Friday, November 7, 2008

HDFIV Report Card @ 7 Nov 08

HDFIV is at the moment outperforming KLCI by 8.50% (30 Sept 08: 8.90%) at a loss of 24.32% (30 Sept 08: 14.54%) while KLCI suffered a loss of 32.82% (30 Sept 08: 23.44%). There was a dip in terms of performance during the month - bringing down our performance below KLCI's as IOI and Lion Industries had a major dip. Both stocks recovered and we are back on track in terms of outperforming KLCI.

With our short term trading stratety, we have managed to reduce our cost per share in Lion Industries Berhad from RM1.391 to RM1.160 (19% decrease). We have also added Genting Berhad into our portfolio.

Asset Allocation:
21% cash available for short term trading and continuous cost averaging down.

Thursday, October 30, 2008

How You Should View Bad Financial News

Hey shareholders... will be updating our fund's performance soon. Will be away for eye laser operation tomorrow and hopefully eyesights return in time for me to update by next Monday.

Worried about endless bad financial news recently? Read on...

"Stock markets worlwide are crashing and reaching historical lows...", so you turn on the television to catch the latest market news, so you flip pages of business sections to check how the market is doing or so you hear colleagues talk about not the right time to buy. But instead of logging to CNBC or CNN, imagine that you can tune in to Benjamin Graham Financial Network ("BGFN"). By the way, Benjamin Graham was a great teacher to Warren Buffett. On BGFN, the audio doesn't capture the famous sour clang of the market's closing bell; the video doesn't home in on brokers scrurrying across the trading floor of stock exchanges like angry dogs. Nor does BGFN run any footage of fund managers telling how bad the market is going to be in the next few months.

Instead, the image that fills your TV screen is the facade of the KLCI, festooned with a huge banner reading: "SUPER SALE! 50% OFF". A promoter girl announces brightly, "Stocks became more attractive yet again today, as the KLCI dropped another 5% on heavy selling volume - the third day in a row that stocks have gotten cheaper. Plantation investors fared even better, as leading companies like IOI Plantation Berhad lost another 10% on the day, third consecutive day of 10% drop, making them even more affordable. That comes on top of the good news of the past year, in which stocks have already lost half of its value, putting them at bargain levels not seen in years. And some prominent analysts from big houses like CIM Bank are optimistic that prices may drop still further in the next few months with their sell calls."

The newscast cuts over to top market strategiest, Mr Top Market Strategist of Top Research Firm, who says "My forecast is for stocks to lose another 15% by year end. I'm cautiously optimistic that if everything goes well, stocks could lose 30%, maybe more."

"Let's hope Mr Top Market Strategist is right," the newscaster says cheerily. "Falling stock prices would be fabulous news for any investor with longer time horizon."

(The above article was modified based on an article in page 222 of "The Intelligent Investor, The Definitive Book on Value Investing")

Thursday, October 2, 2008

Testing... Mobile edition

Testing... Testing... Testing 1 apps

Tuesday, September 30, 2008

HDFIV Report Card @ 30 Sept 08

HDFIV extended its run on outperforming KLCI by 8.90% (22 Sept 08: 8.39%) at a loss of 14.54% (22 Sept 08: 14.40%) while KLCI suffered a loss of 23.44% (22 Sept 08: 22.79%. The outperformance is partly contributed by the additional capital of RM6,600 for month of Oct 08, demonstrating the power of cost of averaging and continuous investment on constant basis. I have added a new bar graph for "cash position over net asset value" with reading on the right axis.

I was watching CNBC yesterday night on the debate by the House of Representatives in US over the pros and cons of the financial-rescue plan of USD700 billion. However, I was too tired and fell asleep, only to discover that the rescue plan has been voted down at vote of 228 to 205. Investors in US became jittery and as a result Dow Jones dropped by 777 points, apparently a historical record. This morning, our KLCI followed negatively by dropping by more than 20 points but recovered at the end of the day.

We talked about incorporating short term trading strategy in our portfolio strategy last week. To reiterate, this short term trading strategy ("STTS") is basically to take advatange of choppy price movements but SUBJECT to (a) our fund size which has been relatively big in view of the 8th period; and (b) prices we go in for the trading has to make sense in terms of fundamental (a price that we are prepared to hold or can cost average our current investment).

This week, as part of the SSTS, we have bought 1,600 units of IOI Corporation Berhad at RM4.20 with targeted short term selling price at RM4.50-RM4.60 within contra period. As mentioned, the price we enter into has to make sense in terms of value. By buying 1,600 units at RM4.20, we have also averaged out our cost per share to RM5.05 from RM6.40 (21% lower). So, we have flexibilities in terms of make small and quick gain or continue to hold for longer term with lower cost per share.

During the week, we have also acquired 3,500 units of Lion Industries Berhad at RM1.38 per unit. Lion Industries Berhad is a steel player in Malaysia and a valuation done by OSK Investment Bank Berhad has build my interest in the stock. Will talk about the counter in another article but very quickly, here is an extraction of the valuation:

Profit from steel business for year ended June 2008 (price earnings of 4.8 times) = RM3,463 million
Total investment in Lion Forest Industries, Parkson Holdings Berhad, Lion Diversified Holdings Berhad = RM1102 million and by putting a conservative discount of 40%, the total investment in these listed companies are worth RM661 million.
By adding the profit from steel business and investments in listed companies, the company is worth RM4,124 million or RM5.75 per share.

Asset Allocation:
Comfortable level of cash at 21% after acquisition of IOI and Lion Industries.

Will await for next financial plan by US. I am of the view that that the USD700 billion plan which has been voted down will be finetuned as the US financial market can't afford to continue to be in the dire situation it is in now.

Monday, September 22, 2008

HDFIV Report Card @ 22 Sept 2008

HDFIV is currently beating KLCI by 8.39% (15 Sept 08: 6.96% at a loss of 14.40% (15 Sept 08: 15.96%) while KLCI suffered a loss of 22.79% (15 Sept 08: 22.47%. KLCI dropped below 1,000 points last week and managed to rebound with plantation sectors playing a major role.

Our fund has managed to widen the gap with KLCI's performance with IOI's price rebounding due to stronger CPO price.

We did a minor reshuffling of portfolio to take advantage of our relatively larger fund size. We will allocate a small portion of our fund for short term trading to take advantage of prices yo-yoing in the uncertain market. Downside of such strategy is of course limited as the prices that we are going in are still attractive in terms of value. We have bought 1,500 units of BJTOTO at RM4.38, averaging down our cost per unit from RM4.74 to RM4.50 (10% cheaper) and at the sametime raising our exposure on BJTOTO from 10% to 28% of our fund. We have also disposed of 1,400 units of IOI at RM4.60 with losses of RM467. We are willing to realised loss as the strategy is to sweep back the stock at at lower price with expected profits to be made. This is a short term trading strategy deployed to take advantage of price movements but subject to (1) our fund is relatively big to be able to allocate a small percentage for shor term trading; and (2) prices we go in for short term trading has to make sense in terms of fundamental.

Asset Allocation:
Cash remained at about 20% after our portfolio reshuffling to incorporate short term trading strategy.

Generally, in my opinion, the investors are pretty tired with the political development. In fact, if Datuk Seri Anwar Ibrahim is unable to topple the Governement by his self-imposed deadlines, guess the market might settle down with some short term stability. Market will be very much driven by development in the US. At the time of writing, Dow Jones IA and regional markets have been showing positive results due to the huge plan by the Government to save the dying investment banks in the US.

We have cash and will continue to average down our holdings.

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