CH Offshore:Vessel charter not renewed
Here is an update for CH Offshore share holders. One of their 4 year charter vessel will not be renewed by the charterer.
Of note is that it should not hit the profitability of the soon to be closing financial year but would likely impact the next financial year as the charter rates are much lower.
Hard up on cash? Do Extreme Couponing!
Finding it hard to feed your family? Couponing have been around a long time for retail shops to make it easier for price conscious shoppers to identify themselves and yet still able to buy the products.
But what I never anticipate is how much effort some people will spend on it. So much so that they got a whole boot load of free products to sustain their living. And I really mean FREE.
This isn’t for everyone but the absolute price conscious. You would have to take a look at the effort they spend to find coupons in dumpster, collecting them, cataloging them (These ladies can be my secretaries really)
Now my question is can this ever be done in Singapore haha!
Investment Moats Portfolio Update April 2012
Some readers asked since January what did I add to my portfolio. Not much really.
( Click to see larger table)
I basically added some of CH Offshore, Adampak, Kian Ann and Global Investments Limited.
Adampak, was a short 55% gain, and I didn’t even start accumulating. CH Offshore did really well recently.
Global Investments Limited was a rights issue. I subscribe to 5500 rights and 11500 excess rights.
( Click to see larger image)
Here is what I am currently on. Those grey out rows with cost zero are holdings that I sold, but you can take a look at the gains/losses and dividends derived.
Markets have ran up a fair bit but as we are speaking, Europe is down big time. They say sell in May and go away. I really believe there is a seasonal effect. You can take a look at this article.
How you can make use of it is to delay your purchases to that period of May to Sep. Of course, you see a true bargain, determine your margin of safety, price sentiments (if you get the hang of it) and go for it.
You can always follow my portfolio over here at my Stock Portfolio Tracker. Its pretty neat to track stocks based on transactions that you intend to hold for long time. And its free.
Notes to Margin of Safety–Seth Klarman
Seth Klarman is not a name very well known in our part of the world but he manages the Baupost Group, which is one of the top 10 hedge funds by net gains since inception, which was in 1983 (29 years).
Most of the top hedge funds that we see are usually quantitative, momentum based managers, so for a value manager to have such a great record in the long run he must be doing something right.
Seth wrote a famous book Margin of Safety which was written in 1991 and now out of print. The hard cover book is so coveted that people bid up to $1000 to get their hands on it.
Ronald Redfield though, provided here a great summary of what is written in the book.
This summary is great and touches on the psyche that money managers require, what he thinks is the best way to interpret fundamental figures, valuation as a whole. But above all the theme of his book was that the future is unpredictable and as a money manager you should look at your downside, risks and safety more than the upside.
Understand why things work. Memorizing formulas give the appearance of competence. Klarman describes the book as one about “thinking about investing.”
“Investors in a stock expect to profit in at least one of three possible ways:
a. From free cash flow generated by the underlying business, which will eventually be reflected in a higher share price or distributed as dividends.
b. From an increase in the multiple that investors are willing to pay for the underlying business as reflected in a higher share price.
c. Or by narrowing of the gap between share price and underlying business value.”
Don’t confuse the company’s performance in the stock market with the real performance of the underlying business.
“Think for yourself and don’t let the market direct you.” “Security prices sometimes fluctuate, not based on any apparent changes in reality, but on changes in investor perception.” This could be helpful in my research of the 1973 – 1974 period. As I study that era, it looks as though price earnings ratios contracted for no real apparent reason. Many think that the price of oil and interest rates sky rocketed, but according to my research,that was not until later in the decade
He discusses choosing a discount rate. He states, “A discount rate is, in effect, the rate of interest that would make man investor indifferent between present and future dollars.” He mentions that there is no single correct discount rate and there is no precise way to choose one. He explains that some investors use a generic round number, like 10%. He claims it is an easy round number, but not necessarily the best choice. He emphasizes to be conservative when choosing the discount rate. The less the risk of the investment, the less the time frame, the less the discount rate should be. He explains, “Depending on the timing and magnitude of the cash flows, even modest differences in the discount rate can have a considerable impact on the present-value calculation.” Of course discount rates are changed by changing interest rates. He discusses how investing when interest rates are unusually low, could cause inflated share prices, and that one must be careful in making long term investments.
If you see a company selling for what you consider to be a very inexpensive price, ask yourself, “What is wrong with this company?” This reminds me of Charles Munger, who advises investors to “invert, always invert.”Klarman mentions, “A bargain should be inspected and re-inspected for possible flaws.” He indicates possible flaws might be the existence of contingent liabilities or maybe the introduction of a superior product by a competitor. Interestingly enough, in the late 90’s, we noticed that Lucent products were being replaced by those of the competition. We can’t blame the entire loss of wealth on Lucent inferiority at the time, as the entire sector followed Lucent’s wipeout at a later date. There were both industry and company specific issues that were haunting Lucent at the time.
Notes to Margin of Safety – Seth Klarman 1991
Let me know what you think.
First REIT:Q1 2012 Result
First REIT continues to announce a stable set of results for the first quarter.[Results here] A distribution of $0.0776 works up to a yield of 2.09% for the first quarter and an annualized yield of 8.4% at the current share price of $0.92.
A note to investors is that for this quarter and the last 2 quarters, they have been distributing a one time gain from the sale of their Adam road healthcare building. Thus the dividend yield is higher. Without those the quarter dividend yield would have been $0.0158, 1.7% and annualized $0.068, 7.4%.
That is still a pretty good yield although the share price have ran up 20%.
Net Debt to Asset remain at 10% making this one of the lowest geared. They can pay off their debts with 2.2 years of their profits if undistributed.
Net Asset Value per share is $0.799 versus a current share price of $0.92. The price to asset value have gotten ahead of itself and does not look that cheap now.
I am speculating a rights issue or a share placement soon. First REIT wants to add 15 hospitals in the next few years and with the share price appreciation, they would have a lower hurdle rate in terms of finding yield accretive assets.
At $0.77, they would have to find assets yielding greater than 8.8% in order to boost the dividend per share. Now they just have to find assets yielding greater than 7.4%
At a low share price, due to the hurdle rate to find yield accretive asset, it is likely that current share holders would be diluted and appears unfair to current investors.
I run a free Singapore Dividend Stock Tracker . It contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly here.
