Thursday, January 8, 2015

What to do with $30,000 free cash?

The portfolio value for measuring 2015’s performance is SGD 115, 736 and this includes an assumed SGD 15,000 cash injection. This will be corrected for any dividends I may have missed out for 2014, once the yearly SGX statement arrives in my mail.

At the end of today’s trading day (8 January), the portfolio is valued at SGD 116,158 and it comprises almost SGD 30,000 in cash, and SGD 86,000 in five stocks – Colex, F&N, GMG Global, Petra Foods, Super Group. Only Colex and Petra are in the money. I am sitting on a 30% loss for Super Group as it claims to be affected by the impasse in Thailand. The feeling is not so super. GMG Global and F&N are slightly less in the red (-24.5% and -10.7% respectively). GMG has rallied in the start of the year, against the trend of falling natural rubber prices and this may imply a possible cash call.

I am going to stick my head out and say that 2015 will be a good year to buy stocks. My gut feel tells me that when the price of crude oil reaches almost bottom, about USD 45 per barrel, it is time to load up. I have provided the link for your reference. 

Furthermore, as it is the second-last year of America’s President Obama second term and my “sifu” Kenneth Fisher says that he is likely to dole out the goodies, benefitting US stocks. This will in turn have a spillover effect on the local stock market. Read the following for more details.

I must warn that I think oil prices are likely to stay low (below USD 60) for some time (under USD 80 for 2-3 years as OPEC tries to put to a stop US shale projects. The sustained low prices means that Singapore-listed companies that supply to the oil companies will also be in the doldrums for a while.

Having painted what I think is the bigger picture, I intend to use the free cash in two tranches. The first tranche will be used at the first trigger point (bottomed-out oil price). The most likely target is F&N as it still remains a strong brand, notwithstanding the loss of the Myanmar brewery business. When the second tranche will be disburse will depend on when the money is raised and the target will most likely be either an exploration and production company or a small-sized bank. I am of course open to suggestions via comments or email (sgxstockpicker at gmail dot com).

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