Posts
One of the things that I like to do is to buy into what looks like a fundamentally sound business when insiders are accumulating. One such stock which has amply rewarded me over the years is Hock Lian Seng.
I already had a small position in Hock Lian Seng but decided to buy more in 2011 when I observed insiders buying. Back then, I paid 24c a share.
Fully confident that the company would be able to continue with a dividend per share (DPS) of 1.5c, I was looking at a dividend yield of 6.25% back then. That was in October 2011. Read blog: here.
A few months later in February 2012, Hock Lian Seng declared a DPS of 2c which translated to a dividend yield of 8.33%! That it represented only 32.8% of earnings was pleasing.
They were retaining earnings which increased the value of the stock. Read blog: here.
In both 2013 and 2014, Hock Lian Seng declared a DPS of 1.8c. In between, I had an opportunity to add to my investment, paying 26c a share in May 2013, confident that a DPS of 1.5c remained undemanding. Anything more would have been a bonus. I was not disappointed. Read blog: here.
Almost a year later in February 2014, Mr. Market gave me a chance to buy again cheaply. That time, I paid 25.5c a share. I would have liked to accumulate more later on but Hock Lian Seng received positive media coverage by end of 2014 and its share price quickly rose. Read blog: here.
In 2015, Hock Lian Seng declared a DPS of 4c! Mr. Market's exuberance went through the roof!
I cautioned that the 4c DPS was a one off event and unlikely to be recurring as Hock Lian Seng saw its share price rocketing.
Too many analysts and investors were waving the 4c DPS around as if it was a regular event.
I won't be surprised if there were many newly minted Hock Lian Seng investors that year.
I did not add to my investment but, throughout the buzz, I held on to my investment and enjoyed a dividend yield of 15.38% to 16.66% that year. Read blog: here.
In 2016, Hock Lian Seng declared a more normalised DPS of 2.5c. Mr. Market wasn't enthused and its share price reflected the mood. However, its share price did not go below 30c. If it did, I would have bought more.
Of course, it stands to reason that Hock Lian Seng should not trade at below 30c a share. It is a more valuable company today than it was in 2011 from retaining earnings for so many years.
Yes, on top of the dividends I have received over the years from Hock Lian Seng, my stake in the business has also appreciated in value. The total return has been more than satisfactory.
Hock Lian Seng's sound fundamentals might have caught the attention of Mr. Market and its share price recently went ballistic.
I talked to myself, I listened and I acted accordingly. Spooky!
Hock Lian Seng could possibly announce a DPS of 2.5c sometime in the near future. Based on 52.5c per share, that would give a dividend yield of 4.76%.
Based on my cost, however, I would get dividend yields of 9.6% to 10.4%.
Wait a minute, since my remaining stake in Hock Lian Seng is free of cost, what should my dividend yield on cost be? Alamak. How to calculate like that?
I shared in a blog many years ago that my investment in First REIT was for keeps. To be fair, there are a few other investments in my portfolio which I feel the same way about.
My blog is not very cerebral in nature because I am not a very intelligent person. I am not being modest here. I am being honest.
Not being very intelligent, I hope to be rewarded by simply staying prudent, pragmatic and patient.
I believe we don't have to be smart to be rich. If AK can do it, so can you.
Related posts:
1. First REIT: This one is for keeps.
(In five and a half years, I would have recovered my capital. )
2. Don't have to be smart to be rich.
3. Robust order book at 3 year high.
Bloggy Award
22 comments:
Hi AK,
Have delved into these construction gems in 2015.
I checked the whole list and finally just bought Sim Lian :)
It is a shame that it is privatized at a lower price, otherwise I believe it will certainly be a more rewarding investment!
Also tried Low Heng Huat, but seeing that Singapore property market is beginning to fall, the construction sector may be weaker in the coming years, I exited finally...
Hi AK,
Nice play there! I would sell half and let the remaining 'freehold' continue to generate income for me too.
Been reading your blog regularly and find your posts informative. Keep it up.
You are one of the blogs in my reading list.
Regards,
JASS
https://justasingaporeanson.blogspot.sg/
Hi redponza,
I like to think that even during bad times, there are opportunities in construction.
In Singapore, those opportunities would take the form of MRT lines, airport expansion, roadworks etc. Public works.
Hock Lian Seng should continue to benefit.
Hi JASS,
Welcome to my blog.
I am glad you like it. :)
HLS declared 10c Special Dividend and 2.5c Final Dividend.
Total DPS: 12.5c.
http://hlsgroup.listedcompany.com/news.html/id/570181
http://hlsgroup.listedcompany.com/news.html/id/570179
I said this on FB:
I sold half my investment at lower price earlier this month.
Those who are chasing HLS higher now might get burnt.
Ask how much is HLS worth after payout of bumper dividend?
Logically, NAV will decline 12.5c.
Something like this happened before a few years ago.
History could repeat itself. Deja vu.
Hi AK,
I have been reading your blog and have written to you before so I am not new to your blog or bias or whatsoever
I noticed you shared more winners than losers, and honestly in my opinion, you have painted a picture as if investing in shares is a piece of cake. Maybe you experienced this way but this is not entirely true. You are able to do it better because of your many years of investing in the market, plus your character which helped you to stay rational in your decision making. Statistically, there are more losers than winners.
I am aware you do not blog for income, as you have already achieved financial success,and I also aware that you are a good person, from the donations you made. However, please bear in mind your action, as a successful blogger, influence others. Hence, please be mindful what you blog. Bu yao hei ren rather than bu yao hei wo.
Just my thoughts.
Hi W Y,
I have my share of investments that have gone bad. Marco Polo Marine, SMM and SembCorp were a few, off the top of my head, but I have also blogged about how I managed my exposure and sized my investments, good and bad.
I also blog about my philosophy and the importance of mastering psychology, our fear and greed, as investors. I can only hope that I have been clear enough in those blogs.
What I have achieved is not based on investing in stocks alone although it is an integral part of my journey and I have shared my journey here in my blog.
It is obvious from the topics I blog about that I believe we should be holistic in the approach towards wealth building and in this way, hopefully, there will be more winners than losers.
Hi AK,
Thanks for the response.
As you are aware, there are many types of people, or readers out there. And many do not have the correct attitude nor knowledge to discern. Hence I wrote to you to be mindful on the impact that you can create. I know you want to create a positive holistic approach on wealth building, that is why I take time and courage to write to you after pondering for a while. I do not need to if I do not care, agree?
Of course, it is entirely your decision on what you like to share and what you choose not to, and I have no right. But as an unbiased reader, I believe I know where you are coming from and I hope it is my mistake because I sincerely believe you do not need to do that. I hope the world and the financial markets are really a better place altogether.
But just be very mindful that there are a lot of readers with different characters out there. And because you did not disclose enough your portfolio returns, it is not a correct way to measure performance and it might mislead others.
Just my suggestion. I recognized many of your other topics are holistic and I applaud that. However, on your personal investment, either you choose to share in details or just keep it a secret if you are not comfortable. Do not try to create the "wow" factor, this is dangerous and mislead others. At the end of the day, I believe you want to create the right impact or influence to the community, teach them how to fish/invest rather than getting tons of message like "Can I buy this stock" "What do you think about this stock" "What should I do with my stock" etc kind of messages. In my opinion. those that asked such questions are in dangerous zone, they do not know what they are doing with your hard earned money. You get what I mean?
I applaud and enjoy most of the topics you have contributed and I hope there are more meaningful articles out there in the blogging community, helping others to grow in their wealth building knowledge. It is probably less common for bloggers to share their mistakes to help the community to see how one can avoid making mistakes. But then, mistakes contains so much wisdom that one can learn. On the other hand, sharing positive experiences serve more like a motivating factor, making others believe they can do it (even without the hard work), creating idolization and making one like "God". I am not sure if you can appreciate my statement. I do not mean to be disrespectful, I am just sharing my thoughts.
Like I said, my intention is to help create a positive environment. I knew you are one that is in alignment, hence I write to you. And I am certain that I am right you are a kind good person because you can ignore and delete my message, but you did not and yet you published it. Also, I would not done so if I do not think the suggestions will be accepted. I am not one who will waste my precious time. Somehow, I hope my righteous will not get me into trouble one day : )
Have a good weekend.
Hi W Y,
Thanks for taking the time and effort to pen the comment. I appreciate it.
Unfortunately, I cannot cater for all the different types of readers out there. As a hobbyist blogger, blogging has to be an enjoyable activity for me. If I have to shoulder responsibility you have mentioned, it becomes onerous and I don't think I would enjoy it anymore, especially when I am not even being paid to do so.
I have sounded caution on various occasions in my blog and on FB. In this comments section, you will see I sounded caution on why readers should not chase HLS share price higher, for example. It was something I shared on FB and I reproduced it here for readers who don't follow me on FB.
Here are examples which you might approve of:
1. Manageing exposure in investment: Some examples.
2. Investing for income and position sizing.
I even say that some people are not ready nor suitable to be investors and I was criticized for it by a prominent local financial blogger and some other people. I pretended not to know. In retirement, I try to lead a life without stress.
3. Is investing in stocks suitable for you?
I am a lazy person. I planned for an early retirement because I am lazy. In retirement, I spend time on hobbies which includes blogging. If blogging has such scary consequences, I should seriously consider a second retirement. A retirement from blogging. :(
Hi AK,
Thanks for taking time to clarify, I am right about your good heart : )
I am convinced that you do what you preached, you are a prudent investor after all. You manage your portfolio and risk well. I came across blogs which preached value investing but they are traders by action. Because you made an impact, I thought I should share how I feel and more can be benefited.
Wish your blog continue to be the number 1 financial blog in Singapore, and more readers can learn the rope of investing from you.
All the best.
Hi W Y,
It is a jungle out there and my blog is part of the jungle. We have to be careful when going through a jungle and, hopefully, we don't get hurt in the process.
I am a lazy fellow and don't fancy a job as a jungle guide. ;p
I think I will blog about this another day. ;)
Hock Lian Seng up more than 6% today! Strange that SGX did not launch trading query. :P
Hi Kevin,
I hope those who are chasing HLS higher won't get burnt. -.-"
Hi AK,
I divested a portion of my investment too. Stock is overbought maybe due to the fact that Budget 2017 announced plans to bring forward $700 million in public sector infrastructure projects in the next two years. However, the OPEX will increase too due to manpower levy hike for construction firms.
Nonetheless it is a very well managed company with a easy to understand business model. Net profit margins are constantly crossing the 20% mark for the past few FYs. It has a cash pile of over 200 million dollars for a purpose as the nature of the business requires high CAPEX/OPEX.
Hi Kevin,
There is no accounting for Mr. Market's sentiments.
We will do well enough in the longer term, knowing the value of the business we are invested in and paying nothing higher than a fair price for it. :)
Now HLS is at all time high, do you still think it is a value buy to go long term? Thanks
peter
Hi Peter,
I sold half of my investment and my remaining position is free of cost.
I might have confidence in HLS to do well over time but my investment is now risk free.
If you are getting in now, paying a much higher price, you have to be aware that you could be overpaying and you have to ask yourself if you are able to stomach a plunge in its share price if it should happen.
The Financial Monkey said...
Hi AK,
You have talked to yourself about how you price stocks at their fair value, however, if Mr. Market decides not to share the same sentiment and the stock price continues to dip, will you ever have an exit? If so, how do you know what price you should exit at?
AK said...
Hi TFM,
Valuation is not an exact science.
There are so many methods and you have to decide on what is suitable for your purpose.
I have blogged about valuation before on and off.
Generally, we want to buy at prices we won't sell at and sell at prices we won't buy at. ;)
Reasons could be both quantitative and qualitative.
There are so many blogs to choose from but, as a case study, you might want to read my blogs on Hock Lian Seng on why I bought in, sold some and hold some.
This blog is probably a good place to start:
http://singaporeanstocksinvestor.blogspot.sg/2017/02/hock-lian-seng-returns-100-and-more.html
Read the related post and follow the hyperlinks to my other blogs on Hock Lian Seng in the related post too.
Remember, it is just me talking to myself. :)
Reader said...
Hock Lian Seng 34 cents. :o
Hi AK,
Good Day.
I need to be appreciative & must say a BIG THANK YOU to you.
Hock Liang Seng is $0.3 now.
Dont know why.
But i dont need to know:-)
Just hope it will go steady.
Best Regards
David
Hi David,
Alamak, why thank me?
It has nothing to do with me.
Honest. :)
Post a Comment