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The Little Book That Beats The Market.

Saturday, July 27, 2013

Thanks to a reader, Solace, for highlighting this great deal on a great little book:

"Being interested in finance at an early age is pretty difficult for me because of all of the complex terminology and concepts. My brother, who is in finance, suggested this for me because it is easy to understand. He was completely right, Greenblatt was able to explain market analysis so well a 10 year old could go out tomorrow and be able to choose stocks well."

"It is written for the non-financial professional, but all could learn from this simple, but powerful concept. Basic concept is to buy good businesses at attractive valuations. Unlike most investment books, however, it actually tells you how to identify a good business and what an attractive valuation is. It also does not promise this strategy will work in all markets, but if you stick with it over a 5 to 10 year period you will be very happy with the results. If you want to dabble in buying individual stocks, you should read this book!"

Buy this hardcover pre-owned at US$6.48.
Free shipping worldwide: 

Little Book That Beats The Market.


This book is from the same series as another book I recommended some time back:
Little Book of Value Investing.

Related post:
"Beating the Street" with value deals.

First REIT: Revelation. (Part 2- DPU increased 16.4%).

Now, many readers are curious to know how much have I invested in REITs but I have always been reserved for good reasons, as you can imagine. That has not stopped some readers from becoming more creative in their questions.

A reader lately suggested that I could reveal details for a small portion of my portfolio which might not cause too much personal discomfort and I think this is acceptable. 

Personally, I think it will also serve another purpose which is to show that I do not have as much invested in REITs as some might think.
So, let us start with when was the last time I did something to my investment in First REIT. It might come as a surprise but I haven't done anything to my investment in First REIT in a long time. 

The last time I bought more was in March 2011 at 73c a unit. It has been pretty much a buy and hold strategy for me although I did trade around my investment from time to time.

I have never bothered to really keep track of exact numbers but a back of the envelope calculation shows that I received more than $15,000.00 in income from First REIT in the last 12 months. I estimate the distribution yield to be about 10% on cost. 

At the moment, although it is not as important a consideration to me, there is also a paper gain of more than 70%.

So, you might agree that this has been a pretty good investment for income for me.

Some might wonder why I invest for income? 

Well, a big purpose of investing for income is so that our investments could help to pay for some of our expenses in life. 

Of course, the ideal situation is for them to pay for all our expenses in life.
For example, the largest expense item in my life really is my car and the income I receive from First REIT more or less pays for this including the car's depreciation which is more than $500 a month.

So, imagine if I did not put my money to work by investing in First REIT or some other investments which generate income, that money would probably have sat in my bank account collecting 0.125% per annum in interest in the last few years. 

Utterly miserable and the interest payments would probably not even be enough to pay for transportation by bus and the MRT for a year!

It is, therefore, not surprising that I still feel my investment in First REIT is for keeps although some might say that I should sell to lock in capital gains. Well, maybe if future conditions suggest that it could be a good idea to do so. 

For now, I will just sit back and relax.

Related posts:

First REIT: DPU increased 16.4% (Part 1).

Friday, July 26, 2013

First REIT declared a DPU of 0.86c. This is for the period of 22 May to 30 June 2013. This will be paid on 29 August 2013.

Including 0.99c paid for the period of 1 April to 21 May 2013, the total DPU for the quarter is 1.85c.



Gearing ratio: 33.4%

No debt will be due until 2016 once a fixed rate loan is finalised next month.

NAV/unit: 89.65c

Unit holders have to be prepared for more private placements as the REIT's managers have stated their intention to keep gearing at 30% even as they embark on future acquisitions and AEIs.

With unit price way above the NAV/unit, it is less expensive for the REIT to raise funds through issuing more equity now. As long as they are able to grow DPU in spite of a larger number of units in issue, I don't have a big issue (pardon the pun).

Like what the management has stated, despite a larger number of units in issue, DPU has grown 16.4% year on year. This means that without me having to invest more money, I am getting significantly more income from my investment in First REIT now.

Therefore, it would not be wrong to say that my investment in the REIT has been quietly growing a passive income stream for me without additional cost to me. 

This makes me happy.

See presentation slides: here.

"Beating the Street" with value deals!

A reader sent me an email to say that he missed out on both value for money deals on "Buffettology" which I blogged about yesterday. Is there another book I would recommend that is being offered at a special price?

Consider this:

"Whereas companies routinely reward their shareholders with higher dividends, no company in the history of finance, going back as far as the Medicis, has rewarded its bondholders by raising the interest rate on a bond. Bondholders aren't invited to annual meetings to see the slide shows, eat hors d'oeuvres, and get their questions answered, and they don't get bonuses when the issuers of the bonds have a good year. The most a bondholder can expect to get is his or her principal back, after its value has been shrunk by inflation." - Peter Lynch.

Get the book here:

Beating the Street

Beating the Street


Pre-owned copies at US$7.48 each.
Free shipping worldwide.
(New at US$19.66 each.)

Related post:
Good deal on "Buffettology" (hardcover).

Will CapitaLand build "almost inhuman" size apartments?

The statement by former CEO of CapitaLand, Liew Mun Leong, regarding shoebox apartments being “almost inhuman” is one of those things which will be remembered for a long, long time.

Now, in a bid to sell more apartments in rather challenging circumstances, will CapitaLand build smaller and smaller apartments including those which are "almost inhuman"?



"Almost inhuman" size apartments in Japan.

CapitaLand, Singapore’s biggest developer, may alter the size of its apartments as it seeks to improve affordability to combat government measures aimed at curbing speculation and lowering prices.

The developer sold 139 residential units in the island- state in the three months ended June, 31% fewer than in the same period last year, it said yesterday as it forecast “headwinds” in the near term with the housing curbs. (Source: Bloomberg)

Tough times for property developers in Singapore and, with interest rates set to rise, it seems that it will only get tougher.

Related post:
To rent or to buy: Rule of 15.

Has it become too expensive to keep that car?

If you are a car owner, you must have felt at some point that it is rather expensive to keep a car, especially if you are a regular guy like I am.

Is there some way to avoid the high cost of keeping your car? Oh, why not try destroying it? What?



This is pure madness. I don't understand.

Good deal on "Buffettology" (hardcover).

Thursday, July 25, 2013

My blog post this afternoon regarding a good deal on "Buffettology" was an unexpected success because all three copies of the book were sold in just a couple of hours. I didn't expect readers to be so enthusiastic during working hours.

I think I know who got the last copy of that special deal as I saw this on my Facebook wall:

董奕华: Left with last piece!!!

董奕华: AK sell you US$14. You want

Gunning for a 100% gain! Very enterprising!

Anyway, for those who missed out on that deal, here is another one. It is the hardcover version and only at US$3.00 more. Yup, the price is US$9.98 only. Free shipping worldwide.

This is a steal since a new paperback sells for more than US$20.00 a copy.

You got to be fast. Only three copies are available and I don't know how quickly this one will sell out:
Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the Worlds

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the Worlds


Related posts:
1. Good deal on "Buffettology".
2. Warren Buffett: The world's greatest money maker.

AIMS AMP Capital Industrial REIT: Higher DPU in future.

The numbers for 1Q FY2014:

DPU: 2.5c (payable on 20 Sep)

NAV/unit: $1.50

Leverage: 25.4%

Interest cover ratio: 5x.

The DPU of 2.5c represents 99.4% of distributable income per unit. DPU would have been 2.78c if the share placement at $1.60 a unit did not take place in May 2013. Bummer.

However, the share placement resulted in a stronger balance sheet which is prudent as the REIT embarks on redeveloping 103 Defu Lane 10 and Phase 2E & 3 of 20 Gul Way.

As a result of having more cash, higher property valuations and much lower debt of $279.0m which is reduced from $359.3m three months ago, leverage lowered from 34% to 25.4%.


Without asking unit holders for more money, the REIT's DPU is expected to increase in the next two years as:

1. Phase 2 of 20 Gul Way was completed seven months ahead of schedule and will contribute to income starting this quarter.

2. 103 Defu Lane 10 and Phase 2E & 3 of 20 Gul Way are likely to be completed in 2014.

OSK DMG estimates that DPU in 2015 upon completion of the projects mentioned will approximate 13.3c, everything else remaining equal.

See presentation: here.

Related post:
AIMS AMP Capital Industrial REIT: Interview with CEO.

Good deal on "Buffettology".

An example of what we will learn from this book:
Look for businesses with recurring revenues.  Having repeat customers means that long-term capital expenditures can profitably return capital. Invest in manufacturers! For example, if we want to buy a can of Coca Cola, we wouldn’t care where we buy it from.

Buy "Buffettology" pre-owned.

Only 3 copies available at US$6.98 each.

Free shipping worldwide.

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor


Related post:
Recommended books for FA and TA.

CapitaMalls Asia: Interim dividend of 1.75c declared.

Wednesday, July 24, 2013


CapitaMalls Asia is slowly and steadily improving its EPS and increasing its DPS. The latest results are encouraging and affirmed my conviction that this stock is going to be worth much more in a few years' time.

1H 2013 EPS: 8.2 c
1H 2013 DPS: 1.75c

Payout ratio: 21.34%.

The company's malls in China show a high percentage growth in NPI of 12.1% while malls in Singapore only registered a 2% NPI growth, reflecting the mature market here. The company's strategy of being in China and being there early is paying off nicely.

CapitaMalls Asia owns real estate and I would like to buy at a discount to the net value of its assets, if possible. The number to look at? Its NTA/share of $1.78.

Of course, paying a bit more for professional managers and also growth that seems to be in the bag is not an unreasonable proposition. In fact, at $2.00, some might say that it is hardly expensive. Indeed, annualising its 1H 2013 EPS would mean a PER of 12.2x. Fair? I think so.

After all, we have to remember that CapitaMalls Asia is not only a developer and owner of malls, it also derives a significant portion of its income from REITs in the family. This income stream is recurring and dependable.

However, I am also corrupted by TA and it is clear that the stock is in a downtrend which started in February 2013. That was also the last time I blogged about the stock. Resistance for the week is at $2.04.

Weekly chart.

If resistance at $2.04 could be overcome convincingly (i.e. with high volume), then, the downtrend would have been broken and exciting times could be in store for fellow shareholders of CapitaMalls Asia.

If things turn out to be less than exciting, well, I will be sure to dip into my war chests to accumulate at prices closer to or below NTA/share.

See presentation: here.

Related post:
CapitaMalls Asia: Reduced exposure.

Tea with Matthew Seah: POSB Invest-Saver Account.

POSB's newly launched Invest-Saver Account is a Regular Savings Plan that allows us to invest via a GIRO arrangement on a monthly basis.

No securities trading account or CDP account is required. 

All we need is a savings or current account with POSB.

It charges a flat fee of 1% per transaction.

For more information, go to:
POSB Invest-Save Account.
NEW LINK:  HERE.





My take? 

In a nutshell:

If we are putting aside between $100 to $500 a month, POSB Invest-Saver is a good choice.

If we are putting aside more than $500 a month, OCBC Blue Chip Investment Plan is a better choice.






See:
OCBC Blue Chip Investment Plan.

How much will my tea break and lunch cost tomorrow?

Tuesday, July 23, 2013

This is an impromptu blog post in response to a comment by a reader, Serendib, in an earlier blog post: here.


That is how much my tea break and lunch will cost tomorrow. Yup, a grand total of $1.00. Actually, it will be less because I will get a 5% rebate from the SMRT Pay Wave VISA and I will also get a rebate from being a NTUC CO-OP shareholder. If you can see me now, I am smiling.

Tea to be provided by the office pantry, of course.


I am quite looking forward to having this tomorrow. In fact, I am tempted to eat one now but I shall resist! Yum, yum.

Tax paid with Citibank Dividend Card.

It is a once a year affair. Got to pay Road Tax for my car:


I paid at an AXS machine this evening and was pleasantly surprised to find that I had a choice of paying with a DBS or a Citibank credit card too.

So, I paid with my Citibank Dividend Card and I guess tonight's dinner at the food court was free! That makes me happy!

I used to NETS it using my POSB ATM card. Things have changed for the better.

NeraTel: A voluminous day of fear.

Monday, July 22, 2013

There is lots of fear in the air for some people trading the stock of NeraTel today. I won't be surprised if some people lost money as well. Why? A long black candle was formed on the back of relatively high volume. There must have been some panic selling as share price touched a low of 74.5c before closing at 76.5c.

However, this could be good news for some. Who? For people who have been waiting to buy into NeraTel because of its strong fundamentals and attractive dividend, of course.

The question on their minds might be whether it is the best time to buy now?


Well, if we remove the word "best" from the question, then, it becomes easier to find an answer. Linked to this, ask what is our motivation for investing in NeraTel.

My primary motivation for investing in NeraTel is for income. It was not to trade the stock. However, with the rapid and significant rise in the share price, I turned partial trader by reducing my long position in the stock last week.

As my primary motivation for investing in NeraTel is unchanged, the dramatic pull back in share price is a boon for me as I bought back what I sold recently. This means that the planned passive income from NeraTel's dividends in my portfolio is now restored.

Of course, I received a nice little bonus from trading around the investment as well. Quite happy to get some pocket money from Mr. Market, for sure.

Next question, will I increase the size of my long position in NeraTel at current prices?

Well, I think it is now common knowledge what NeraTel's full potential is. Apart from impressive growth potential, it is also a net cash company with a recurring income base. So, it is a stock anyone investing for income and growth would be attracted to. For anyone who is not in the know, I have provided links at the end of this blog for further reading.


Technically, a weak immediate support is at 76c. This is followed by the rising 20dMA which approximates 73c today. Failure of the support provided by the rising 20dMA to hold means a possible decline in share price to 66c.

Fundamentally, at 66c, we are looking at a PER of less than 10x once more and an estimated dividend yield of 6.06%. So, expectation for strong support at that price is not premised only on the technical picture but also on more attractive numbers.

I will be adding to my long position if supports are tested.

Related posts:
1. NeraTel: Trading around an investment.
2. NeraTel: A very good investment.

Tea with AK71: Wah! Your car is SO big!

Some people drive big cars:





So big that a single parking lot is not enough.

The inconsiderate, selfish and idiotic people like this driver are why the world is in such a mess!

KNS!

Marco Polo Marine: Bracing news from Indonesia.

Sunday, July 21, 2013

Some news from Marco Polo Marine's subsidiary, PT Pelayaran Nasional Bina Buana Raya Tbk:


1. They are seeking to purchase another new AHTS before the end of 2013. I like this because this will allow them to capitalise on the higher rates in Indonesia more rapidly.

2. The management is projecting at least a double digit growth in revenue and profits in 2013!

Things are looking pretty good and the Indonesian growth story is cruising ahead at full steam.

Would I buy more of Marco Polo Marine's stock?

If Mr. Market is willing to sell to me cheaply again, why not?

Related post:
Which stocks have I been accumulating in June 2013?

Reference:
RESUME HASIL PAPARAN PUBLIK TAHUNAN

OUE Hospitality Trust: Considerations and comparisons.

Some might be more interested in OUE Hospitality Trust than SPH Trust because the distribution yield the former has promised is higher at 7.46% compared to the latter's 5.79%. 

Although the two are not strictly comparable since they are holding different types of real estate, let us look past that for now and just concentrate on the numbers to see which one is a better deal.

Mandarin Hotel.

OUE Hospitality Trust is being offered at a small discount to NAV while SPH REIT is being offered at a small premium to NAV. Oh, I like a discount!

OUE Hospitality Trust is going to have a gearing level of some 32.8% while SPH REIT's gearing level is 27.3%. Oh, I like SPH REIT more now because its gearing level is lower.

Leverage, of course, makes it harder to see the underlying yield. If we were to remove leverage and assume that there was none, we see that OUE Hospitality Trust approximately yields 5.62% while SPH REIT yields 4.55%. The former still gives us 1.1% more a year!

SPH REIT's Clementi Mall.

OUE Hospitality Trust has 2 properties and apparently they have 44 years left to their leases. SPH REIT has 2 properties too. The Paragon will have a fresh 99 years lease while Clementi Mall has a few years lesser than that. I like longer leases, for sure.

So, although OUE Hospitality Trust is able to generate 1.1% more return per year compared to SPH REIT, the life of its assets is less than half of SPH REIT's, assuming the status quo is maintained.

Ariake Sunroute Hotel
OUE Hospitality Trust is a stapled security and not a REIT per se. I have blogged about Ascendas Hospitality Trust before which is also a stapled security. For anyone who might want to find out more about this, I have provided the link at the end of this blog.

Like OUE Hospitality Trust, Ascendas Hospitality Trust also had its IPO priced at 88c.

Ascendas Hospitality Trust last traded at 85.5c which is still at a slight premium to its NAV. At 85.5c, it has an estimated distribution yield of 8.57% and a gearing level of about 35%. 90% of its assets are in Australia and Japan. These are freehold in nature!

AK is just talking to himself.



Related posts:
1. Ascendas Hospitality Trust.
2. SPH or SPH REIT?


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