End October Portfolio

The portfolio recovered by about 2 percent month-on-month, excluding the value of new Etika stock. Will find some better way to do this by the year end.

Portfolio Pending Activity

We are reaching the end of 2011 and I have only made two purchases for the whole year, namely additional lots of Etika International as well as initiating a position on Auric Pacific. They have not been doing well due to the weak overall sentiment.

To keep the readers posted, I intend to set aside some money to subscribe for the rights share of GMG Global. Based on my current holdings, I am entitled to subscribe to twenty lots of rights share at 9.1 cents each. Also, I intend to take up ten more lots in Etika International bringing to a grand total of forty lots.

That said, I will have to figure what to do once shares in C&O are acquired mandatorily by Shinogi Group. I will have to email the company to know when the proceeds of the acquisition, estimated to be SGD 4,500, will be credited to my bank accounted. I will be sussing for deals in the mean time. If you have any good ideas, do let me know.

China Animal Healthcare Updates

China Animal Healthcare made an interesting announcement. In response to a Straits Times article that suggested the company was an attractive candidate for privatisation, China Animal Healthcare said that it was possible that a restructuring (not privatisation) exercise take place. This would involve only delisting those shares listed on SGX, while those on the Hong Kong Stock Exchange (SEHK) remain trading.

Just yesterday, the company announced its third quarter results for 2011 which were quite impressive. Revenue for the nine months increased 33.8 per cent while net profit rose 84.2 per cent. The strong results were attributed to strong sales of its powdered form drugs and biological drugs.

Putting the two pieces of news together, I would think that such a move is very likely to happen. This is because in general, S-Chips such as China Animal Healthcare have always felt that they are underpriced on the SGX compared to on the SEHK. This is something that the new SGX CEO Magnus Brocker has tried to refute.

GMG Global 1-for-1 Rights Issue

GMG Global announced today a 1-for-1 rights issue, at 9.1 cents per rights share. This is the second time in two years that the company has proposed such a fund raising exercise. The company said that the proceeds may be used for acquisitions or financing purposes. The full document can be read here. I should be subscribing to the rights issue via the ATM.

Update December 31, 2011: I applied for 20,000 rights and 2,000 excess. In the end, I have got only 1,000 excess on top of my entitlement. This brings the total number of GMG shares I currently hold to 41,000 at an average price of SGD 0.094.

Book buying spree in October

I went on a major book buying spree during October and I think I spent close to SGD 700 dollars!

I bought one career-resource book for my friend's birthday; something on philosophy for my library (I do read philosophy!); and three very expensive books related to the industry I am covering at work.

One was a reference book which cost me SGD 256, which I saved SGD 60  on as I had the Kinokuniya membership card during their promotion period. The other was ordered online and inclusive of shipping, cost me about SGD 240.  The last was a textbook that was SGD 100.

The books you do not read

Although I am tempted to expense the cost of the book, I would like to keep the books for myself as well. This is because, at least I know I can bring the books along with me even if I change my company, unless of course some one knicks it from me from the office.

I was also reminded by sister, who read The Black Swan, that it is not about the books you have read, but those you did not read. The underlying idea is that what you do not know is more important than what you already do know.

But that is besides the point. The reason for buying the books is that I feel slightly inadequate at work and I need some form of structured literature to get me through one more year. Continual learning. It has been three years since I have left the University and I think my career path is more or less fixed. And to be good at what I am doing, I will need to use the free time at work and at home to read up on the industry. And so, even if I feel the temporary pain, I know that it may pay off further down the road. If not, I can always try to sell the books on ebay. Off to the bookstore to get a book jacket!

Debt crisis at home

I have been doing something silly recently - applying for credit cards. Previously, I only had one plastic, which is a supplementary card given by my father, the POSB Everyday card.

My "crisis" occurred recently when I started traveling overseas for holidays and for work. The expenses that were charged on the card was within limits, but it affected my savings because say in June when I had booked a hotel, I only paid up in July or even later because the bills were overlooked (but were paid due to GIRO deduction) as they were not addressed to me. Now that I have got myself a personal card, I hope I can bring my spending and saving into a balance (more savings definitely!).

The lessons learnt here are simple. Always set aside money to pay off credit card bills. And while it may be convenient to have and use a credit card, you tend to overspend because you do not feel the pain immediately and it screws up your mental accounting. Therefore, unless you are going overseas or trying to impress your date, you should leave your credit card at home. That way, you will not overspend your month's budget.

Sixty-six dollar and fifty cents profit on C&O Pharma

As some of you may know, Shinogi has managed to acquire at least 90% of all ordinary shares in C&O. It will now acquire the remaining shares that have not been tender at the offer price.

I did a quick calculation and my cost of purchasing 9,000 C&O shares was $4,501, $67.50 dividends in between, while the offer will give me $4,500.

This means that during the same period I have been holding on to the shares, the STI lost about 15%, I made a 1.5% gain!

A 1.5% gain is nothing much, considering that there are opportunity costs that I did not factor in. Also, I am a bit sad to have to lose a drug-maker in my portfolio. Nonetheless, C&O's share price had been languishing for a very long time, and Shinogi looks like a white knight on hindsight.

I will have to email the company to find out when my shares will be acquired and when the money will be in the bank. Hunting season begins when I sort that out.

Is the bottom near or far?

I have not been following the market very closely because most of the news coming out is the same - America, China and Europe (ACE) is crashing or landing softly.

I would like to buy some stock soon, as my position in C&O will most likely be liquidated due to the 95%-threshold being crossed eventually. Also, I have not invested much this year. This is not helped by the fact that the market does look attractive.

In terms of valuations, most of the Singapore blue chips are trading close to the GFC levels.

Personally, I will shore up my stake in an FMCG company or those stocks that have high sustainable dividend yield. This is because my view is that all will come to pass eventually, and picking these stocks does not cause much grief. Furthermore, I do not see how the existing problems will lower the revenue of companies selling basic food stuff.

For the readers, if you have the money, I will suggest global oil services companies listed anywhere, but the holding period will only be 1-2 years from today. Oil is a necessity still and as I have often said, if it were not for the takeover offer, I would be holding on to the shares of SPC.

I have taken a look at the STI charts and identified the start of August as the turning point of the market. My own investment rules tells me to wait at least 18 months before increasing positions. This is usually how long a bear market last. I do not mind buying stocks in the next one month as I will still have at least 10 more months to shore up my money for one big purchase. So to summarise, I am aiming short and long, but not in the middle.

That is of course not taking into consideration, the cost of doing my Masters or preparing for Marriage. Things that start with M.

I cannot wait for the year to end. The past twelve months has been very fruitful.