Over three separate transaction, I picked up a total of 80 lots of Colex. I did this after freeing up some cash towards the end of the quarter with the tidying up of the portfolio. The main reason for me collecting shares of collect was that it had been on my watchlist since 2009 and it was one of the shares that had yet risen much since then, I thought. As per Bloomberg, Colex's share price has risen from a bottom of SGD 0.08 three years ago to its current price of SGD 0.29. To a large part, due to the lack of trading volume for this share, I believe I contributed to most of the price increases the start of October.
The business model for Colex is straight forward - provide waste management for the West side of Singapore mainly through fixed long term contracts. As long as Singapore's population grows, particularly in the West side, earnings will grow in tandem, assuming cost remains the same. The main reason for cost escalation will be manpower costs although fixed capital for the trucks will weigh down future earnings.
The chart above shows why Wilmar is currently languishing at just above $3 when at its peak in 2010, it was worth $7. After a strong run up, crude palm oil prices have come down sharply. As per the index, the CPO prices were at the 1,300 level in February 2011, but the latest end-September index is 710. The supply of CPO has adjusted to demand and prices hence have collapsed and producers such as Wilmar have a difficult time improving margins. Other producers such as First Resources seem to have de-trended from CPO price levels, but I still think the fundamentals are still weak at the moment.
I took a big hit on my investment in Wilmar and to a large extent I regretted. This is because I bought the stock because it looked like a discount from its old days. However, the old days, like the VHS, never did come back. That is why good thinking processes must be in place to make sure silly purchases like this are kept to the minimum. Good processes such as understanding the industry's and company's fundamentals are crucial to protect profits.
I visited Perth, Australia, with two of my friends over one of the September weekends. I flew in by Jetstar and got out by Scoot. The Jetstar flight got delayed but fortunately, I was covered by travel insurance. Because I booked early, my total airfare was close to SGD 400. Again, I stayed over at my friend's spacious apartment in the CBD and that minimised my lodging expenses.
The itinerary was very predictable. Everything you have heard about Perth is very true. It is quiet, slower paced and lacks commercial tourist attractions. Outside the CBD, the number of Asians who have migrated to Australia or are working here, is very high. Still, this is not as high as the number of foreigners working in Singapore.
Day 1 started very late. Our rescheduled 7 am flight reached Perth airport at 1230. By the time we got to the city center, it was 2-3 pm. Our first meal was at a local fast food burger joint Grill'd somewhere in the vicinity of London Court. The burger below set me back by AUD 15 dollar! Food photos are the good work of my friend.
It has been a crazy past few days. After months of inertia, I have finally sold off Action Asia, Biosensors, FJ Benjamin and Wilmar. I have held the first three stocks since almost the beginning of my investing journey, close to 5 years each on average. Wilmar on the other hand, was bought and sold after 20 months.
For this transaction, Wilmar and FJ Benjamin were losers. Perhaps I was too optimistic of the prospects of crude palm oil and hence Wilmar's future. I lost 18% or SGD 1,440 on Wilmar, a blow that was softened by the dividends the company distributed. Also, I could never imagined that fashion retailer FJ Benjamin would sink so deep in the red for the latest full year end, after years of small profits. I lost 14% on FJ Benjamin and again, the dividends collected over the past 4 years helped cushion the impact of capital depreciation.
The winners were not really winners. Action Asia raked in 10.5%, or just SGD 154 for me, but that was mainly because the manufacturer was consistent in its dividend payout, and after close to 6 years holding on to the stock. Biosensors, raked in 36.2%, or SGD 587 but this was mainly capital appreciation. At one point, Biosensors was my two-bagger, but after one of the substantial shareholder dispose of its stake, it began on a steady downtrend that it has yet to recover.
My portfolio including the value of dividends and free cash at the end of September, increased 2.8%, versus the 3.4% increase over the similar period by the STI. Approximately 30% of the portfolio was in cash or unused dividends, meaning given the recent meltdown as a result of the demonstrations in Hong Kong, the decline would have been worst. I personally think that give 1-2 weeks, the whole issue will settle down, although the downtrend has been terrifying for some.
I did some transactions on the final day of September. I sold my two lots of Wilmar at a 20% loss of value. I also bought some 10 lots of shares in waste collector, Colex. I have since added another 43 lots to my portfolio. It is a very illiquid stock which makes me wonder how am I able to dispose of my holdings in the company without incurring high transaction costs.
Entering the last quarter of 2014, I think it is time for me to clean up my portfolio even further.
