HDFIV Report Card @ 30 Sept 08

Performance:
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.

Portfolio:
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.

Strategy:
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.

HDFIV Report Card @ 22 Sept 2008

Performance:
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.

















Portfolio:
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.




















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.

HDFIV Report Card @ 15 Sept 2008

Performance:

HDFIV is currently beating KLCI by 6.96% (5 Sept 08: 7.80%) at a loss of 15.96% (5 Sept 08: 11.75%) while KLCI suffered a loss of 22.47% (5 Sept 08: 19.55%). KLCI continued to be dragged down by political uncertainties as well as the performance of plantation stocks. Our fund has managed to maintain the gap with KLCI's performance notwithstanding the drop in IOI's price.

Portfolio:

No purchases and sales this week.

Asset Allocation:

Allocation of idle cash into fixed deposit for 1 month period.

Strategy:

To watch out for tomorrow's political development.

HDFIV Report Card @ 5 Sept 2008

Performance:
HDFIV is currently beating KLCI by 7.80% (29 Aug 08: 5.79%) at a loss of 11.75% (29 Aug 08: 11.50%) while KLCI suffered a loss of 19.55% (27 Aug 08: 17.29%). KLCI continued its downtrend as Dow Jones Industrial Average suffered a 300 over points drop as well as the political uncertainties that have yet to see any light at the end of the tunnel. Our fund has managed to extend our gap with KLCI's performance with the contribution of our holdings that have been holding relatively steady during the week as well as the dilution of losses from our monthly cash inflow.

















Portfolio:
No purchases and sales this week.


















Asset Allocation:
Cash increased to about 20% from 7% after the monthly cash inflow.






















Strategy:
With the exciting date i.e. 16 Sept 08 around the corner, we would prefer to stay on the sideline during this period. We are not timing the market but waiting for opportunity to sweep some cheap stocks if KLCI happened to react badly on political developments. Stocks under radar are Resorts World and Bursa Securities.

HDFIV Report Card @ 29 August 2008

Performance:

HDFIV is currently beating KLCI by 5.79% (27 Aug 08: 5.50%) at a loss of 11.50% (27 Aug 08: 12.91%) while KLCI suffered a loss of 17.29% (27 Aug 08: 18.41%). KLCI recovered about 20 plus points on Friday ahead of the announcement of Budget 2009.















Portfolio:
No purchases and sales this week.















Asset Allocation:
7% cash (27 Aug 08: 7% cash).


















Strategy:
Our holdings are registering single digits losses except for Bursa and Waseong-Wa. Next immediate strategy is to acquire new cheap stocks or to average out Bursa. Bursa remained top pick in view of its cash hoard and simple business model.