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What did AK buy in the stock market in the last 12 months?

Tuesday, April 28, 2015

A reply to a fellow blogger inspired this blog post as I looked back at my "nibbles" in the stock market in the last 12 months (since May 2014). They are:

1. Ascendas Hospitality Trust
2. Wilmar
3. Soilbuild Biz Space REIT
4. SembCorp Industries
5. SembCorp Marine
6. OUE Limited
7. ST Engineering
8. SATS
9. Accordia Golf Trust
10. WingTai
11. Marco Polo Marine
12. Singapura Finance
13. Hong Leong Finance
14. NeraTel
15. PREH

16. Yongnam


Quite a mixed bag.

I am sure all of us have our reasons for our investments. To be doubly sure, it is always good to see if we are able to articulate the reasons through writing, even briefly, and see if they make good sense.


Ariake Sunroute.

From the list, it is clear that there is a slant towards investing for income but with less reliance on REITs and business trusts. Although I turned cautious some time ago on REITs and business trusts as their valuations became less compelling, bearing in mind also that they distribute most of their income to unit holders, leaving little to fund growth or to pare down debt, I still believe that they remain relevant instruments for the income investor. The REITs and business trusts in the above list are #1, 3 and 9.

I continue to like NeraTel (#14) for income and potential growth. I added to my position as its stock price declined not too long ago. I believe that a DPS of 4c is undemanding and could be maintained as there are indications that future growth will be funded through debt. A judicious amount of leverage is good for the company if they are able to improve ROE.

I also increased my investments in selected blue chip companies as their stock prices declined. I believe that their businesses are going through temporary bouts of weakness. These are companies which are likely to do well in future, current rough patches notwithstanding, and are unlikely to go kaput in the meantime. They also pay dividends and I like to be paid while I wait. These are #2, 4, 5, 7 and 8.


SembCorp Industries.

As interest rates are rising, financial institutions are likely to do better. I increased my investment in Singapura Finance (#12) and also initiated a position in Hong Leong Finance (#13) on weakness in their stock prices. Interest income accounts for about 80% of their total income as compared to 60% for banks. I believe that earnings will likely improve as interest rates normalise (i.e. rise) in future. Trading at a fair bit of discount to their NAVs, they are also known to pay meaningful dividends. I am quite happy to be paid while I wait (again).

There are a handful of investments which I made in property companies in the last 12 months. These are #6, 10 and 15. Although things are likely to remain challenging for them in the near term, I chose to invest in these three companies because of rather specific reasons apart from the fact that they are pretty undervalued relative to their NAVs. In short, I believe that there could be specific catalysts for each of them to do better in time to come. Built on expectations with margins of safety, these positions are smallish in size.

Marco Polo Marine (#11)  and Yongnam (#16) are probably not going to pay dividends for a while. They were both relatively big investments for me at one time or another but they were pared down under different circumstances. As their stock prices suffered, I feel, excessively from Mr. Market's pessimism, I added to my much reduced long positions recently. Both companies are trading at huge discounts to valuations and have potential catalysts which could excite Mr. Market again in future.


Marco Polo Marine.

CONCLUSION

I will continue to receive meaningful income from my investments in the stock market this year even if stock prices should decline. As long as the businesses I am invested in are able to do well in future, I should stay invested, have a war chest ready and buy more on weakness. If valuations do not become more compelling, I will simply channel dividend income to my war chest. There is nothing wrong with sitting on money and doing nothing if nothing is worth doing.

I have a handful of positions which I feel are more speculative in nature and, although they could turn out to be hugely rewarding in time to come, I have been careful to size them appropriately. In total, they do not cost more than what I could recover easily within a year from my other investments in the stock market.

It doesn't matter how big or small our portfolio is. If we are clear minded as to why we are invested, if we have a war chest ready and if we have sized our positions appropriately, we should be able to sleep well at night. Having peace of mind is most important.

Some related posts:
1. Ascendas Hospitality Trust: A nibble.
2. Soilbuild REIT: A nibble.
3. Accordia Golf Trust: A yield of 12.16%?
4. AK went shopping in the stock market.
5. OUE Limited: A nibble.
6. Incomplete analysis of Wing Tai Holdings.
7. PREH: A nibble?

12 comments:

blazingruby60 said...

hi AK
May i ask at what price did you nibble at Hong Leong Finance? Have been eyeing HL for a while :)
thanks and as always enjoy reading yr views

AK71 said...

Hi Blazingruby,

Don't tell you. LOL. ;p

Seriously, don't let my buy price affect your decision but it is not far from the current price. ;)

Sillyinvestor said...

AK,

maybe I should write a blog post about what did SI sell in the last month. LOL

I sold:

Singshipping
China merchant pacific
Lippo mall
ST engineering
Sembcorp industries
Venture
Ascendas Reit

ST, sembcorp and Lippomall to reduce exposure and risk

The rest to take profits.

LOL

blazingruby60 said...

meaning HL is overpriced now :(

blazingruby60 said...

oophs did u say not far...:) :) shall wait for correction then ;)

Cory said...

Wingtai is HK developer. Looks like privatization won't work for them unless someone local buy them over.

TX said...

Hi AK,
I'm one of your fan & always enjoy reading your blog.
Do you think NaraTel's biz is being challenged? I have noticed the MRT & ATMS are already changed to veriphone system, no longer neratel. I have no idea what happen to them. I would like to know your view on this.Thank you

AK71 said...

Hi TX,

Alamak. I am glad you enjoy my blog but don't be a fan. I am asthmatic. too breezy not good for me. ;p

I am sure there will always be competition. It is only natural.

We will have to follow NeraTel's quarterly reports to see if they are still doing well in future.

Unless there is some permanent damage to their business, I think the logical thing to do is to stay invested.

TX said...

LOL!!Thank you for your advice :)

AK71 said...

MAYBANK Kim Eng has maintained its "buy" call on Wilmar International as its top sector pick with a target price of S$4.04.

This comes after Wilmar posted a 49 per cent year-on-year jump in net profit for first quarter FY2015, spearheaded by strong soya-bean crushing margins, better associate contributions and a reversal from huge foreign-exchange losses last year.

Part of this was negated by Tropical Oils weakness.

"We expect crushing margins to remain decent in first half of 2015. Operating conditions for crude palm oil plantations and refining could remain difficult in the near term but we expect margins to improve as Indonesia implements its biodiesel policies.

"We believe Wilmar's integrated business can better withstand commodity-price volatility. It remains our top sector pick. We leave earnings per share and target price unchanged, at 15 times FY2015 price earnings, its 5-year average," Maybank Kim Eng said.

Source:
http://www.businesstimes.com.sg/stocks/brokers-take-buy-call-maintained-for-wilmar-international

Tee Tee said...

Ak, are you still holding Croesus REIT?

AK71 said...

Hi Tee Tee,

Yes, I haven't done anything to my investment in Croesus Retail Trust. Is there any reason why you asked?

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