & Soundglobal hope they run soon. AK need your adv, any REIT with good price to invest now. Wondering .......which to picks? Thanks for sharing.
JOPY

AK71 said...

Hi JOPY,

I am not giving advisories here but if I had to choose one S-REIT to buy into now, it would be Sabana REIT. :)

Monthly Popular Posts

 
 
Bloggy Award