The To-Sell List: Wilmar, Noble Group, FJ Benjamin, Action Asia

I have been thinking of selling Noble Group and Wilmar International for a very long time. FJ Benjamin and Action Asia have been added to this list because they just sank into the red in my portfolio, while at the same time not showing uplift possibility.

Noble Group has seen increases in revenue without a corresponding increase in net profit. The same goes for Wilmar International, although Wilmar has had a relatively stronger showing in the third quarter of 2013. The weakness of the result further confirms the end of the commodity super cycle but Wilmar's exposure to the food market puts it in a slightly better position going forward.

For FJ Benjamin, perhaps the lesson to be learnt here is that fashion retailing is a very difficult business. At the superficial level, FJ Benjamin has no peers in the Singapore stock market and would justify some premium. But when you realise that it has to compete with the likes of Zara, Uniqlo and H&M, the outlook gets bleaker. There was some wishful thinking on my part that the stock may someday go to the 40 cents level in 2010.

Action Asia could well be the victim of trends moving too fast in the sector. The scenario that everyone in China who has a car and have a display monitor made by Action Asia excited me. However, just look around now and everyone is using a tablet PC, be it a Samsung or an IPad.

Selling a share is never an easy job since we have to admit that we made a mistake and incur the pain of a loss. At the same time, I guess to be successful in the longer term, I would have to accept the changing business reality as well as the system that I put in place to trigger a sale.

SGX Singapore 50 Top Gainers Past 52 Weeks

The top 50 stocks with the largest price increase and with a final market capitalisation of more than USD 200 million is shown above, using my DBS Vickers screener. The market capitalisation criteria was too weed out most of the penny stocks but with the exception of ADRs, most of them were under a dollar. 

The Top 10 from the list and with my comments were:

1. China Environment: I avoid S-Chips in general. I guess the climb up is due to positive news flow. It has managed to place out shares to institutions as well as announce several big contracts. 

2. HanKore: Another S-Chip? It seems like company will acquire some assets through a share offering. In my opinion, that is not very good as in increases the supply of shares although one my argue that the acquisition would unlock synergies. 

Investment ideas and wealth allocation for 2014

I had a short discussion with another blogger recently and we agreed that there will be a sharp market correction this year but we could not agree when it would be. Unfortunately, I jumped the gun by acquiring 3 lots of Super Group wiping out most of my free cash for the year in the process. As a result, I am left with the options of selling my current holdings to fund purchases during the “Great Singapore Sale” or being more hardcore and saving up even more capital.

Why do I think there will be a correction this year? I actually thought and wrote that we may enter a bear market a few months back and now. Based on Straits Times Index’s movement over the past seven months, I can confidently say that we are in the middle phase of a bear market.

I would add that this is more the case for the Singapore market than the US market. If you had not realized, one of the classic trailing indicators of a bear market has appeared, namely, falling property prices. While the decline in property prices is more pronounced in public housing, I believe that this is also the same for the private sector.

Why do falling property prices follow a falling stock market?

Start point for 2014: SGD 87,121

This post is just for reference for the 2014 annual review.

Portfolio at end-December 2013  values, including some Petra Foods (3 lots) purchased midway that was not factored into the 2013 review.

Stock value : SGD 72,095
Dividends received : SGD 4,514
Cash injections : SGD 10,512
Total investible portfolio :  SGD 87,121

This does not include my very recent purchase of Super Group ~ SGD 11,320. I will probably settle this than contra it like I did the last time.

Bought a new Oxelo Town 7 kick scooter

I ordered an Oxelo Town 7 kick scooter over the weekend and it got delivered to me via SingPost yesterday. A kick scooter or a bicycle was on the list of things to buy, but due to space constraints and impulse, I chose the kick scooter instead. The evils of online shopping.

I took it for a trial around the neighbourhood and being a cool night, I spent at least an hour and a half scooting around with my new toy. I did get a few stares because kick scooters are not what adults usually wander around in. Maybe roller blades or bicycles. Or my bad dress sense.

I have not tried other brands of kick scooters yet, but the Oxelo's design was well worth it (European design but made in China). Took me a while to figure how to fold it but it will definitely be useful if you need to take the train or bus. The downside was that some parts of the pavement I was on were very old and caused me a bumpy ride. Otherwise, the ergonomics of the Oxelo - for people up to 1.95 meters tall and 100 kg in weight - meant that I could keep scooting for a long time without back pains . Either that or it could be just my enthusiasm.  

Can we still depend on investment moats?

I have been taking an MBA module as part of my Master's requirements and came to realise that the firm Michael Porter co-founded and premised on his Five Forces, Monitor Group, was declared bankrupt and sold to Deloitte in late-2012 and merged into the accounting firm's advisory practice. 

There are some articles as to why this came to be from the Economist and Forbes (Forbes initial article here).

The reason I termed my post as such is because a lot of my thinking stems from finding businesses with sustainable competitive advantages, or investment moats. This line of thinking is seen in Warren Buffet and Jeremy Siegel, both who preach the long term buy-and-hold investment approach. But if the founder of this way of thinking cannot keep his business alive, can we depend on the tools that he has provided us?

My Two Ray-Ban Sunglasses

I bought two pair of Ray-Ban sunglasses recently (shown above), one a Wayfarer and the other, an Aviator. Together, they cost me about almost SGD 800 and I purchased them from the reputable Paris Miki. 

I was initially hesitant wearing them because it made me look too pretentious. But after a few times wearing them during lunch, I found them useful in protecting me from the glare of the sun. I think the next step for me would be to source for corrective eye surgery (otherwise known as LASIK) for just my right eye, which has slight astigmatism.

Portfolio Review 2013: Portfolio - 8.4% vs STI +/- 0%

The Straits Times Index remained almost unchanged from a year ago but my portfolio lost about SGD 16,000 in value during the 12 month period, or 8.4%. This would be narrowed to a loss 5.1% in portfolio value of If I were to add back the distributions from Elite KSB but exclude ordinary dividends. All in, my loss for the year was 2.1% and it makes the second time I under performed against the benchmark index.

Worst Performer: Majority of the stocks in my portfolio sank in the red but this dubious distinction goes to Elite KSB. The price went down to its net asset value price after the company redistributed most of the cash in its coffers. 

Best Performer: Etika International was the best performer, carrying some momentum from the previous year.

2013 was a year that I had been less active in monitoring my portfolio aside from the lead up to the purchase of more Petra stock. My inactivity was due to a very poor stock market as well as too many demands on my time. In a bull market, people tend to be more active in seeing the paper gains. For the coming year, I will have to make a decision whether to pump more capital in the stock market. I already have some US share ownership through the company plan and it has been working well, since it can be considered "free". This assessment will be in a coming post. For 2014, I will include the value of Petra Foods stock that was acquired in July. This had been omitted for convenience sake. 

2013 Action Item versus Deliverables