Followers

Profit taking Jan 2020...... Recalibrating risks

Woke up one morning, I was shocked to read about the US killing Iran's top general on Iraq soil. Few days later, Iran started firing ballistic missiles into US Green zone in Iraq. Those event unfold so quickly that it really shook my confidents in the recently bull run. Looking at my portfolio, I was almost fully vested in the market. My huge positions in the market during this "brink of war" posed a risk that I'm not ready to stomach at this moment.



So I decided to sell some counters to rebalance my portfolio. I thought maybe raising cash and wait for better entry moment was a wise choice to make, however the stock market did not yield to the world events. It recovered very quickly when Trump announced no casualty and calm the market.

Keppel. Bought at $5.84 lowest, sold at $6.80.



OCBC. Bought recently at $10.95, sold at $10.95.



Sembcorp. Bought at $2.21, sold at $2.29.



Lam Research. Sold 50% at $294. Cost price at $271.



Alibaba. Sold 10% at $213. Cost price at $172.



At the end of the portfolio rebalancing, my cash holding increased from 5% to 16% in 10 days. Total profit from my completed trade was $13,860.

It may seem like a wrong move to take profit so quickly as the market recovered. It having a very strong start of the year. But I felt too exposed to the tension in Middle East. Raising some cash to manage my risk. I still have about 10 counters in my portfolio, I want to see how far they can run in this bull market before deciding on my next move. Not planning any more trade at the moment. Ciao!

-WILLIAM CHENG


Click on the links for more interesting articles:

Investment Psychology....Investor's worst enemy

ALIBABA HK IPO..... (Investment Profit Overdrive)

Boom and Bust in 2019 revealed

KEPPEL KBS US REIT...... Take the JUMP!

CAPITALAND....... Land of Capital Growth

Investment Psychology....Investor's worst enemy

Why we are so emotion when come to investing?

Well, that's because "MONEY" is involved when making an investment. All of us has great emotional attachments toward money. Especially when you invest with your hard earned money. That's your blood and sweat hardcore money. Your emotions can influence your decisions in every steps of investing, from deciding what to buy, when to buy and when to sell. People make dumb decisions in investing due to their rational thought was clouded by irrational emotions. You need to be "emotionally intelligent" to mastered the "Game of Investing". 4 deadly emotions that you need to avoid when investing: Fear, Greed, Ego and Affection.



1. Fear. 


"Buy low, Sell high" is the best investment advice that you ever heard on the street. But how many of us really doing that? Instead, most of us are doing just the opposite due to peer pressure. Welcome to the "herd mentality" exclusive club. Chasing the ever rising share into bubble and panic selling to exit the gate of hell. That is the "Psychology of Fear". When the wave of bad news hit the market, everyone started throw in the towels, what would you do? Would you start selling out of fear that you may lose even more, or would you start buying like Warren Buffet did during the 2008 financial crisis? In every market correction, the drop in share price usually started at slow rate. It will continue to accelerate. When the fear reached the pinnacle, that is when the peak of panic selling sank in, the price will dropped the most and usually followed by huge gap down at market open. This phenomenon also marked the end of correction phase if the stock managed to recover on the same or next day. When its happened, I would said that is the worst time to sell your stock. Hold on to your guts, be contrarian. You should start buying instead if you could overcome the fear factor. It is easier said than done when so much fears in the market. When all the analysts start cutting forecast about the economy, would you dare to overcome your fear and to be a contrarian?          


2. Greed. 


Another herd mentality that could be deadly is Greed. If you talk to any technical analyst, they will tell you that a stock price that reached the peak and breakout will go much higher regardless company's valuations. That is because everyone follow the same trading patterns that create demands. Investors like to buy stock that has upward momentum because everyone is making money on the way up. . You are tempted to join the buying frenzy because you don't want to feel left out when your friends are making tons of money from stock market. That is FOMO - Fear of Missing Out. Sometime, the greed will push you to chase higher price, take bigger risk and worst, double down on your bet. That is how the stock's bubble created. You are getting bold to buy at much higher price due to Greed. By now, the stock's fundamental is detached from its lofty share price. Greed create ignorant. The tulip mania is a classic example that explained the greed of man. This is the world's first recorded speculative bubble in investment. This mania started in Holland where the contract price of tulip bulbs continued to rise astronomically throughout 1600s. By 1635, price for 40 tulip bulbs is 100,000 florins (1 florins=USD 13 in today's currency). As compared to a skilled laborer who earn 150–350 florins a year, price of 1 tulip equal to 10 years of his salary. Would you buy a tulip flower with your 10 years wages? That is madness and greed of man chasing the bubble.  

  


3. Ego. 


There is ego in every one of us. We don't like to admit that we are wrong even though the mistake was obvious. That is so true in investing world and it can very deadly state of mind. Said you just bought a stock recently and the share price start to drop. Later, you realized that the company was reporting bad financial results, involved in legal dispute and the CEO just resigned!  Your Ego is preventing you from acknowledging the bad decision you have make and cut losses early. You doesn't want to take the losses as you still hoping for the situation to turn around. The share price continued to sink further, adding more damages to your pocket and confidence. What will be the  worst case scenario? That is when you decided to buy more to averaging down as the price keep failing. This is like trying to catch a failing knife, you could get hurt badly at the end. This is a common mistake make by most investors including myself. We could choose to sucked our thumb and acknowledge our mistake. Be truthful to our self, take action by taking losses early and move on. Remember, Ego doesn't do any good to your pocket



4. Affection. 


Never fall in love with the stock just because you like their products or services. Have you ever bought a stock just because you like it's products or the name but later regretted? When you sense something is wrong with the company, don't buy regardless how much you really like the company or admire its products. I remembered many years back, Blackberry phone was very popular. There were many die-hard fans loving it. This stock ticker "RIMM", it was peaked at $150 a share in 2008. I first bought the share at $40, out of strong affection for their products. I thought it was bargain at $40 even thought the Apple was beating them with new iPhone launched every year. I finally muscle enough courage to sell the share at a loss for $30 a share and switched to Apple stock that year. Total damage was few thousands USD. Recently, I checked the stock RIMM is trading at $6 only. I make a grievous mistake by buying a stock out of affection for their products. You need to do a complete "thought through" process to understand the true value of the company and the right price before investing. I love drinking coffee at Starbuck but it doesn't mean I will invest in it if the price isn't right.

"Better to follow your mind than your heart", emotions can be disastrous to your investment strategies. 

Personal notes:
Let me repeat it again. Your emotion can influence your decisions in every step of investing, from deciding what to buy, when to buy and when to sell. People make dumb decisions in investing due to their rational thought was blinded by irrational emotions. You need to be "emotionally intelligent" to master the game of investing.  

-WILLIAM CHENG

"KILL THIS LOVE" - BLACKPINK

ALIBABA HK IPO..... (Investment Profit Overdrive)

Pre IPO

Alibaba announced second public listing in Hong Kong had got me excited about this stock again. The listing will be the biggest IPO listing in HKSE. I had been "hibernating" since I sold out all my BABA shares back in March 2019 for $180. You can click on my link below to read about this trade back in early 2019.

Other Posting link: Click here:
 ALIBABA 2019 ....... Feasting with 40 Thieves (Part-1)



The major Setup

Back in Oct 2019 it was trading at around $160-$170 range, same level as 2017. In my opinion, this stock is way under-value, the company's revenue and profit have been growing at North of 40% every year and yet the share price stuck at 2017 level. For me, this is a perfect setup for major breakout. Just like a pressure cooker, you keep pumping steam (profit) into same pot size never increase (Stock price). It will going to pop anytime when you lift the lit.   



There are 2 major events took place in Nov which I hope will boost its share price before the IPO kick in.

1. Quarter Sep 2019 earning announcement 1.11.2019 - The results was fantastic!  
Revenue was RMB119,017 million (US$16,651 million), an increase of 40% year-over-year.
Non-GAAP net income was RMB32,750 million (US$4,582 million), an increase of 40% year-over-year.
2. Global Shopping Event 11.11.2019 - Voila!
Generated US$12 Billion of GMV in the First Hour of the Global Shopping Festival.
Generated RMB268.4 billion (US$38.4 billion) of gross merchandise volume (GMV) in 2019, an increase of 26% compared to 2018.
So, I put up a huge positions for BABA in Oct, hoping to profit from those events above. It was a gamble, but the risk is well managed with the low share price. Both events had past with much fanfare, but yet the share price failed to lit up. To my disappointment, it bounce around $170.  

Post Mortem

It was a very disappointing indeed. The stock failed to ignite was not due to company's performance. It had done very well on both financial matrix and major sales events like "Single Days". It was mainly due to external factors. 2 major events keep people from investing in BABA and analysts were bearish about:
  1. China GDP and companies profitability decelerating - there was concern it might affecting consumer spending sentiment.
  2. China-US trade war drag on - the flight to safety was so great to avoid more damage from the tariff increase.
The pressure in the cooker keep building. I double down my investment in BABA, as I think the China GDP had no impact on consumer spending as the middle income class keep expanding and the trade war will resolved eventually given that Mr. Trump need that badly to boost his rating. No turning back for me as I put my wager down. I'm hoping that the new HK IPO will pop open the lit and let the steam out.   

The IPO (Investment Profit Overdrive)

Alibaba Group announced to raise US$12.9 billion from its landmark Hong Kong listing and is set to price its shares at HK$176 (S$30.62) each, start trading on 26 Nov 2019. Shares of Chinese e-commerce giant Alibaba saw a strong debut in Hong Kong surged more than 6% at debut, intraday high of HKD189.50.
Since the HK IPO listing, BABA share surge almost daily hitting it 52 week high within 2 weeks. The cooker's lit had finally popped open, letting the steam out. The truce reached in the China-US trade war back in Dec-14 had bring back much needed boost for this Chinese stock. Turning a "flight to safety" trade, avoid all "Chinese stock" event into "risk on" overdrive. 
Alibaba currently trading at USD215 after 1 month since IPO. Up > 20% since my last bought.  Hey, I'm not popping my champagne yet and not selling my stake. I think the surge is not over yet, there are few more events may add more "boost" to the share price. I'm looking at next 2 major events that will be significantly impact the valuation of the stock price. 
  1. Inclusion into Shanghai Stock Connect - this inclusion will open a floodgate of 100 millions investors in China eligible to invest in this HK biggest IPO stock. This will help boost the share price valuation. 
  2. Inclusion into the major world Index -  Due to its capitalization size, it will be include into major index such as Hang Seng Index and MSCI China etc. This will drive up the buy side demands from index fund managers' portfolio that require mirroring the index performance. 

Personal notes:

I like to read especially books about investing. However, I didn't read much as I would like to in 2019. One of my new year resolution in 2020 is to read more. This is for my own personal development. Always stay humble and stay hunger for knowledge. I hope I can complete 1 book per month and hopefully I can share some of my read in this blog. Currently I'm reading this book below.
Cheers and enjoy the remaining 2019 before it is gone. Happy New Year 2020 to all. This Chinese drama " The legend of white snake" debut in 2019, I find it very entertaining to watch. Hope you will like it too.

- WILLIAM CHENG

Boom and Bust in 2019 revealed

The Good and Ugly of 2019

Few more days to go before we usher the arrival of 2020, it is good to take a moment to reflect on this journey in 2019. You may hit some goldmines or landmines along the way, but what's matter most is the valuable lessons that you learn from the journey. This year is the most eventful, full of risk volatility due to external political headwinds. From trade war, Brexit to Hong Kong protest, I would said the stock markets braved through with only few pocket of corrections with not more than 5%. The pocket of corrections are where the opportunities you should trade to maximized the gains.



Most people think when the market is falling, the risk is higher to trade and you should exit. I bet to differ. I think when the market goes lower, the risk to trade is lower and that is how I manage my risk. That is why each time the market start falling, I got so excited because I can acquire a excellence business at the lower risk and higher profit margin.




In 2019, US market still in bull ride while the rest of the world trying to find its footing. We are now in the 11 years of bull run since the last recession in 2009. The bull shows no sign of slowing down and it was forecasted to continue into 2020 and beyond. Some businesses had a short corrections in 2019 especially for semiconductors, commodity and car industry but analyst predict recovery is now underway in 2020.

 Post mortem 2019

As the year coming to a close, it is a good moment to do a recap of my investment journey in 2019. Overall, this year fare much better that last year. I had make far less trades this year but bigger gains to my portfolio, mainly the gains come from US portfolio.

I make a total of 36 trades this year, 97% of the trades were in US and SG market. I only make 1 trade in KLSE this year.



Out of 36 trades, 21 trades were profitable and 15 were in "Red". So, my success rate of picking the winners is 58% only. Some of my decision to sell at loss was due to fear of market correction. Cut loss to manage my risk which I regret later on as the market recovered every time it dropped from peak. Some trades are due to company's fundamentally had changed, I decided to move my funds to better counters. The rest were sold at loss to rebalance my portfolio.



Even though my success rate was 58%, my profit for each successful trade far outperformed than those bad trades I make. For every $1 value I loss in the market, I make $9 profit gains from my trade. It seem that my entry and exit strategies works well this year. We should let the good trade run its course and fast to act when the tide turns. Stop loss strategies is useful to keep the loss at minimum and maximize profit from the bull's rage.


You may wonder why I didn't mentioned much about my trade losses. It is not because I don't like talk about it, but the magnitude of the trade losses is not significant enough to be mentioned. Just to cure your curiosity, I will make a list of top trade losses below for your reading pleasure.

My top 3 most profitable trades in 2019:

1. Alibaba (NYSE)
2. Facebook (NASDAQ)
3. Capitaland (STI)

My top 3 most UN-profitable trades in 2019:

1. Alibaba (NYSE) - $1900 loss
2. Disney (NYSE) -$1100 loss
3. Dow30 UltraShort (ETF) -$880 loss

**All the records above are based on completed trade, which positions were bought and sold done in 2019. There are few stock holdings in my portfolio currently which I had not decided to sell yet. It is not included in the chart and stock list above.**

Personal notes:

There are few lessons I learnt from managing my portfolio in 2019. I'm sharing some of personal thoughts below:

1. Value Grab vs. Bottom Fishing: . Since I could not predict when is the peak or bottom for stock price's movement, I would never try to time my trade and hope to catch the bottom. I will make the trade based on value investing analysis. This method was popularized by Benjamin Graham. I will start buying in small volume when I see a value emerged. It may dropped below my initial buying price but that is okay. I will add into my position as the price goes cheaper. I called it a "Value Grab" trade, which preferred over "bottom fishing".

2. Patience: One of the biggest lesson I learnt when betting with your hard earned dollars. I learnt to be very patience when making a trade. Patiently wait for sellers to subside and buyers to emerged pushing up when they start to sense the value in the stock. Sometimes if you try to wait for the technical indicators to give you the green light to buy, it may be too late to benefit from "market inefficiency", the share price already gone up so much to reflect the current value. Being late to the game is high risk of being the baits for big white sharks.

3. "Blind Spot Investing"-Market efficiency theory: "Market is Always efficient" when all the information make available to public and it reflected in the share price. "Market inefficiency" theory occurred when the public is unaware the true value and the price is not reflecting the true value of the company. I called it "Blind Spot Investing". This is where you have to make the biggest bets to gain maximum profit before others sniff out the gems. That was how Warren Buffet make his legendary trade on Coke, AMEX, BoA and many more. You can read how those legendary individuals make their trade through books or website.

Into 2020

In the coming year 2020, I would like to make less trade and increase the profitable trade ratio which currently at low 58% success rate. This can only happen if I really planned my trade well and stay faithful to my trading principles. A lot of self control and discipline needed.

To end this milestone 2019, I would like to wish everyone a Merry Christmas and Happy new year!.    


Other interesting articles to read; Please Click here:

CAPITALAND....... Land of Capital Growth

ALIBABA 2019 ....... Feasting with 40 Thieves (Part-1)      

KEPPEL KBS US REIT...... Take the JUMP!

2018 Malaysia Election...... the death star of my WIN-ning steak



ALIBABA 2019 ....... Feasting with 40 Thieves (Part-1)

Reflections of 2019
As YR 2019 draw to a close this month, I would like reflect on the some of most significant events in my investment for the year. It had been a very good year for me, the best year in term of investment return as almost all Indexes reaching record high. There are so many investing journeys that I would like to post in this blog, however I had difficulties in finding time to write more posting.



Today, I would like to write about one of my greatest investment journey, ALIBABA, ticker BABA. I had written several posting on Alibaba for YR 2017 and 2018, you can refer to my previous article. This year the effects multiplied due to trade war and the Hong Kong IPO. I will end this year in my last posting next week with a summary of my trade for 2019.

ALIBABA IPO
I think Alibaba's decision to list new share in Hong Kong is a brilliant move. For those who had invested in anticipation for HK IPO had already making a good ROI. Congratulations for those warriors who took the bets. Again, congratulation and I think this is just the beginnings of a great journey.



WHY Jack Ma??
I had been investing in this company for past 3 years because I believe in Jack Ma's vision. The company is at the epicenter of "Mega trends" of changing consumer's lifestyle. I believe this trend will continue for multiple years.

The quality attributes that I like about Alibaba (from previous posting):

1. Right business model at right market trend
2. strong economic moat - King of the jungle
3. high growth rate, >40%
4. Low PEG ratio <1.0
5. Very profitable, positive cash flow

The right key to Treasure Chest
What is the key for profitable trade? The KEY is the timing for entry in any investment. Any external events can create a perfect setup for right entry point in profitable investment. As for Alibaba, the US-China Trade War is the "KEY".



Turning Crisis to Opportunity
During the peak of heated arguments between Xi and Trump in early 2019, US listed Chinese companies become the victims. I have not seen such level of fears in the market and the fierce downgrade had create gigantic risks that no one dare to buy. The dropped from $210 (where I sold all my BABA stock in 2018) to $130, many investors were running for exit. I saw a great opportunity to accumulate more BABA stock during the crisis.



Feasting during the harvest
External crisis had no effects on Chinese consumer's sentiment as they continue to spend, Alibaba continue to registered record profits quarter after quarter. It helps to push the share price to recovery mode. I finally sold all my holdings above $180 in March 2019. My return on investment was >20% in 3 months.

Personal notes:

I don't believe in diversification. Using diversification to manage risk is very popular among investors. However, this method will also dilute your returns in long run. Even though you have higher chance of hitting multi-baggers, you also have equal chance of hitting landmines. Many of us who are not full time investors, does not have the luxury of time to study reports, monitor and strategize for 30, 50 or 100+ stock counters.
In summary, diversifications will not bring much benefits to your bottom lines with low stock's ROI and huge efforts required/ time wasted.



In my portfolio, I always limit my holding to maximum 10 stocks or less at any given time horizon. I invest in very limited stock counters. Making very few trades per year but I make sure each stock's ROI is significant. I would spend great amount of time to study the stock and strategized my investing plan to manage my risk. Once I have decided to invest, I would move in and hold a very large positions that will have significant impacts to my bottom lines when the stock price move either way.



Why would I want to waste my precious time and effort investing that doesn't make significant impact? I would rather spend time relaxing at wonderful resort in Bali, than suffer mentally and emotionally to trade for penny return.

Simple calculation of if your time worth the trade you make. look at how much you make per hours as employee in the company and multiply by how much time you spend on making a trade. If it doesn't give you >3 times of the returns, don't bother to trade. Just focus on your daytime job and buy mutual funds. Or hire a fund manager to manage for you.


Finally, this is my favorite song from Stephanie Ho, "True Lovers" from TVB drama "Run Over Run" theme song.

-William Cheng


     



CAPITALAND....... Land of Capital Growth


CAPITALAND
Investing in Capitaland was one of my most memorable journey in 2019. Capitaland is listed in SGX and is part of STI index component. It's main business units focusing on investment properties which generating recurring incomes from rental and trading properties as developer in major cities like Singapore, China and Vietnam. You can google it to learn more about Capitaland.



Headwinds....
The share price had been depressed for some time between late 2018 and early 2019. Singapore and China properties cooling measures had dented investor's confidents in the company's prospects. It is because the majority of its investments are concentrated in China and Singapore, more that >75%. It's gets worst with the on-going trade war between China and US.



Investment journey.....
I saw a window of opportunity here to make an investment. Looking outside the window, many see storms approaching and raging winds . What I saw outside was a rainbow beyond the horizon after the storms cleared. And that was how the journey started. Accumulating at low pricing between SGD3.00 to SGD3.30. Continued this journey until I had exhausted most of my SGD funds in my trading acc. It was partly because I also accumulating huge positions in REITs at the same time. You can read my previous posting on REITs investing if you interested to know more. Yes, there was a huge risk in the horizon, but I had never regret making this journey.



Tailwinds...... wind of change
In Jan 2019, the rainbow finally appeared. Temasek announced the merger of Capitaland and Ascendas-Singbridge. This deals will see Temasek injecting ASB asset into Capitaland and Capitaland to issue new share at $3.50 to Temasek. This announcement helps to boost the share price and confidents in the market.   



At the end of the journey.....
I finally decided to lock in profit at $3.50 per share, net profit of $18,65511% return in 5 months journey. As you can see in the chart above the share price continued to appreciate after I sold. I have no regrets because I can always embark a new journey in this investment world.

Personal notes:
I viewed investment as a journey, not just the end goal of generating income. You need to have the PASSION in what you do and I really enjoy the whole process of investing from early planning to execution. Regardless if I really make or loss money in the journey, I will make sure it's a memorable experience that keep you going. That is the part of my life's journey that I enjoyed the most. PASSION!

And that is my investment journey....

-William Cheng      

                                      Just completed watching this Drama recently. Enjoy!


Other Articles posting; Please click here:




KEPPEL KBS US REIT...... Take the JUMP!

One of the popular investment class in SGX is REIT, Real Estate Investment Trust. It's typically provides stable and low beta stock price swing, sugar coated with consistent dividend payout. I probably should have invested more in SG REIT than speculating in stock market. However, those "Branded" REITs (Prada!!) which backed by heavyweight cornerstone sponsors are mostly trade at full book value >0.9 P/B and low dividend yield <6%.



This week, I would like to write about Keppel KBS REIT which recently changed name to Keppel Pacific Oak US REIT. This REIT was issued for USD0.88 at IPO. Traded around this price for sometimes until the share price start to tanked in late 2018.

2 key reasons for the fierce selling:

1. Fear of possible US tax withholding Law changed could impose 30% tax on its profits.
2. Greatly discounted Rights issue at USD0.50 to purchase new office building in US.



This REIT's price dropped from USD0.85 to USD0.54 lowest point in very short period of time. At this price, the dividend yield will exceed 12% return. Very attractive investments return especially the Right issue which allowed you to acquire more share at discounted price to book value. With Keppel as the cornerstone sponsor, I'm confidents that it's a very safe investment and the opportunity won't come twice in your lifetime.

What I like about Keppel KBS REIT:

1. High dividends yield >12%
2. Good sponsors > Keppel & KBS
3. Right market and strategic locations - US companies are growing a fastest pace support the demands for office space.
4. Super cheap rights issue - Like buying TESLA model X at Cherry QQ pricing.

I started buying between 58 cents and 64 cents. I had fully subscribed to the Right share and applied for Rights excess at USD 0.50. I got the full allocations plus excess share due to many not willing take the risk to invest. Including the Rights share and dividends received, my average price come down to USD0.53.



Fast forward to 2019, Keppel KBS US REIT issued a statement and clarify that they expected no tax impact as a result of the new US tax regulations. This immediately cleared up the risks hanging, the share price immediately recovered from 0.54 to 0.64. I sold it later in March 2019 at USD 0.68 with 23% gains in profit for 5 months holding period.

I admit that I make a big mistake as later it hit 80cents highest few months after I sold. Currently the stock trading at 74cents. But I'm glad I took the courage to "JUMP"  when others rush for the exit.

     "Taking a calculated investment risk is like taking a bungee jump with safety harness"-WC




I end this blog with my favorite song by G.E.M. "LIGHT YEARS AWAY". Enjoy.

- WILLIAM CHENG




Stock name: KEPPEL KBS US REIT
Country listing: Singapore
Research periods: 2 weeks
Stock accumulation/holding periods : 5 months
Return on investment (ROI) : 23% in 5 months 
2019 Stock ROI ranking: 5th (biggest gains)
     

Keppel Corp....... The Pheonix rising. Thank you, Temasek.

Making an investment usually take a lot of efforts and time to research a stock before I take the plunge. I have a long checklist that I use as benchmark to grade the company (What to buy) and to determine the right entry price (when to buy). This is to ensure the reward is always outweigh the risk I take. If you followed my blog closely, you should be very familiar with my stock pick's criteria.



Keppel Corp need no introduction, one of the biggest conglomerate listed in Singapore. Since last year, its facing multiple headwinds from bribery scandals to falling oil price. Since then, Keppel had make multiple restructuring to move away from oil rig and ship building into properties and data center business. However, the share price continue to depressed as investors doesn't like the short term volatility.

What I like about Keppel Corp:

  1. Market leader - holding top position many of its key business in SG including O&G, properties and DC business.
  2. Right market trend - Data Centre is the core infrastructure that enable cloud computing, AI, machine learning and industry 4.0. 
  3. Good sponsor - Temasek is the biggest shareholder with 21% ownership.
  4. Transformation mode - many initiatives taken by Keppel transforming its business to achieve high ROE. However, it takes time and patience to see the returns which many investors doesn't have. 
  5. Crisis mode - with so much negative news surrounding this stock, the price had reached rock bottom. This is what make me even more excited to invest.        

I see this a great opportunity to buy a great company at a fire sales pricing. This is the "cigar butts investing" analogy popularized by Ben Graham. I am a big fan of his investment technique. Keppel hitting the right tune and the right price for me to take actions.

I started buying Keppel shares right before the Q3 2019 earning announcement. As usual, they announced poor results with 30% dropped in profit. Market panic with another 15cents dropped after announcements. While others running away from Keppel, I saw this as "once-in-a-lifetime" opportunity to accumulate more.



On Oct-21, Temasek announced to buy 30% of Keppel at $7.35. The last traded price for Keppel was $5.84. The deal will boost Temasek’s stake in Keppel from 20.45% to 51% and also imply a premium of approximately 26% over lasted traded price $5.84.

Last Friday closing price was $6.91 and I'm still holding on to my stock with a paper gain of 20%. I plan to hold this for longer term to enjoy the benefit of the on-going restructuring happened at Keppel. I can really see the "Phoenix is rising with second tail wind" from Temasek.

-William Cheng



Stock Investing Performance Matrix (SIP Matrix):

Stock name: Keppel Corp
Country listing: Singapore
Research periods: 6 weeks
Stock accumulation/holding periods : 3 days
Return on investment (ROI) : 20% in 5 days 
2019 Stock ROI ranking: 6th (biggest gains)




     

Jardine Group ......... Dark force raising

To make an investment, you need to make 2 very important decisions. What to invest and when to invest? If you invest in the right stock but wrong timing or right timing but a wrong counter, the outcome can be disaster. But the former is much better as you can wait out the storm. I always think the best stock to invest are those with right market trend, positive cash flow and market leader with strong moat. The best time to invest is when the company hit the speed bumps or in crisis mode.

What to invest?
1. Company with right market trend
2. Positive cash flow (not only profit/loss statement)
3. Market leader with strong moat

When to invest?
company in crisis mode

Recently, the companies in Jardine Group caught my attention. Most of the Jardine components are in hitting year low as the Hong Kong protest gaining momentum. Their business exposure to Hong Kong is quite significant especially HongKong Land with 80% asset located in Hong Kong. The Jardine Group are quite complex and most of its subsidiaries as part of the 30 companies that formed STI index components. Here is the chart that show the complex companies web in Jardine Group.



Listed companies of Jardine Group in Singapore:
1. Jardine Matheson
2. Jardine Strategic
3. Jardine C&C
4. HongKong Land
5. Dairy Farm
6. Mandarin Oriental

The focus will be the top 4 companies above. 52 weeks charts below showing all 4 companies hitting rock bottoms.









Remember, it is hard to get a good companies reasonable price due to supply and demand equations. You can only find valuation at reasonable level when the crisis hit. The opportunity is rare but it can present potential in huge capital gains when the dark cloud finally lifted. I viewed the situation in Hong Kong just a temporally setback, it will be resolved soon with time.  I have said enough and it up to you to make the best out of the opportunity out there. Good luck!

- WILLIAM CHENG

Disclaimer: All investment come with great risk and should proceed with cautious. This is not an advice to buy or sell any stock. It is important to do your own research and analysis before making any investments.







 

Profit taking Jan 2020...... Recalibrating risks

Woke up one morning, I was shocked to read about the US killing Iran's top general on Iraq soil. Few days later, Iran started firing bal...