JC Fund and JC Options Fund - personal review

The Singapore and Hong Kong markets closed today at 12pm and I was looking at the results of Thaibev. I knew the acquisitions will make the results look nasty but did not expect to be this bad. I sat there thinking about the next 1-2 years outlook for Thaibev. I am worried of its over leveraged position and rising interest rate environment. In the short run, the stock will not perform well but the business is consolidating to grow from strength to strength.

I was wondering why I chase after bad investment such as HPH Trust USD, double down on my losses and did not cut this counter last year. In fact, there was a window of opportunity when it was even profitable.

I was thinking of this recent market correction when there were opportunities for me to switch out laggard IBM shares to acquire AAPL shares. I done my homework and I was convinced that AAPL was mispriced. Why I did not do it? There are a few other companies which provide that window of opportunity to switch and move my money into a faster lane. I seem to prefer status quo (maybe I have a fear of losing money) or I have no confidence of my own valuation?

My portfolio consists of mainly dividend stocks and only 1 growth stock. I am playing a defensive role here. Maybe I believe that now I am jobless and there's no income coming in from my side, I need income from dividend. I just want to be prudent and to be paid while waiting. I think everyone has different investing approach and as long as the same objective is been achieved, it does not matter which route you take. I am just thinking whether I should move away from net-net stocks which sometimes can be value traps.

As of 14th February post market share price of AAPL was USD 168.93, maybe on the 16th February, my AAPL sell put options will expire with share price above USD 170 (20th February when I review this, the option expires worthless and share price closed at USD 172 on 16th February 2018). On hindsight, I could be profitable instead of pocketing the huge losses. However I should remember the important lesson learnt. What if a huge bear wakes up and share price drops by 50%? Will I have money to top up margin maintenance call? Nope. It will be a worse scenario resulting into a very unhappy Chinese New Year.  Thou never gamble with leverage and trade within your cash and cash equivalent. Always follow the checklist. If it is a huge gain, there is bound to be another larger loss later on (this applies to me, I suffered twice on this - a total loss of USD 32k on two trades). If I follow a small gain of 1% per month, this will be a safer approach in the long run.

Overall, as of 15th February, JC Fund and Option Fund portfolios have recovered to a neutral position with no paper gain or losses. Let's think of a strategy on how to shift the stocks around and what sort of mistakes to avoid in the future.

• Rebuild watch list - understand beta of each stocks, moat, intrinsic value and margin of safety
• Re-balance portfolio towards end of Q1 and review again in Q3.
•  Withdraw some profit every quarter to spend on the family

Switching Works!

Recall from my previous Post that I made a major position switching. I sold 20 lots of OCBC at an approximate loss of SGD 9,200 excluding brokerage fees. I took the sum of money and went into stock M. If you follow Hong Kong stock, you will be able to decipher which counter it is. I bought a total of 26 lots in stock M.

On 22nd March 2017, I sold 5 lots as I need to set aside some money for my remaining lumpsum mortgage loan payment.  On 30th March 2017, I sold another 5 lots at 43.85 and 9 lots at 43.9, this is an one-off example that instead of holding on a stock which is losing money, you can cut loss and switch to another stock which can be either:

1) undervalued
2) special situation trade
3) dividend play

The breakeven point for the switching move which I estimated was at about $42, for the 14 lots (those sold on 30/3/2017) which are about $2 higher than the break even point, I consider that as I had already pocketed the equivalent to the special dividend amount. The special dividend will only be issued on 19th May for $2.2 and normal dividend for $0.8. For information, this counter is currently overvalued.

Currently, this move is already profitable and I have covered my previous losses. Before I sold any of stock M, I have 33 lots. I will let the remaining 14 lots continue to run and see whether it will break through its major resistance. When it is closer to May, I will pare down the remaining 14 lots. Whether I will sell 10 lots and keep 4 lots or sell all will be decided later. 

After the sell down, I will switch to another Hong Kong counter. My current HK portfolio is about half a million worth of SGD, HKD is taking a hit recently with the noises in USA due to Trump. I am confident US economy will continue to strengthen and dollars will continue to go up. 

12/4/2017 Update

Recently there are geopolitical tensions in the region. I have not seen any opportunity to acquire more shares yet. I sold another 4 lots of stock M at $44.70 and I am left with 10 lots.

Recently, I am reading a few new books and revisit some of the old books while traveling on train to work. I need to revise my strategy after discussing with my mentor.

Till date, net gain about SGD $9k.  

20/4/2017

I started my new role and decided to cash out a I did not want to look at stocks during office working hours.

After selling my holdings in stock M. I decided to shift the money to buy one US stock. The only good thing from this move is I have recovered my capital (excluding the dividend from OCBC) and I am able to shift the funds to other stock counter.

This is the only single counter which I am shifting, the rest of the portfolio remains untouched. I will just hold and wait.

I always believe in fully invested.

 *Past performance does not guarantee future results

2/2/2017 Major Position Movement

Assume I am addressing my stakeholders of JC Fund, I will mention the following.

Today, I made a major switching of position by selling 20 lots of OCBC at S$9.44 and buy into 26 lots of Company M which was mentioned in previous post. Hence, my total holdings in Company M will become 33 lots. 

I sold 20 lots incurring a position loss of S$9k+. The reason of selling is twofold. I saw the impairment issue of EMAS Chiyoda which means DBS is going to write down further losses. I am sure DBS has already catered for this under NPL. I am just not confident of the quality of the loans, the O&G positions are just a small portion of banks' portfolio. The larger portion belongs to the property developers and construction companies. To add salt to the wound, SME loans will further deteriorate in the next 2 years. 

My OCBC original position consists approximately 30% of my portfolio which is overexposed in the finance sector. I want to reduce the holdings to a comfort level of 10%. The 26 lots of company M which I switched to will generate approximately S$14k of dividend. This will cover my loss and have a margin of safety for my entry price. My downside is covered.

I think back, maybe I should switch out slowly. 

Only time will tell whether this move is right or wrong. Let's reflect this again.

09/02/2017 Reflections on my actions

From the previous post, I did not think deeper and on a hindsight, it is a rash decision. Emotion is at play. Looking at the above chart, OCBC today is at S$9.71 range. I believe eventually this will close up higher to S$10 and I will not incur any losses at all. There is an additional factor which I have ignored. There will be the final dividend which will amount to 20,000 x ~S$0.2 = S$4k. All in all, my this move is equivalent to a loss of S$14k.
Yes, the future company M's dividend should cover this loss.

What I could have done is to wait a while longer for OCBC to rise, get the dividend and immediately switch to Company M. Well, if I am that accurate, my net worth should be a few folds more than now. 

24/2/2017
The switching out from OCBC is about to breakeven. Hang in there.

28/3/2017
The price went past breakeven point. The switching works. Now Mr Greed is in the hot seat. I sold 5 lots already. By mid of April, I will sell down more.

Take profit 03032016

Due to recent letter from my big boss to further reduce headcount, I am terrified. I am fully invested and do not have much cash in the bank.

Today, I sold 29,000 of ThaiBev at 0.76, 5000 SingPost 1.53 and 1000 Singtel 3.8. I took back about 33k cash. This should tide me through for a year. Very unfortunate but I need to see my stocks soar and I need to let go some of the shares.

5/2/2017
Till date, thank God I still manage to keep my job and reflecting on my portfolio. Thaibev went up to S$1 before settle back at S$0.8+. 

It was unfortunate to sell ThaiBev.

Lesson learnt, I wish that I never ever need to sell a stock.

Regroup and rethink

It has been a long week as I was away on a business trip since Tuesday till today. I took the red eye flight out on Saturday morning and I reached Singapore with a headache. I did not get to rest well throughout the flight.

I believe it is time to look at the overall STI index first and evaluate my strategy.

Short term wise, I see the STI deflecting downwards after 2700 if it fails to break the downward resistance. All chartists are using the same chart. It is up to oneself to believe in what will happen. If it fails to recover above 2700, I should take profit from some of my existing counter and wait for the next entry at around 2300.

With respect to Hang Seng, I see some consolidation and at best recover back to 20000. Hong Kong had recently released its budget for 2016 and it seems the economy is losing steam due to the big brother China.

Next let's zoom into the individual stocks which I intend to let go on a short term basis. GLP I see it ascend back to 1.77 forming the cup shape. Fundamentally, this company is seen as burning cash and cashflow is slightly back into the black. I see this as recovering to $2.00.

My Singtel's average price is $4.09, I do not see the stock breaking even as presently the price is at $3.7 and there is a downward resistance on the stock.

15/2/2016 Further acquisition of Hong Kong shares

Today I bought 10000 728.hk China Telecom at HKD 3.48 and 500 388.hk HKEX at HKD 167.3.

I bought IBM at 118.7 on last Friday, I realised that I do not have sufficient USD to acquire the shares. I need to trade this by this week. Futures are up, maybe I can hold the horse for a while longer.

5/2/2017
If I have enough money to hold the IBM shares, I will have made close to $60/share. 

Power Assets change to SingPost

I bought 5000 SingPost at 1.35 with the rationale of monopoly business model in Singapore, growing infrastructure with e-commerce and solid process.

I intend to sell out 2000 Power Assets to accumulate SingPost.

I will start to keep HK Tracker Fund and MTR for child's education fund.

8/1/2016 Decision to switch from AXP to RDS.B

I bought AXP when the share was at around 80, then I start to average down at 70. Recently, the shares dropped further to 63.9 when I sold it. I still think AXP will have a lot of competitive advantage despite its recent news with merchandiser. I found greater value in RDS.B, I switch to this stock at about 40.74. The closing on 8/1/2016 was about 39.7. 

At this price, the dividend yield is about 9%, less the tax will be 6% yield which is still good. However, with the ongoing turmoil in the Middle East, coupled with oversupply in the states, low demand in China, the oil prices as what GS suggest may hit the 20s/bbl. The Canadian oil is at that range already.

You can never buy the share at its lowest, I think there is a lot of competitive advantage Shell has over other oil majors. The potential merger of BG is already priced in. If things don't go that way, the share price may bounce back up. If merger takes place, Shell will take the opportunity to do cost cutting in such a competitive landscape to make things work. Short term wise, the share may go further down but I believe in the long term of this stock. I will diligently start to stock up on this business.