Mid Year 2017

Stock Portfolio Returns 

Year-to-Date Portfolio Returns:20.7%
STI index excl dividends: 12%

Number of stocks in portfolio: 24

Stock Portfolio Rules

1) Keep number of stocks in portfolio to 20-25 stocks.

2) I can only buy the stock till it is 10% of my portfolio

3) No stock can be larger than 20% of my portfolio. If the stock rises to above 20% of my portfolio, I need to trim my position in the stock.

Thoughts on Portfolio

It is harder to find stocks to buy in Singapore market. I have been sellng more Singapore stocks than buying in the last two months.

Instead, it is easier to find stocks to buy in the HK market. I have been buying HK stocks instead in the last two months.

Some portfolio actions in last two months:
Singapore Stocks
- Sold 1/3 of my Dutech position, in veiw of the poorer than expected 1Q 2017 results. If Dutech dropped by 10%, I may add to my Dutech position

- Sold down 75% of my position in Valutronics before the bonus share issue. The bonus share is 1:10. Is leaning towards keeping the remaining Valutronic shares for the dividends. Nonetheless, I may also dispose of the shares, as the position is smallish (around 1% of my portfolio).

- Sold 1/2 of my position in 800 Super at $1.32. The sale is due to the poorer than expected 3Q results. The sale will reduce my concentration in this stock to 5% of my stock portfolio. Prior to the sale, 800 Super is 10% of my stock portfolio.

- Sold 1/2 of my position in OCBC at $10.92. The sale is to take profit. After the sale, OCBC is around 1% of my portfolio. If the price rise further, I will sell all my remaining shares in OCBC.

- Add to my position of Far East Hospitality Trust (FEHT) at $0.615. FEHT is around 4.5% of my portfolio.

- Add to my position in Cogent. I think Cogent earnings should continue to grow in the next 1-2 years.

HK Stocks
- Bought Hui Xian Reit, which is now around 2% of my portfolio. This reit offers more than 8% yield and trades at 2/3 book value.
- Bought China Overseas Land, which is around 4% of my portfolio. It is a China developer with rather interesting ROE of higher than 15% in the last few years.

Thoughts on Stocks

It is interesting that HSBC is now $72 and a year ago, you can snag it for less than $50. Too bad that I was not able to foresee this increase in share price and the under-valuation of HSBC a year ago, even though I am aware that the sentiment on HSBC was quite poor.

I read from somewhere that China banks are among those stocks with very poor sentiments. I agree somewhat with this view as the PE ratio of Big 4 China banks are quite low, even though there are some risks in investing in China banks. I may buy some shares in a big 4 China bank (listed in HKSE) if their share prices fall further.

Portfolio Returns

Year	% Returns	STI (Excl Dividends)	Remarks
2004	6%
2005	35%		Returns/Declines boosted with slight leverage. 2008: Great Recession
2006	130%
2007	46%	15%
2008	-70%	-49%
2009	147%	64%
2010	78%	10%
2011	-46%	-17%	Declines in S-chips and excessive concentration into 5-6 stocks
2012	25%	21%
2013	15%	-1%	Diversified into 19 stocks
2014	8%	6%
2015	4%	-14%	Oil & Gas crisis
		STI ETF (incl Dividends)
2016	19%	4%
2017	33.6%	21%
2018	-11.9%	-7%	Fail to hold more cash during Jan-Feb 2018 Buying low quality stocks at height of optimism in Jan
2019	8.4%	9%
2020	3.6%	-7.5%	Covid 19
2021	14.7%	12.5%
2022	-13.7%	7.6%	Higher % in US and HK stocks
2023	4.5%	4.0%	HSI (2800 etf) dropped 10.4%, while S&P 500 rose 26.3%
2024	45.2%	22.1%	HSI (2800 etf) rose 22%, while S&P 500 rose 25%
2025	22.0%	27.2%	HSI (2800 etf) rose 33.8%, while S&P (SPY etf) rose 18%

Bull Market, Buying Reits

It is a bull market this year, with STI (Strait Times Index) up 12.1% year-to-date.

Bull market implies, in general, more expensive valuation. I find that the current stock market are quite close to full-value and I expect lower returns down the road. 

As stocks are close to their full-value, it is getting harder to find good stock ideas.

I have sold some stocks recently i.e. FCL, Lian Beng, as mentioned in earlier posts, and thus have some capital to deploy.

The capital are used to buy two reits: SoilBuid Reit (SBR) and Far East Hospitalality Trust (FEHT). Personally, I don't like to own reits, as reits generally have high price-earnings ratio and we are in rising interest rate environment. However, due to the lack of ideas, I have to settle on reits.

SBR and FEHT are bought with the possibilty of 'turnaround' in dividends.

For SBR, its Loyang Way premise is 90% empty now, as it was vacated by an O&G company last year. If it manages to lease out the Loyang Way premise in the next 2-3 years, there will be some upside to the dividends and hopefully share price.

For FEHT, the idea was from 3Fs (A Path to Forever Financial Freedom) blog, who bought CDL Hospitality Reit (CDLHT) and FEHT, in anticipation of the turnaround in hotal room rates in 2018 or later. I have bougth FEHT, but not CDLHT, as CDLHT has run up quite a lot this year. FEHT is around $0.61, not far from its 0.58 low.

SBR and FEHT are low risk, low return ideas to me. You get paid for waiting for the turnarounds. If the turnaround don't happen, you still get your dividends. If the turnaround materialise, you get some capital gains. Of course, I may still lose money in SBR and FEHT, if their operating results are worse than expected. 

Accepting what the market gives you

I am on investing note platform. Recently, investing note has a few post noting the possibility of market correction, and taking steps to prepare for the possible correction (e.g. buying low beta stocks at 52 weeks low, holding more cash).

Personally, I don't know if a correction is near. The market current seems more optimistic than in the past few 12 months. But, this was the market that fell from its high of STI 3,500 in 2015. Will more optimism lead to correction? No idea. I do note that the world economy is in a better shape now compared to last year, and the stock market reflected this.

Instead of preparing for correction, I will try to accept of what the market gives me and act accordingly.

If the market rises a lot and benefit me, so be it. As the market rises, more stocks may reach my target prices and I will start to reduce my position in them. In addition, I will be unable to find stocks meeting my criteria to replace the sold position. This lead to me holding more cash, if the market rise.

If the market corrects later and erase my gains, so be it. As the market fall, I may find new stocks meeting my criteria or average down on my stock holdings and hence increase my stock position. Currently, including CPF, I am around 60% in stocks. Thus I have ample funds if I am to buy more stocks.

Selling Developer Stocks

I own 2 property stocks sometime this year. One is Fraser Capital Limited (FCL), the other is Lian Beng. The position in each stock is not large. (It is around 2.5%-3.5% of my portfolio).

FCL was bought last year in July at around $1.50.  Last month, I sold it for $1.72, as it rose by fair bit, after the Government announced cooling measures on the property market. I sold it because I thought that the cooling measures do not really affect the property market. On hindsight, it seems that I sold too early. FCL traded at $1.765 today.

Lian Beng was bought some time in Jan this year at around $0.48. I bought it due to its low price to book value of 0.45. Some forumers have concerns on its high debt to equity ratio. I think that the high debt is mitigated by Lian Beng's diversified property portfolio and its prudent overseas ventures helps. (i.e. Lian Beng join other developers on overseas projects.)

Yesterday, Lian Beng run up by a fair bit and I sold it at $0.62 today. The run-up seems to be due to its 10% stake in Gaobeidian. I think that the 10% stake seems rather minor and may not affect Lian Beng's value a lot. Hence, I take the opportunity to sell it today. If Lian Beng falls below $0.50, I may consider buying it back.

After selling FCL and Lian Beng, I no longer own any developer stock. This is fine with me, as I find developer stocks hard to value. This is also why my position in property stock will not be large.

Clearing deadwoord, buying back

STI has rose 8% in the first two months of 2017. Given the rise, it's harder to find stocks at prices that I like.

I had been selling some stocks, as its fundamentals has weaken. The sold stocks are Singapore Shipping (a stock that I should sold earlier), FSL Trust (after the CEO quit incident) and Kingsmem Creative (sold half, after its poor results).

In the mean time, I bought some shares in Lian Beng, as its price to book is quite low. The position is not large, as I do not like investing in property counters and I am not good in investing in them. 

I also bought back some stocks in China Aviation Oil (CAO) after its release of its FY 2016 results. Its FY 2016 results are not bad, but the stock valuation is not terribly cheap either. Nonetheless, I like the fundamentals of CAO i.e. sole aviation oil importer in China, a stake in refuelling company for Shanghai airport and expanding its presence to other countries. It seems that CAO is expanding its presence in US in 2015 and Middle East in 2016. 

2016 Returns

2016 Returns

My stock portfolio returns this year is +19%, beating STI returns (excl dividends) of 0% and the STI returns (incl dividends) of 5%  (based on STI ETF as at Nov 2016)


The returns are largely due to 2 stocks: China Aviation Oil (CAO) and 800 Super. (I am still holding 800 Super in my portfolio, but I no longer hold CAO. I may buy CAO again if the price drops.)

What I aim to do in 2017

As mentioned earlier, I aim to inject funds into my stock portfolio such that my stock-to-cash ratio will be 60-65% in 2017, as the opportunity cost of cash -- i.e. returns if invested in stocks -- is significant.

In 2016, I have steered my portfolio towards GARP (Growth at Reasonable Price) stocks. Hopefully, I can continue to find GARP stocks to buy in 2017. It is quite difficult to find stocks with quality and growth at reasonable price. 

If possible, I should set aside a portion (maybe 5%-10%) of my portfolio towards buying stocks which had fallen a lot, market is very pessimistic about, but the problems are temporary and the stock has a chance of recovery. Thereafter, when I had bought the stock, I should die-die hold the stock for 2 years regardless how low the stock fall. This is something I may do, if I can identify such stock in 2017.