Tuesday, May 22, 2012

Elite KSB to sell off core business to Lee Say Group

Elite KSB on 21 May 2012 entered into a conditional sale and purchase agreement with Kendo Trading, a subsidiary of the Lee say Group, for the disposal of the entire issued and paid-up shares in each of the capital of its wholly owned-subsidiaries, KSB Distribution , Jordon International Food Processing , Soonly Food Processing Industries and SAFA Gourmet Food. Full announcement here

My understanding of this announcement is that the poultry distribution business is being sold off to a bigger but private company (Lee Say) and that all that remains of Elite KSB Holdings are its unsold investments, proceeds from the sale and one property that they did not manage to successfully sell earlier this year. Shareholders such as myself will have to guess whether it any special dividends will be announced upon completion of the sale.

Sunday, May 13, 2012

No simple way to pick winners

I recently finished reading "The Halo Effect" by Phil Rosenzweig, a book which focuses on the delusions that business managers tend to suffer. Those who have read "The Black Swan" will find similarities in the book, such as their attack on the use of faulty statistics.

For instance in Halo, the author pointed out that studying and identifying the characteristics of successful companies at a point in time, without looking at the not so successful companies, will only introduce a bias in the analysis.

While we might try to identify the commonalities amongst the winners, replicating their methods may not bring about the same results, due to the flaws in our identification process as well as execution. Luck also plays a part. Bringing the logic in Halo over to stock picking, there cannot be a sure win method for picking winning companies. Having said that, there are ways to increase your probability of success, such as by reducing your costs of investing and by having diversification.

Does this mean that stock picking is dead?

Quick update of things I have not done:
I have not sold Stratech or ChinaAnimal yet, since the market as a whole has been week. I am trying to find my DBS token (which generates a number) as I cannot recall whether I left it in the office or at home.