Wednesday, February 25, 2015

Portfolio Buy - ETF Strategy - Asia ETF

One of the advantages of having work pressure become very high is to look for a way to simplify other things such as investment decisions.

The original thinking behind this approach to simplifying investment decisions actually is from the Pragmatic Capitalism blog which I read occasionally, a link to which is here below



In gist, the idea is that there is one global portfolio of investments and broadly your investment allocation should be in line with this global portfolio.

Country
Equity Market Cap
% Equity Market Total
Allocation of Equity Portion
Bond Market Cap
% Bond Market Total
Allocation of Bond Portion
Total
51,955
80,191
18,668
35.93%
35.00%
39882
49.73%
49%
3,697
7.12%
7.00%
733
0.91%
1%
3,681
7.08%
7.00%
15700
19.58%
19%
3,019
5.81%
6.00%
2734
3.41%
3%
2,016
3.88%
4.00%
18
0.02%
1,823
3.51%
3.00%
731
0.91%
1,486
2.86%
3.00%
12874
16.05%
16%
1,286
2.48%
2.00%
86
0.11%
1,263
2.43%
2.00%
33
0.04%
1,230
2.37%
2.00%
0.00%
1,180
2.27%
2.00%
985
1.23%
1%
1,108
2.13%
2.00%
63
0.08%
1,079
2.08%
2.00%
0.00%
995
1.92%
2.00%
1919
2.39%
2%
875
1.68%
2.00%
222
0.28%
651
1.25%
1.00%
0.00%
612
1.18%
1.00%
171
0.21%
561
1.08%
1.00%
0.00%
525
1.01%
1.00%
70
0.09%
480
0.92%
1.00%
3690
4.60%
5%
476
0.92%
1.00%
414
0.80%
1.00%

One simple way to do this would be to buy a whole world Index tracker and a whole world bond tracker.
Unfortunately, no such thing exists and perhaps even if it does, one's need to tinker will not allow a person to just invest like that.
Using the above construct, I am investing a portion of my portfolio in this global portfolio.



ETF
% Portfolio
Target Weight
Annualized Return
STI ETF
2.95%
1.00%
8.78%
CIMB Asean 40 ETF
1.21%
3.00%
5.12%
Lyxor H.S.I ETF (A9B)
1.81%
2.00%
20.92%
Lyxor Europe 10US$ (JC5)
2.91%
10.00%
12.22%
SPDR S&P500 US$ ETF (S27)
2.46%
12%
46.76%
iShares Barclays USD Asia High Yield Bond Index ETF
2.50%
40.00%
12.46%

Broadly, the results have been satisfactory.
I am quite confident that
a) I am not good at timing the markets
b) I am not smarter than the average investor, let alone the big professional investors
So, a lot of this performance is likely to be attributable to luck in terms of timing, as I bought Europe on the dips at the height of the Grexit episodes as well as the S&P 500 amid a wave of negative news on the US fed tightening, causing a close to bear correction in the S&P 500.
The eagle-eyed investor would have spotted the home bias, where I should by right have 1% in STI, but instead have put 3% in STI.
I am using STI and CIMB Asean, to net it out at around 4%.
I had space for a China ETF, which I disposed of a while back, detailed below.
http://sgx-stocks-sti.blogspot.sg/2014/11/portfolio-sale-kt4-dxt-china-etf.html

After reflection, I decided to add a 1.5% weight each to Asia in a High Yielding stock ETF as well as a real estate ETF, sort of a bar bell approach, yesterday.
ETF
% Portfolio
Target Weight

db x-trackers MSCI AC Asia Ex Japan High Dividend Yield Index UCITS ETF 1D (N2F)
1.30%
3.00%
Lyxor ETF MSCI AC Asia Ex Japan Real Estate (MT7)
1.16%
3.00%

Over time, I am slowly likely to migrate my direct equity exposure to exposure through ETFs, As always, Make Haste Slowly.
Disclaimer :- 
I am not an investment professional.
I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.
Nothing written here is an invitation to buy or sell any particular stock.
At most, I am handing out an educated guess as to what the markets may do.
The market will always find a new way to make a fool out of me (and maybe, even you!).
Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures

Tuesday, February 17, 2015

AIMS AMP Industrial REIT

AIMS AMP Industrial REIT was formerly known as MacArthur Cook REIT.

To have a better picture about the history of AIMS AMP Industrial REIT, please look at the forum link below

http://forums.hardwarezone.com.sg/stocks...54-57.html

Hat tip to A Layman from Valuebuddies.com who provided some context.

http://www.valuebuddies.com/user-1890.html

Here is a link to the thread on Valuebuddies.com which has a discussion on AIMS AMP

http://www.valuebuddies.com/thread-737-page-13.html

1. MacArthur Cook Trust was trading around $1 before it has any trouble.

2. The ex-CEO Chris Calvert bought 1A International Business Park for $90.2m without financing arrangement.

3. Chris Calvert then left to join Cambridge, leaving $202.3m of debt without refinancing. 


4. Rating body Moody seized the opportunity to jump in and downgrade MacArthur, causing share price to DIVE.
http://www.theedgesingapore.com/the-dail...-reit.html



5. Newly appointed Chairman George Wang, backed by Amp and Aims, brought in a rescue plan for MacArthur Cook, which allow themselves to issue new placement units (amount to majority stake) at $0.28 per unit while the NAV of the trust at the moment was about $0.94 per unit. 

6. The wresting for control between George Wang and Chris Calvert went on for weeks, with full page stories in newspaper every day.

7. George Wang complained to MAS, resulting in MAS ruling that Cambridge has no business in MacArthur Cook.

8. EGM to approve the "rescue plan" of George Wang went through with wafer thin margin. Angry minority unit holders complained that they were brutally treated.

9. After dusk settled down, AimsAmpREIT share was stagnant around $0.20 for many years. 

10. The management did a 5-to-1 consolidation, result in the share price to trade around $1 region.

11. Positive mangement and acquisitions and asset enhancement initiatives resulted in the return of confidence in AimsAmpREIT by investors.

One of the reasons I would not invest any of my money in both Cambridge as well as AIMS AMP Industrial REIT is that even back then, I felt this was unfair to minority shareholders.

I was looking for an avenue to invest and both AIMS AMP as well as Cambridge came on my radar as the highest weighted stock in the ST Mid Cap.

As is usual, I went through the forums at Valuebuddies.com to find reasons why I should not invest.

This post is to remind myself about the history as chances are I would not remember in a few years. 

Full Disclosure : No position in AIMSAMP and no intention of investing either.

Disclaimer :- 

I am not an investment professional.

I encourage you to do your own independent "due diligence" on any idea that I write about, because I could be and probably am wrong.

Nothing written here is an invitation to buy or sell any particular stock.

At most, I am handing out an educated guess as to what the markets may do.

The market will always find a new way to make a fool out of me (and maybe, even you!).

Even the best strategies of the past fail, sometimes spectacularly, when you least expect it.

I am not immune to that, so please understand that any past success of mine will probably be followed by failures 

Thursday, February 5, 2015

A Low Enterprise Value EBITDA Portfolio for Singapore

This whole exercise was sparked off by this valuewalk article.

Does EVEBITDA work to pick stocks?

Some of you might have come across Gannon and Hoang who are huge followers of this.

One Ratio to rule them all

Greenbackd did backtesting and found that no other multiple works as well.

which-price-ratio-outperforms-the-enterprise-multiple

The short thesis is that stocks with Low EV/EBITDA will be good stocks to buy and hold.

I did this exercise for Singapore stocks using SGX stock facts.

Below are some of the companies which came out.

Company Enterprise Value EBITDA EV/EBITDA Stock Code Date
Rotary Engineering 47 50.647 0.93 R07 2/5/2015
PEC Ltd 68.1 25.8 2.64 IX2 10/21/2014
CDW Holding 28.8 10.9 2.64 D38 2/6/2015
Keong Hong 75 24 3.13 5TT 12/22/2014
Lian Beng 418 117.7 3.55 L03 2/5/2015
Nam Lee 35.7 8.4 4.25 G0I 10/20/2014
Lee Metal 283.7 54.172 5.24 593 2/5/2015
BRC Asia 218.4 41.6 5.25 B03 10/20/2014
Colex Holding 34.9 6.5 5.37 567 2/6/2015
Teckwah 96.3 17.6 5.47 561 12/22/2014
Tai Sin 163.7 29.7 5.51 500 12/22/2014
ABR Holding 70.8 11.4 6.21 533 11/24/2014
CM Pacific 1566.4 235.8 6.64 C22 11/4/2014
Asia Enterprises 19.7 2.6 7.58 A55 11/4/2014
Boardroom 109.8 14.2 7.73 B10 12/11/2014
CWT 1788.1 222.5 8.04 C14 12/10/2014
Sin Ghee Huat 41.3 5.1 8.10 B7K 10/21/2014
Stamford Tyres 187.7 22.5 8.34 S29 11/3/2014
Pan United 713.2 83.5 8.54 P52 11/24/2014
TA Corporation 290.1 30 9.67 PA3 11/5/2014
Lum Chang 232.6 21.5 10.82 L19 11/3/2014
Excelpoint 130.2 11.1 11.73 E17 10/21/2014
Eu Yan Sang 438.6 34.8 12.60 E02 11/10/2014
Chip Eng Seng 937.7 68.4 13.71 C29 10/20/2014
UOL Group Ltd 6976.4 443.2 15.74 U14 10/21/2014
Tye Soon 91.4 4.9 18.65 T08 11/3/2014
Casa 41 2 20.50 C04 10/20/2014
Hiap Hoe 1087.3 49.1 22.14 5JK 2/5/2015
Second Chance 392 15.4 25.45 528 12/24/2014
Aspial 1683.1 53.1 31.70 A30 10/20/2014

So, what I have done is to create a portfolio of ten stocks with low ev/ebitda and tried to equal weight them for a portfolio of around 5,000 SGD.

SYMBOL NAME Price Per Share # Shares Cost
IX2.SI PEC Ltd 0.475 900 427.5
D38.SI CDW Holding Ltd 0.188 2200 413.6
5TT.SI $ Keong Hong 0.375 1200 450
G0I.SI Nam Lee Pressed Metal Industries Ltd 0.3 1500 450
B03.SI BRC Asia Ltd 0.173 2700 467.1
561.SI Teckwah Industrial Corp Ltd 0.35 1300 455
567.SI Colex Holdings Ltd 0.26 1800 468
R07.SI Rotary Engineering Ltd 0.565 800 452
593.SI Lee Metal Group Ltd 0.33 1400 462
L03.SI Lian Beng Group Ltd 0.62 800 496
Total 4541.2
I will post a report a year later on this a year later.

The thesis is that

a) This portfolio will outperform the market
b) It will exhibit lower volatility and draw-down.

The portfolio is available for viewing on Google Finance.

Low EV EBITDA Portfolio