Wednesday, July 6, 2016

Company merger looms nearer

Not much happened in between the three months since my last serious post at the start of April. I was busy with my evening classes and darts. Day to day work was busy, rushing through consulting projects and client presentations. Work life was punctuated by news of colleagues leaving mostly involuntarily as the company sought to trim headcount ahead of the impending merger as well as in response to the weak market situation.

After abandoning the much-loathed strategy of serially acquiring companies, our company went big and announced it was merging with another company (let's call it Equal). A strategy of acquiring companies is good for shareholders (including the company executives who have share compensation plans) in the short-term because it boosts earnings as well as market share. It is also a means for the company to acquire capability.

However, studies have shown that companies tend to overpay for acquisitions. As a result, share price will underperform in the longer term, despite the vaunted synergies. Just do a simple online search and you will find endless studies supporting this. Evidence that suggest otherwise are typically submitted by M&A consultants who wish to stroke the egos of CEOs. And make the advisory fees of course. At the employee level, it means lesser cash that could be spent on investing in organic capabilities. With a bigger product suite, there is the need to integrate them but this always face resistance where the capabilities overlap.

In a span of three months after the initial announcement, the merger with Equal will take place in a few more weeks. Given that Equal is focused selling to another industry, the impact of the merger will be minimal to me in the short term. Those working in functional groups such as IT, HR, Finance and Estate will probably be edgy. After all, the heads of the two companies promised shareholders that there will be immediate cost savings. There is a very likely possibility that Equal employees in Singapore will move into our current office. Cramp conditions, especially poor toilet conditions will be the order of the day. What will be most interesting to watch is how the senior managers jockey for limited offices.

Sunday, July 3, 2016

Stock portfolio posts 16.8% YTD returns

Despite Brexit, my stock portfolio managed to post a year-to-date increase of 16.8% compared to the Straits Times Index's 2%. The portfolio increased from SGD105,200 at the end of 2015, to SGD122,900 at the end of 1 July 2016.

My top performers in terms of dollar contribution were Colex Holdings and Delfi (former Petra), each adding around SGD8,000 to the portfolio. F&N was the worst performer in terms of dollar contribution, losing me SGD910.

Friday, May 20, 2016

Excessive amounts of time spent playing darts

I was on afternoon off yesterday. Without anything firm in mind, I decided to play soft-tip darts yesterday before heading home. This turned out to be a 2 hour affair. Another short 1 hour session ensued after I left Bugis. This time, I threw my darts at a pub much closer to home. I must be playing at least twice or thrice a week. Those sessions where I fly solo, I only spend 1 hour each time. Those weekends with groups, usually last three hours as there is talking, drinking, eating and the watching of football. This probably has helped take my mind off the falling Straits Times Index. Oh, but I just received my tax bill too. Time to earn my keep!

Saturday, April 2, 2016

Singapore stock rally helps lift Q1 performance

The Singapore stock rally in late-February and early-March helped lift the portfolio. My basket of shares gained 14% (inclusive of dividends received) compared to three months ago, compared to the STI, which fell 1.6% during the same period. Transactions were limited to the purchase of 12,000 Super Group shares over on two occasions, as well as, the receipt of F&N dividends. There is about SGD220 in free cash.

GMG Global saw the sharpest percentage share price gains. The rubber planter grew 90% mostly on news of the merger with Halycon Agri. Petra Foods was distant second, rising 33% during the same period, mostly on very thin trading volumes. Dollar-wise, Petra added the most to my portfolio, increasing it by SGD7,600. F&N was the only counter that failed to register gains.

In line with my March forecast, I expect the road to recovery ahead, to be less bumpy. I do get the sense that while the depressing macro news - recession, unemployment, falling housing prices - has just started being reported, the worst (in terms of emotions) is over. I will be building up cash though, as it is a goal that I have been neglecting.

Monday, March 7, 2016

Another day, another dollar

At the MRT, on the way to work, a colleague tapped on my shoulder. While catching up on the weekend's football matches, he told me that he had tendered his resignation and that his last day was in the coming weeks. He is a relative senior colleague in his late-30's. He shared that he was joining a competitor but I couldn't quite guess which one it was. It was good for him. Our company has been having a few bad quarters and retrenchments - or reduction in force - has been on going. Budgets have also been scaled down although I would point out that investment in organic capability was scarce. The company preferred to grow revenue by acquiring other companies.

Colleague who had tendered agreed with us that the company didn't really care about employee feed back, despite appointing "champions" to better understand the issues that affected employee happiness. The track record of being ignored has been consistent during both our times with the company

Lunch. It was a very warm day but I made my way with some other colleagues to the nearby hawker centre. I had salad because I have not had enough fibre in my diet. The others had Malay food as well as some famous wanton noodles. I ended my lunch with ah balling. It almost caused another of my shirt button to explode. The first one came out in the morning and I shoddily sewed it back on with thread with a non-matching colour.

Lunch discussion escalated quickly after one colleague asked if I knew this person was a new colleague. She said she was busy this week because she was tasked to give colleague M training on how to use one of our products. Others in the lunch party started to chime in with their thoughts that another colleague D should be the one providing the training. The lunch party suggested that our product was easy to use and training could have been self directed.

Back at the office, I stood along the hallway that joining the lift lobby and the cubicles. The hallway was much cooler than the rest of the office, offering me respite from the stifling heat and humidity encountered on the way to and back from lunch. At my seat, I knew I hardly spoke to my team mate as we both had our own research agenda.  Most other days, we exchanged the daily pleasantries an nothing further. It was colleague K's gym day and so he did not join the lunch party. I let K know that another colleague had tendered his resignation.

The day came to a quick end. It was uninteresting. Deadlines loomed closer for me but I did not make significant headway as more research was needed. Research which included literature review. I was drained by the mental exertions. Nevertheless, I slowly made my way to the west for my dinner.