Jac's selection for first 8 months...

It's almost three-quarters of a year. Let us relook and reflect on my selection in the beginning of the year. Take a look at the summarised table below.

Company	Price in 4 January	Price on 10 August	Total Dividends for past 8 months	Percentage gain/loss
US-listed Companies
McDonald's	$     99.390	$          88.200	$                          2.100	-9.1%
Coca-Cola	$     69.700	$          78.790	$                          1.530	15.2%
Starbucks	$     46.170	$          45.570	$                          0.510	-0.2%
Walt Disney	$     38.850	$          49.650	$                                 -	27.8%
Las Vegas Sands	$     43.760	$          38.950	$                          0.500	-9.8%
US Performance	$  297.870	$       301.160	$                          4.640	2.7%
Singapore-listed Companies
Cerebos Pacific	$       5.040	$            6.550	$                          0.250	34.9%
Singpost	$       0.935	$            1.060	$                          0.050	18.7%
SPH	$       3.740	$            4.060	$                          0.070	10.4%
Breadtalk	$       0.550	$            0.555	$                          0.015	3.6%
Popular Holdings	$       0.164	$            0.235	$                          0.005	46.3%
Singapore Performance	$     10.429	$          12.460	$                          0.390	23.2%
Overall Performance	$     367.87	$          373.85	$                            5.96	3.2%

McDonald's and Las Vegas Sands has the greated value loss of just less than 9.1% and 9.8% respectively. I still have faith in these two companies and I am confident they can make my investment grow. It may be a good time to stockpile McDonald's shares.
The US portfolio still has an overall 2.7% gain in value.

Meanwhile, all the five stocks that I have picked for the Singapore portfolio has gained 23.2% for the past 8 months. Cerebos Pacific has made an exit offer of $6.60 per share. Shareholders not only enjoyed the good $0.25 dividend and a surprise windfall as well.  If you have bought this share at the beginning of the year, your savings would have gained 35% in just 8 months.

Singpost and SPH has gained 18.7% and 10.4% respectively. This healthy gain signals that we should continue to hold on to these two stocks. Breadtalk's value increases only a mere 3.6%.

Lastly, I will talk about Popular. If you have read my last post, you would have known that Popular Holdings' Chairman has increased his stakes. Even after that post, he continues to increase his stake even at $0.235. This can only tell me one thing, Mr Chou is very confident of Popular Holdings in the years to come.

Please feel free to comment and share about your thoughts.

Cheers.

Disclosure: Writer owns Popular Holdings shares.
Disclaimer: Readers are advised to exercise their own discretion when investing. Stock investment is considered high-risk.

When is the right time to buy another property?

Anytime, I would say.

Do not allow any measures to stop you from buying into any investment properties. And do not TIME the purchase of a property. You may be happy when prices fall, but you may also be angry when prices go up. We should control the situation and not let the situation control us.

Property prices out there are still at a very high selling price. But there are bound to have a few that are undervalued, which we have not discover yet. Keep on finding. Go to different showrooms and open houses to see and compare.There is close to zero percent chance that property prices will fall to the 2008/2009 prices. 

For the past one year, I have been going around house-hunting. Visit the different showflats around the island, screening through the Straits Times Classified, and surfing the Internet to find more properties on sale. Till now, I am not able to find a single property that can attract me to open my warchest to buy. 

I am really disappointed with the current situation, but I do not wait for the property come to me. I will still continue to search for undervalued valuable properties. When I found one, I will not hesitate to buy. And you should too.

Another round of cooling measures to follow? We'll just wait and see.

You may want to refer back to my post, "Singapore Property : Buy or hold till recession?" for a refresher.

Cheers.

Why the sudden surge in Popular Holdings shares?

From 1 March price of $0.169 to 25 May price of $0.199. That's a 17.75% increase in just 3 months. Have you wondered why is there an increase?

If you have searched SGX's company announcement website, you would have notice that there is some insider transactions reported in the months of April and May.

On 02 April announcement, Mr Chou make an open market purchase of 3.173 million shares at average price of $0.17741 on 30 March.
On 09 April announcement, Mr Chou make another open market purchase of 250,000 shares at average price of $0.179 on 5th April.
On 14 May announcement, Mr Chou make another open market purchase of 256,000 shares at average price of $0.182 on 11 May.
On 17 May announcement, Mr Chou make another open market purchase of 4.935 million shares at average price of $0.188 on 16 May.
On 21 May announcement, Mr Chou make another open market purchase of 1.796 million shares at average price of $0.185 on 18 May.
On 24 May announcement, Mr Chou make another open market purchase of 3.098 million shares at average price of $0.191 on 23 May.

All in all, his company, also registered holder, World Holdings (Pte) Limited, has bought 13.508 million shares. The total cost for these transactions is $2,506,021.93.

I doubt Mr Chou is stopping to acquire Popular shares in the near future. I still feel that Popular Holdings is still an undervalued company. At the current price of $0.199, its P/E ratio is only 5.85 for trailing 12 months earnings of $0.034. Still consider a steal in the stock market.

9 months earnings of Popular Holdings is at $0.0314. They are going to annouce their 4th quarter and full year results end June 2012. I am optimistic about their 4th quarter results and full year earnings ending 30th April 2012. The amount of dividend that they are going to give may be better than previous years.

In the past two months, I have also increase my position by another 6%. Hope you have got yours too.

Happy investing.




Disclaimer: All the information here is blogger's personal views. It should not be taken as a call to buy or sell the shares. Investors are advised to exercise their own discretion when it comes to buying of shares, as all kinds of investments carry risks.

Disclosure: Blogger has Popular Holdings shares.

What is the right amount to invest?

Investment is a process to make a profit from the capital for a period of time. In other words, it is a process to grow savings at a reasonable rate to beat the inflation and enough for retirement. However, every investment involves risk. Risk appetite of the investor is one important factor. So, how much money should one invest?

Different people have different risk appetites when it comes to investment. Some people is willing to put their money in fixed deposits, where capital is guaranteed. Even if the interest is only about 1%, they can have peace of mind that they money are save. Some people have larger risk appetites, where returns are much higher. But bear in mind that investments with higher risks can also make one lose their money at an alarming rate.

In order to make the suitable investment, we have to ask ourselves this question, "Are we ready to make a failed investment?" No one likes failed investments, neither do I. That is why doing "homework" is important. Even when I have made a wrong decision on investing in a particular company, I accept the consequence of losing the money and learn from it. Recently, I bought an IPO of Genting's perpetual securities. First mistake, I assume that perpetual securities is the same as bonds or preference shares. In fact, they are ranked lower than bonds and preference shares. Second mistake, I did not find out more about it before investment. I sold them right after it's open for trading. Luckily, I lost $26 only. This $26 lesson will wake me up and be more diligent. 

After this "failed" investment, a phrase appeared in my mind like a flash. "Only invest the amount of money that you are willing to lose." By following this phrase, I invest with a peace of mind. If the investment is lost, take it as a lesson learnt. If the investment is right, then our savings will grow at double digit rates. Not only have we beat inflation, we can also retire comfortably.

Here's an example.

Sam is married and have two children. His family managed to save $20,000 after 5 years. What should he do with the savings? 

1.   Put all the money into fixed deposit that gives a rate of about 1.5% per annum, and capital is 100% safe.

2.   Put all the money into stocks that can grow at a rate of 8% per annum, but there is a risk to lose a lot of money.

3.   Put 50% in fixed deposit and 50% into stocks.

4.   Set aside $15,000 in fixed deposit as emergency cash and $5,000 in stocks.

Which of the above choices is the wisest?

It is important to set aside some money for emergency, even if these money value depreciates due to inflation. Once the amount is set, invest the rest of the savings. If the $5,000 is lost due to failed investment, there is still $15,000 to fall on for any emergency. But if the $5,000 is growing at a double digit rate after investing in the right company, savings can growth at reasonable rates to beat inflation too.

Many friends and relatives asked how much money should they invest. My reply is always the same. Set aside the right amount of emergency cash reserves and invest the rest at their comfort level. Of course before investment, we will do research with our diligence and minimize the risk to the lowest possible. Only in this way will we have many successful investments.

Personal finance is for one to decide on his own. It is not for the financial consultants to decide what to do with the money. A responsible financial consultant will only give advice and will never push the customers to invest in a certain product. Take control of your own finances.

Cheers and happy investing.

1st Quarter performance of Jac's picks for 2012

Q1 in 2012 was considered a good quarter for investors. If you remembered my post in January 4, 2012, I had picked 10 companies to invest in. The 10 stocks have increased about 11.1% for the whole quarter. Separately, The chosen US-listed companies has grown 11.5% and the chosen Singapore-listed companies has grown 10.0%. A summary of the growth in value of the different companies are as follows:-

Company	Price in 4 January	Price on 5 April	Percentage gain/loss
US-listed Companies
McDonald's	$                   99.39	$                 98.62	-0.77%
Coca-Cola	$                     69.70	$                 73.47	5.41%
Starbucks	$                     46.17	$                 58.18	26.01%
Walt Disney	$                     38.85	$                 43.08	10.89%
Las Vegas Sands	$                     43.76	$                 58.76	34.28%
Singapore-listed Companies
Cerebos Pacific	$                     5.040	$                 5.810	15.28%
Singpost	$                     0.935	$                 1.030	10.16%
SPH	$                     3.740	$                 3.870	3.48%
Breadtalk	$                     0.550	$                 0.575	4.55%
Popular Holdings	$                     0.164	$                 0.184	12.20%
Overall	$                   308.30	$              343.58	11.44%

The water dragon...and when to invest.

Dear readers,

This blog has been quiet for the past month as there hasn't been any new events that create buying opportunities. In this post, I will include some formulae for you to do your own calculation. Please note that these formulae suit me in my investments and some investors may have their own investment formulae.

I have been using the same formula

Future value = Present Value x (1 + Rate/100)^years

All I need to do is to manipulate the formula into other formulae. With this single formula I am able to calculate the future value of the earnings, share value and revenue. I can also calculate the present values, at what rate is the value growing. These are the 3 things that interest the value investors.

The Microsoft Excel can also help us in our calculations. For now, I will just teach you the RATE function.

By typing "=RATE(number of years,,first value, final value)" Excel will return a value in percentage format. For example, 12.4% means that the figures are growing at a rate of 12.4% compounded for the number of years you keyed into the formula. There is no mistake in the function, you need to type two commas after the number of years.

We use the RATE function to calculate the rate of growth of sales, equity or net asset value (NAV), cash generation and earnings per share (EPS). Why do we need to know the growth rate? These four components form the heart of a company. A business needs to have growth in these four components in order for the company to grow. As a rule of thumb, any company that doubles their value in five years is a value company to invest in.

Meanwhile, enjoy doing your homework.

Cheers.

Cerebos Pacific Limited (CPL) & SingPost

Dear readers,

Jac wishes all a prosperous dragon year. May all investors reap in good profits this year.

CPL and Singpost announced results yesterday. I shall talk about SingPost first.

Singapore Post's Q3 net profit declined 5.2%, still manageable. They are still giving out an interim quarterly dividend of $0.0125 per share, that is, a 10,000 shareholding will earn $125 on 29 February. Anyway, SingPost is a dividend stock, as of now. I am still looking at how the company is going to invest the cash they have in hand. If you were to buy SingPost shares at $0.94 last month, the expected dividend yield for 2012 will be 5.3% per annum. This percentage is calculated using 5 cents total dividend for this year. There may be more dividends in the 4th quarter.

As for CPL, it is a bit more complicated than what is reported. The company compares only their Q4 results, hence reporting a net profit drop of 20%. Why did CPL compare only Q4 rather than the full year results? It was because CPL has changed their financial year from September 30 to December 31. In 2010, the company reported a total of 15 months results instead of the usual 12 months. Hence, it is very difficult to compare a 12 month results to a 15 month results.

However, as investors, we shall be a little more hardworking than anyone else. I have compiled a 12 month results for CPL for 2010. I took the company's results for four quarters in 2010 and add them up to make the result of one financial year of 12 months. Only then, we are able to make comparisons of results year on year.

As we know Thailand's massive flood has caused almost all the companies there to be affected. Cerebos did not escape this disaster either. In fact, their sales were adversely affected by the distribution disruptions. A stronger Singapore dollar against Thai Baht also affects the profit as Thailand is the group's largest market for Cerebos' products.

Comparing year on year, CPL's 2011 revenue was $977 million compared to 2010's $936 million. This is actually a 4.4% increase. Net profit attributable to shareholders for 2011 is $100.1 million compared to $108.7 million last year. This is a drop of 8.0%. It is still considered acceptable. Earnings per share dropped 8.3% from $0.3442 to $0.3155. As a shareholder of CPL, I am still comfortable with the drop in earnings, due to the natural calamity. Of course, the shareholders hope that this dragon year can bring better results.

CPL will be distributing a dividend of $0.25 per share in middle of May 2012. Holding 10,000 shares will earn the shareholder $2,500. The elderly couple that is still holding to their CPL shares has gained a dividend yield of 5.6%. This high dividend yield is due to the fact that they bought the shares at the price of $4.48 per share. In total, this elderly couple earns a total of $0.58 per share dividend for investing in the company for 2 years. Including the increased in share value, the couple's investment into the company has grown by 31.7% for two years. Their invested savings have compounded at a rate of 14.8% per year for two years. Not a bad defensive investment after all. 

Disclosure: Jac is holding on to CPL and SingPost shares at the time of writing this post.

Disclaimer: This post should be used as a reference to educate novice investors. Any kind of investment involves risks. Investors are advised to exercise their own discretion when investing their money. 

Jac's picks for 2012

Hope 2011 has been a great year for you.

2012 has begun and the first two days' tradings show some positive note. I have also made some changes to my top picks. The companies listed below are not ranked.

1.    McDonald's, US
2.    Coca-Cola, US
3.    Starbucks, US
4.    Walt Disney, US
5.    Las Vegas Sands, US
6.    Cerebos Pacific, Singapore
7.    Singpost, Singapore
8.    SPH, Singapore
9.    Breadtalk, Singapore
10.  Popular, Singapore

Please take note that the list are my personal picks. Readers should us it as a reference only.

Disclaimer: Any investment mentioned here is meant to be illustration only. Every investment involves risks. Readers are advised to exercise their own discretion when investing their own money. Writer of this blog shall not be held responsible for any failed investment made.

How did the defensive portfolio fare?

Now let's look at how the elderly couple has fared for 2011 since their investment.


I have included here a sample portfolio for the elderly. This portfolio is a real-life example that I recommeded to an old couple. The shares were bought in mid-2010 and you can take a look at the percentage dividend yield and the returns on invested capital.

A defensive portfolio for the elderly
				as at 30 Dec 2011
Stock (No. of shares)	Buy at	2011 dividend	Realised profit	Unrealised profit
Cerebos Pacific (2,000)	$           4.48	$               640.00	$             640.00	$                 960.00
Popular (50,000)	$           0.15	$               500.00	$             500.00	$                 650.00
OCC 5.1% NCPS (200)	$       105.00	$           1,000.00	$         1,000.00	$                 460.00
	$ 37,460.00		$         2,140.00	$            2,070.00
		% Yield	5.7%
		ROIC (%)	11.2%

Please note that these shares were bought in mid-2010, when the STI index was at 2987.70. The index closed at 2646.35 yesterday. This portfolio gained 11.2% (including dividends) while STI index lost (11.4%). This portfolio beat the STI index by a margin of 22.6%. I would have considered this an achievement.

Remember these points that I have mentioned in my other post.
1.  Value investing is timeless. You can buy undervalued stocks anytime.
2.  A defensive portfolio is able to let you have a good night's sleep. Even during these uncertain times in the eurozone, this portfolio is still able to give the couple a dividend of more than $2,000. 
3.  Buying and holding stocks that are not actively traded can protect your portfolio from the effects of news.
4.  Buy businesses, not stocks. Cerebos Pacific is a company that produces Brand's Essence of Chicken, Popular is a company that is known to almost everyone in Singapore.
5.  Buy a high yield preference shares can almost guarantee every dividend payout at a fixed rate.
6.  Buy at the strike price and not any other price. 

The couple will still be holding on to this portfolio for the next couple of years to enjoy the high dividend yield. Anyway, they are going to receive an interim dividend from Popular in January 2012. Will update on this portfolio at the same time next year. So do keep a lookout.

Happy investing and cheers!


Happy New Year. Let's welcome more good years ahead.

How did Jac fare for his picks for 2011?

This is extracted from my post on 18 February 2011.
These are the companies that I have chosen to invest in.


The companies here are not listed in order of merit.
1. Popular Holdings. Singapore
2. Cerebos Pacific. Singapore
3. Walt Disney. US
4. Starbucks. US
5. McDonald's. US
6. Citigroup. US
7. OCBC. Singapore
8. UOL. Singapore
9. Duke Energy. US
10. Las Vegas Sands. US
Reasons for choosing these 10 companies:
1. Popular is strongest bookstore group in the heartland. Dividend yield can be 6% a year.
2. Cerebos Pacific. High dividend yield of about 7% to 8% per year.
3. Walt Disney. Acquire Marvel to be the company with the biggest number of cartoon characters. Growth stock.
4. Starbucks. Number 1 coffee in US. started to open stores in Japan and India. Opening into single serve area.
5. McDonald's. World number 1 fast food chain. Who does not know McDonald's in Singapore? My children eat their hotcakes or burgers once a week.
6. Citigroup. Growth stock. Balance sheet has improved under the leadership of Pandit.
7. OCBC. Growth stock with dividend yield of about 3.5%. It's growing presence in Indonesia.
8. UOL. Growth stock in residential, commercial and hotels sector. Great leadership Wee Cho Yaw.
9. Duke Energy. going to acquire progress energy to become biggest energy provider in US.
10. Las Vegas Sands. Growth Stock. Building one more casino in Spain.


So how do I fare for the whole year of 2011?
I shall use the share price on 03 January 2011 to gauge the winners and losers.
Let us look are the Singapore shares first.
1. Popular
    Price on 03 Jan - $0.165     Dividend for 2011 - $0.01
    Price on 30 Dec - $0.163     Loss - $0.01


2. Cerebos Pacific
    Price on 03 Jan - $5.25       Dividend for 2011 - $0.32
    Price on 30 Dec - $4.96       Gain - $0.03


3. OCBC Bank
    Price on 03 Jan - $9.41       Dividend for 2011 - $0.30
    Price on 30 Dec - $7.83       Lost - $1.28


4. UOL
    Price on 03 Jan - $4.52       Dividend for 2011 - $0.15
    Price on 30 Dec - $4.00       Lost - $0.37


Singapore blue chips lost 17% for the year 2011, while this Singapore portfolio makes a loss of 8.4%. This portfolio actually beat the STI index by 8.6%.


Now let us see the US stocks
5.   Walt Disney

      Price on 03 Jan - US$37.82       Dividend for 2011 - US$0.60

      Price on 30 Dec - US$37.36       Gain - US$0.14

6.   Starbucks
      Price on 03 Jan - US$33.25       Dividend for 2011 - US$0.56

      Price on 30 Dec - US$46.17       Gain - US$13.48

7.   McDonald's
      Price on 03 Jan - US$76.60       Dividend for 2011 - US$2.53

      Price on 30 Dec - US$100.74     Gain - US$$26.67

8.   Duke Energy
      Price on 03 Jan - US$17.86       Dividend for 2011 - US$1.00

      Price on 30 Dec - US$22.00       Gain - US$5.14

9.   Citigroup
      Price on 03 Jan - US$49.00       Dividend for 2011 - US$0.03

      Price on 30 Dec - US$26.39       Lost - US$22.58

10. Las Vegas Sands
      Price on 03 Jan - US$45.59       Dividend for 2011 - US$0.00

      Price on 30 Dec - US$42.79       Lost - US$2.80

The price for 30 Dec is correct as at 1am Singapore time. There will be some changes to be made the the trading ends in the US.

As for the US side, the blue chips were flat for the year 2011. This portfolio make a gain of 5.73%.

In total, the mixed portfolio has made a profit of 8.33% while the indexes made a lost of 17%. This means that this portfoliio has beaten the indexes by 25%. Consider a job well done for the novice investors.

Although I use closing price on 3 Jan 2011, it does not mean that I buy on that day. This date is chosen for calculation only. In real life, value investors have a personal valuation of the company. We only buy the shares when the stock has taken a beating, else we will just sit back and do not take any action. After the Japan earthquake and the downgrade of US credit, many share has been affected and prices nose dived. That was the time when the value investors took action. 

My personal US portfolio included some shares above, has increased 35.6% in value for the year 2011. I sold my Citigroup shares just before they did a reverse split and I reinvest the money into another stock and I am still holding on to Starbucks. That's the reason why I did not lose any value although Citigroup has lost 46.1%.


My personal Singapore portfolio included some share above, has increased 5.3% in value for the last quarter of 2011. I only started buying Singapore shares in September for the year 2011. That is why I am quite happy with the 5.3% growth in just one quarter.


I am looking forward to increase the value of my invested capital by at least another 15% in 2012. I hope you can do that too. 


In my next post, I will talk about the old couple's portfolio and how they have fared for the year 2011.


Happy investing and have a wonderful new year.


Cheers.