Wednesday, August 20, 2008

HDFIV Report Card @ 20 Aug 2008


HDFIV is currently beating KLCI by 4.24% (8 Aug 08: 2.87%) at a loss of 15.11% (8 Aug 08: 12.81%) while KLCI suffered a loss of 19.34% (8 Aug 08: 15.69%). No sight of recoveries in KLCI's performance. Key concerns remained as global economies moving into recession (or already have) as well as the political uncertainties in Malaysia.

No new purchases or disposals this week. IOI announced its quarterly results this week. Summary of results are available in next article.

Asset Allocation:
7% cash.

KLCI is currently at 1,000-1,100 level but we have underweighted on cash. We will continue to acquire battered stocks with monthly cash inflow. Current unrealised loss is not a main concern due constant inflow of funds. For a simple illustration, current loss of 15.11% can be easily averaged down to 7% with the cash inflow of RM30k plus in the next six months. That is excluding interest income on the cash deposits. Many would argue that KLCI is still heading downwards and now is not the right time to buy. Question back to them is how low before we should start buying? More often than that, proponents of "You should not buy now!" will start buying at higher than our costs as they will only start to buy when KLCI starts to trend up. No doubt, profits can be made as KLCI is trending upwards but these proponents will continue to practise buying at higher price with profit taking (after making minimal profits). Of course, they will argue that they have proper loss cutting mechanisms in place etc.

Don't think we will be able to stop arguing if I continue to write about different strategies adopted by different practitioners. Our fund style is simple - buy when no one is buying (as you can see now) and sell when everyone is selling (which you will see later as in 2-3 or even 4-5 years down the road). If KLCI drops to 800 points, we will still be smiling as our cash coffer is replenishable on a monthly basis, providing us continuous bullets to tackle the market.


A said...

Miss Seane,

I agree that we should be drip feeding; ie adding the equity stake progressively. That is a default anyway becos we don’t have a huge lump sum. I am not worried about the current loss as I am in it for the mid-long term. However, my query is that why are we just buying equity and nothing else especially say, commodities / utiities? Also, I think companies producing agriculture machinery and renewable energy should be look at? Although some of these may already be expensive to buy, we may be at the strart of a long bull run in these sector ???

Seane Lynch said...

Hi Mr A

First, the fund is meant for equity. As such, naturally what we are doing with our limited fund is to buy stocks which are deemed to be cheap. Exposures to commoddities such as palm oil are done via investment in companies like IOI which has good track record as well as its share price being battered down to RM4 plus from RM7-8 range. In fact, m more than happy to look at other assets classes like those mentioned by yourself but our funds are limited. Utilities in malaysia are very much linked to government and am trying to avoid that due to uncertain govt policies and cronyism.

Renewable energy is very interseting. Just that no investable companies in malaysia for such sector.

A said...

Ms. SL

If funds are limited, are we not to consider not buying for a couple months to accumulate bullets then buy other asset classes. Put in FD for income in the next 3 months? Agree that utilities are to be avoided in Malaysia.

If renewable energy is of interest, what stops us looking at other foreign companies? Most banks here offer trading account at minimal cost. I have an account that allows me to buy stocks in Europe, US and some Asian companies. Dunno if that is the same in Malaysian bank?

Of course the final decision is yours on what to invest, I am just giving you some suggestions that you may want to consider…or may be I have muddied the water by asking irrelevant question, if so just ignore me?

Seane Lynch said...

of course you are not asking irrelevant questions. Most welcome in fact. Have some moeny in FD. Just that wanna concentrate on things i know i.e. equities at the moment rather than accumulate funds to buy other asset classes when equities are still aplenty.

u can let me know if u discover any cheap compaines dealing in renweabale energy. just note that good companies does not mean cheap good companies.

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