Saturday, January 1, 2011

Stock Portfolio Review 2010: "Better than I had expected"

The S&P500 index started the year at 1115.10 points and ended at 1257.88 or 12.8 per cent higher. Despite the possibility of a double dip recession, the American stock market managed to chalk up positive gains on the account of more stimulus from the Federal Reserve, notwithstanding the lack of jobs created.

Over in Singapore, the story was much brighter. Not only did the economy surge by double-digits, unemployment rate was also supposedly at its lowest. The Straits Times Index started the year at 2897.62 and added 10.1 percent to close 3190.04.

If you were able to recall, many analysts were very bullish at the start of the year, calling that that 3,200 mark to be easily broken by the middle of the year. The STI only traded in that region for the month of November and has since been weak. I myself was calling 2010 a year that the market will move up a little and this has been accurate to the extent that I did not give specifics.

For 2011, if this is part of a long term secular bull run, I am guessing that the STI will move up 5-8 percent. At the moment I can envision plenty of scenarios that will cause the stock market to trade weaker - China raising interest rates, America raising interest rates (very unlikely), Eurozone meltdown II - but I am a net optimist because there is just too much money avoiding the developed countries. The inflow of capital to Singapore and the region will be the main driver of higher asset prices. That said, I do hope that the MAS increase interest rates to prevent the US dollar from slipping to ridiculous levels against the Singapore dollar. 

How did the portfolio do?

In terms of dollar value, the portfolio was worth $21,810 on the last day of 2009 based on asking prices. Since then, I have made 5 purchases during 2010, namely China Animal Healthcare, Elite KSB, FJ Benjamin and C and O Pharma (2 times). Together, it brought the total amount of personal capital injected to $20,000. Including these additions, the portfolio managed to end the year 40.2 percent higher or $12,375 more in terms of unrealized gains.

There were stocks that cost me money but because they were either new additions or relatively small positions, my total paper loss on them was $640, which was more than even out by the gains. I am seriously thinking of cutting my loss on Stratech or Asiatic but the proceeds from selling them is around $1000 which makes the transaction cost seem punitive.

A review in terms of top 5 contributor stocks follows.

Etika International
More than doubled in terms of terms of share price but due to my bigger initial holdings, pipped GMG Global to the top of my performing list. Share price was lifted mainly by organic growth of its business as well as recent acquisitions. This was further sweetened by its proposed 1-for-1 bonus issue which cause the stock to rise beyond $1.00. Price has since come down as I believe profit taking is in order. Key risk for 2011 is raw ingredient prices, mainly rice and tin, spiraling out of control. End 2011 Target price (EY11TP) - $0.60.

GMG Global
The most wrote about stock almost tripled at one point of time but did not top the $ list because of my small holdings. Share price was lifted mainly by the very bullish sentiment arising from weak supply conditions causing natural prices to trend very much higher. It too has made serious acquisitions and unveiled big plans to increase its plantation acreage. However, GMG Global shares took a beating recently due to the political crisis in the Ivory Coast, which was predicted. Key risk for 2011 should be anything other than African politics as I believe that it has been priced in. EYTP - $0.40

Elite KSB
Up 44 percent. Quite a surprise actually that this stock made it to number three and I had to do a double take. The chicken processor raised its dividends for the second year in a row probably due to a better integration of Jordon during the previous years. Coupled by its very limited public float, this has helped the stock's returns. Unless the MAS increase interest rates, which will strengthen the Sing $ versus the Australian $, it will have an impact on its pork product margins. EYTP - $0.32

Biosensors International
Up 42 percent. After an initial frenzy that was sparked off by various re-ratings, with DBS Vickers looking at $1.20, the heart stent maker has gone off the radar so to speak. If I remember correctly, the Biosensors has had a management reshuffle whereby a co-CEO was appointed. This is definitely to ensure that the company can penetrate the Chinese market, specifically turning its 50 percent joint venture there, into a fully controlling one. More homework should be done to ascertain how long is its technological advantage is being sustained by the patents. EYTP - $1.40.

FJ Benjamin
Started the year in my portfolio at about $0.33 but I went to buy more of the stock and hence ate into some of the percentage gains. To a large extent, the company has been a direct beneficiary of the economic recovery in the region. It has also been aggressive acquiring newer brands under its stable as well as promoting its in-house brands such as Rauol. Extrapolating recent first quarter results, I expect full year results to be released on August to record profits of at least $14 million possibly increasing per share dividend. EYTP - $0.60

No comments:

Post a Comment