Saturday, August 28, 2010

Noble Group: Really a Multibagger!

Noble Group closed last Friday at $1.60. I went through the SGX website and look through its corporate action history. It was very impressive - multiple bonus issues and a 1-for-4 stock split!

Just for fun, I calculated that an initial investment of $1045 in May 2001, held on till today, would be worth $269094.35 (inclusive of $24294.35 dividends) today. You'd be a millionaire had you invested $10,000.

Well, I seriously doubt there was any retail investor that had the prescience to pick as well as hold the counter for so long (10 years).

How do you spot a multi-bagger? It really is not as easy as it seems. I think one thing multi-baggers have in common, is serious M&A or capital injections. They also need to be in the "right" industry at the right time. Noble Group and Cosco are well quoted multi-baggers. Noble rode the commodities boom while Cosco enjoyed offshore & marine one.

But in my humble opinion, most people have no way of knowing which ones are they. Furthermore, once a stock has had a tremendous run up, the temptation to take profit and re-invest the money into something else.

My Take On It - Let The Winners Run

Unless there is something fundamentally wrong with a stock you are holding, you should let it run for at least a quarter. It is alright if the stock does not move when the others are moving, but warnings bells should ring when the reverse happens.

Being relatively new to the market, I have yet to experience the upset of letting a winning stock go too early. As I have talked about in "Afterthoughts on Gentings", while I regretted selling the casino operator, I was aware that to keep the stock, I had several raise cash or face dilution.

My suggestion is to "spread the bets". Place small but meaning stakes into 10-12 companies that you have thoroughly researched on. Subsequently, if a stock does run up too much, re-assess whether it is due to speculation, or something fundamental like M&A or capital injection. This is because a stock can easily appreciate due to potential rights issues, which is not something you want.


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  2. Hi, i purchased 2 lots of Noble in 2000, and have held on to it for more than 10 years! However it's only worth a fraction of the $269K u mentioned in your article :(

    1. all bonus issue and dividen reinvested?