Investment Journey of 2013
When I was in secondary school, I already knew that I needed to work very hard and accumulate assets (stocks, businesses, cash, etc).
I was extremely fortunate to win several prizes. Upon receiving those prizes, I would sell it off for cash because I believe in depreciation. I also did a side business of pricing arbitrage. I thought about how else can I grow this small pot of asset at a much faster pace.
I started to apply whatever I have learned during my diploma course.
I started investing as a side hobby.
Benjamin Graham, Warren Buffet’s mentor, focused into Net Asset Value (NAV) stocks. This method led me to uncover HupSteel (SGX:BMH).
While HupSteel had no moat, here were some reasons why HupSteel was purchased:
- potential turnaround in the steel industry
- no debt, and has a considerable cash hoard
- high NAV, and potentially higher NAV when 6 Kim Chuan Drive is redeveloped into multi-storeys industrial building.
- management demonstrated willingness to share wealth with shareholders with dividends.
Few days after I purchased it, it went up by 19% and subsequently went down slightly. I held it for a couple more months before deciding to sell it away for $400 profit with a start-up capital of $1,900. I felt the price factored in the potential revaluation gains. Besides, the steel industry would not recover and there were better stocks out there.
This was precisely the catalyst for me to spend more time on investing books. For me, it is simple. If a method works, I spend time to create a system for repeatability. I do not want to be a one-trick pony. I spent my money on carefully selected books purchased from Amazon.
- The Five Rules for Successful Stock Investing
- The Winning Investment Habits of Warren Buffett & George Soros
- One Up on Wall Street
- How an Economy Grows and Why It Crashes
- Beating the Street
- There’s Always Something to Do
Similarly, I became members of two investing-oriented forums under the name of Kelvesy.
- www.valuebuddies.com
- www.sgtalk.com
While doing my final year in Temasek Polytechnic, with some experience, I decided to devote more time to master the art of value investing. I also restructured my mother’s investment portfolio.
I sold off ComfortDeglro (slow-grower and high capex needs) and purchased Valuetronics ($0.245), Starhub ($3.30), and SingPost ($0.99). I felt that most of these stocks provide a reasonable dividend yield and it should do well in the future. I was disappointed when Valuetronics recognised a loss due to mismanagement and huge losses incurred when they’re trying to close down one business segment which is not making profits. Starhub and SingPost went up further and provided capital gains.
Somewhere towards the end, I decided that I should merge my portfolio with my mother’s portfolio.
I purchased stocks with the likes of TTJ Holdings (structural steel), Long Cheer (OEM), Heeton (property developer). I’m glad to say I’ve made profits off them for various reasons.
By August, my portfolio has grown from $26k to $45k. Back then, with the twin engines of forum research and massive book reading, I set a goal of a $60k portfolio for myself by year-end.
I went on sgtalk and found an interesting stock called Vallianz.
Vallianz Holdings Limited, is a vessel and equipment owning company listed on the SGX-Catalist, providing marine support services, primarily vessel ownership, leasing and fleet corporate management since our transformation in August 2010. Equipped with valuable expertise, guided by a revitalised team, and a spirit of enterprise, we are now ready to make a mark in Singapore’s shipping industry with a passion for excellence.
In line with our business transformation since August 2010, we are now focused on our goal of building ourselves as a marine support service company to the offshore oil and gas industry. Headquartered in Singapore, we have a strong board comprising of industry veterans with relevant and complementary track records. We will work to strengthen our team and hone our skills and technical expertise to build a resilient business model and establish a track record in this fast growing industry.
It has:
- nearly 50% profit margin
- $600mil worth of contracts
- owned by Rawabi and Swiber
- EPS likely to grow in double digits
These reasons are compelling enough for me to invest in it. I used a forward P/E valuation. I used to be Net Asset Value (NAV) guy, and look out for that margin of safety. However, someone on Valuebuddies revealed that earnings is another factor I should consider. Noting that Vallianz had a 4cts NAV but trading at 6cts. I took his advice and went to purchase Vallianz at an average price of 9cts because of the bright earnings.
In the weeks to come, my wildest dreams came true. Vallianz shifted up to 8cts to 20cts. I made close to 150% profit! My portfolio was standing at $120k combined.
It was also accident that I invested all of our capital. I placed an order for a lower share price and it was not executed. In the afternoon, I placed out another order at the prevailing price and it was done. Subsequently, towards the evening, the share price dropped to match the price I placed in the morning. It was executed as well because I forgot to cancel my morning order! It was unexpected. Nonetheless, it turned out well.
The mathematics goes like this:
If I have a portfolio of 5 stocks, each stock will carry 20% weightage. At any given time, a stock goes up by 100%, the overall impact on the portfolio is 20% upwards.
Compared against…
If I have a portfolio of one stock, one stock will carry 10)% weightage. At any given time, a stock goes up by 100%, the overall impact on the portfolio is 100% upwards.
Coming into 2014, I started to trade some stocks like Kep T&T (when it announced possible REIT), and Federal (when it announced new contract wins), I made $600 within 3 days. I did my research on Kep T&T, and Federal. I think greed played a part and I went to buy Charisma Energy, without knowing much. Then the penny sell down came. Charisma was eating away all my losses in Kep T&T and Federal and I was bleeding more.
Vallianz suffered as well, it dropped from 20cts to 16cts.
I became increasingly worried by the end of day 2 of penny sell down and sold most of my stocks in Vallianz and Charisma.
However, towards the end of day 2, the pennies recovered and I am now, beating myself for violating my own principles and probably my confidence is shaken. Maybe, it is time to revisit my investment books and read more about investment psychology.
I lost quite a fair bit on my portfolio.
Now my portfolio is back at $96k.
I wonder should I stick to being a pure value investor or/and trader?
Many people told me that my performance is good enough for a 21 year old. But life is not about looking back and be satisfied, it is moving forward. I like to stretch myself further by growing wealth faster and preserving it well. Certainly, I failed in the latter.
I’ll see what I can do in this year.