Friday, April 30, 2010

Free Warrant For What ?

Notion Vtec just relased it quarterly report which reported a quite impressive result.

From its financial report :

Financial Result :

For 2Q of FY2010 the Group recorded revenue of RM56.7 million (1QFY2010 : RM56.3 million) and PAT of RM12.2 million (1QFY2010 : RM14.0 million) and earnings per share of
8.06 sen (1QFY2010 : 10.08 sen). The lower earnings is mainly attributable to initial start up cost of new projects such as the Thailand operations and base plate projects of which
the earnings will only come on stream in the following quarters.
For the current year todate, total revenue was RM113.0 million and PAT was RM26.2 million compared to the corresponding period of the preceding year of RM73.5 million and
RM11.8 million respectively. Yoy the revenue and profit after tax was 54% and 122% higher respectively. The strong growth in revenue and PAT is mainly attributable to the
recovery in all the business segments.

Business Outlook

For the Notion Group, FY2010 is a transition year as it invests heavily in the 2.5" HDD space as the main growth driver for the next 2 years. The portable applications and external
storage segment is driving up demand for the 2.5" HDDs and there is a capacity shortage in critical We have rented an existing factory ("Factory 3") located 2 km from the main Klang factory with floor space of 150,000 sq. ft. which will be refurbished starting May 2010 for
production of 2.5" baseplate with designed capacity of 84 million pcs per year. The project will stretch over 2 financial years. The earlier guidance of 2 million pieces per month by
December 2010 is still on schedule for a HDD maker customer. The total production in Factory 3 will be shared between the HDD maker customer and another new spindle motor
maker custome components such as the glass media substrate, baseplate, spindle motor, etc.

By all mean, it is nothing to say about its impressive result. Assuming the pofit for the coming quarter would remain flat for the coming quarters, its annual profit would be  12.2x 4 = 48.8 mil. Ignoring the proposed the latest 10% private placement. its earning per share would be 48.8/154.561 = 0.32. With it current price at RM3.17, it is currently trade at assumed PE of 9.9 ( Assuming anual profit of 48.8 mil. ). Of course the profit could be higher since Notion is still progressing its expansion plan. It seems a good buy at this level.
But ... huhhhhhh.... here is the tricky part. The proposed 10% private placement. They just completed its 10% placement last year. Another round of placement would certainly expand its share capital. I understand very well that shall the proceed from the private placement be used for its expansion plan which translate into much more profit it would eventually become a be an anti-dilutive placement. ( which is just like an anti-dilutive bond in this case). I am OK with it for I believe it is the cheapest cost for its expansion plan PROVIDED that it place its share at the high price. Getting 10 millions from the private placement  to get additional profit of 100k is purely dumb. Of coure I don't think the management would place its share too low which would seriously dilute its earning per share in future. It is just the matter how one looks at the private placement. At what prepecftive you look at it. It is a half full-halt empty glass situation.
But, puhh boohhh..... why free warrant ? That is certainly would dilute the earning per share. We have to include the warrant for the earning per share calculation. You could say that, maybe the shareholder would not want to convert the warrant because the converting price would be higher than the market price in future. But, if I were the share holder I want the share price to trade higher in future. But if share trade  higher, it would trigger the warrant holder to convert the warrant into share which would lower its earning per share.
Shit, should I pray for the share to trade higher or lower now if I were the share holder? What say you ?
It is running late.. Balik lah....

P/S : Now it is very much depend how the management play the private placement and its warrant. It could be interesting, it could be so so, it could be purely dumb. For me I just don't like too much this kind of corporate exercise.  

" Vanity, definitely my favorite sin."
                  ~ JOhn Milton ( Deveil Advocated ( 1997))

Thursday, April 29, 2010

Guilty As Charged ?

J  is a sophisticated investor. He is not only good in long but good as hell in shorting the market. During the dot com bubble, he had successfully made billions by shorting the dot com companies. He made a killing when the market was climbing back from 2000 to 2007 by  longing some big name companies. He is a workaholic as well. He always does he homework. In year 2004, he found that the data clearly showed a rapid explosion of credit in housing upward away from the general trend starting in 2000. He assumed this trend would not continue indefinitely and revert (even overshoot). He warned in 2006 that, the greatest financial bubble was going to burst. But, at that time everyone was having  good time at the ball. Free flow of champagne and the music was getting louder and louder. There was no clock on the wall to say that time was was almost up. Of course he would not want to let go this opportunity slipped by his fingers. He wanted to short the market. He wanted to short in a big way. How to find a way to short in a big way ? Of course he could ask a investment bank to help him. Hence, he went to see investment bank IB. He asked IB to construct a busket of stocks, CMO, CDO and all sort of product which mainly related to mortgage which he could short. The IB took sometime to construct a busket of product ( mainly mortgage related ) which consist of A, B C D & E. To some A, B, C, D & E was jewel or gem. But, J thought they were going to be junk soon. J went ttrough the IB proposal and decide that the busket shall consist only A, B C and D ( lets call it Busket JR), because he considered E still had some value in it and he did not want to shorted that. So IB restructured the busket of product consisted only A, B, C & D which to some it was still a jewel but not J. IB approached others and sold the Busket JR to them. Since the busket was a complicated producted IB could only sold to professional investors. There was no way retail investor could touch that kind of product.  That was in late 2006. So J paid 15 mil to IB for constructing the Busket JR to short and the others longed it. We knew what happen in Sept 2008 when the crisis hit at  the hardest J made a billion bucks and the others lost with their pant down.
After the crisis, everyone was blaming each other for what had happened. Someone was very angry with IB and J because they made money out of them. They wanted to sue IB and J for they thought IB an J cheated on them. They said, IB didn't tell them J was shorting them. The thing is they were the ones who thought the Busket JR was jewel which turned out to be highly toxic. Would they not long the Busket JR if they knew J was shorting it. They would probably laughed at J for being a fool to leave the party when the music was getting louder and louder. Would they make noise if the Busket becomes more valuable now ? For me, it is a zero sum game. The one who make noise is like blaming his friends for bringing him to Genting Highland Casino after he lost tons of money there. 
How about your verdict  it you were the judge ?   

P/S : J = J P, IB = GS, Other = Other

" If I come out alive, this guy, Lefty, ends up dead. 
That's the same thing as me putting the bullet in his head myself"
.~ Donnie Brasco  ( Donnie Brasco (1997 ) )

Monday, April 26, 2010

Market Timing. My 2 cent....

OK. Here I will like to give my 2 cent about what 2ndbrother said about market timing. HERE I made huge mistake when I was greenhorn when I concluded that no one should time the market. I paid for that. WB himself said he would not be bother by the market fluctuation. Does that mean that he do not time the market ? If one looks at the bigger picture, one would find that WB did. So, did that consider a " market timing " ? Well very much so my friend. Price targeting and market timing is very much inter correlated. My 2 cent opinion is that since timing the market is extremely hard to do, timing the price would be a much easy and better way. In fact you have financial tool for the price targeting like the common PE ratio, ROE, Dividend cash flow etc compare to the complex equations of Technical Analysis. Furthermore, the the financial tool could be forecast/future oriented comparing to Technical Analysis which bases on Supply and Demand of Stock of which could be easily affected by human behavior.
So now, market timing should not be confined in the context of buying when index at the low and sell when the index is at the high side. It could be put in the context for industries forecasting. For example, if one could time that the glove industry is going to do very well in a year ago, he would be laughing now. One could also time that inflation could be a ugly monster in the coming quarter and bet on gold.
What if we combine a little of of all said. Say Hartalega for example. ( Like to use it as it is the clearest example which make a killing ). It was listed in April 2008 at RM1.80. You know the glove industry would be doing just fine even during recession. Furthermore they are producing nitrile glove which command a better margin. You were forecasting in the coming years its production capacity would increase and its profit would double. ( Industry Forecasting ). But you also knew at that moment the price of the stock would be depressed for some time. Hence you wait and picked it up in from July - Nov 2008 at the average price of RM1.50 ( Market Timing ). It is now RM7.95. Is this a market timing strategy ? For me, it is.
Someone told me before that we could not time the market precisely. That is why the saying goes : " You would never be able t buy at the lowest and sell at the highest ". Who the hell say I can time the market precisely ? I would be very happy if I am 50% correct about the timing. Beside that, timing the market could avoid dong the dumbest thing. Remember WB admited that he did the dumbest thing by buying Conoco Philip ( NYSE : COP ) when the oil price is hovering around at the historical high (USD 110++ per barrel ). Should we be at least try our best to time the market with the financial tool that we acquire ? You gotta be seriously stubborn if you don't think so.

So what is is your next forecast ?  Happy Trading.
P / S : I like this quote a lot...

               " Show me the money !!!!!! "
                                    ~ Rod Tidwell ( Jerry Macguire (1996))

Sunday, April 25, 2010

The Proxy Indicator Anyone ?

Western Digital ( WDC ) just reported its Q3 earning. Impresive result. But the one which catch my eyes is its revenue for the pass 2 quaters. The revenues of 2.6 Billion USD for the past 2 quaters are a huge jump from 1.6 Billion USD a bout a year ago. Eventough JCY and Notion have some run up recently, I still see some opourtunities here. It is pure base on the proxy indicator. JCY and Notion are both biggest supplier to WDC. It is so obvious that I don't think I shall eloberate more. It is good trading for the results of JCY and Notion would be out soon. After all previous quater result of Notion and JCY were something which should be proud of. JCY ( Net = 77.5 mil @ 4 sen per share), Notion ( Net=14.2 mil @ 10.00 sen pershare ). Debt is not an issue for both companies. With the current valuation in hard disk industry, could it be possible that both counter command a PE of 12-15 inthe coming months? This will translate JCY to ( annualized  at 4x4x12 ( 15 ) = 1.92 - 2.40) Notion ( 10x4x12 ( 15) = 4.80-6.00). Possible ? .... Of courseas long as you are in the market, anything is possible kawan. Happy Trading.

p/s : Just back from a week holiday. Hence a short Post.

                            "Luke, I am your father"
                                        ~ Darth Vader ( The Empire Strikes Back (1980))

Friday, April 16, 2010

The Float

The best thing Warren likes about insurance company is the free " floating money " which he could use to invest and expand Berkshire to what it is today. Simply illustrated ( to my best understanding ) an insurance company ABC is underwriting the general insurance product In123 at the premium of  2k annually with the payout of 300k should anything happen to the customer. Say, the insurance company kira punya kira and finds that the case ratio is 1 in 150 cases. So now, the insurance company finds 150 customers and collect 300k. Shit happen, one of the customer claim the 300k from the insurance company as stated in the insurance policy of In123. It seems like the insurance company is not making $$$ at all. But still have to pay the administration cost. But the thing is, it will take months if not years for the claimant to get the 300k. That is how they them the 300k as " float money" which the insurance company can invest to generate return. A 8% return is a 24k handsome return to put it plainly. Sometimes the return is so huge that the insurance company is willing to pay as a slight lost ( say paying 305k for the case illustrated above ) to the claimant in order get the " float money " that they are longing for. Obviously Warren and Charlie are the among the best in this.
So what industry offer such float other than the insurance company like Berkshire owns ? It is very interesting to read this. ( I had been looking at Leucadia for months (LUK) )
In December 2009, Berkshire Hathaway and Leucadia National Corporation formed a new entity named Berkadia Commercial Mortgage in order to acquire Capmark Financial Group’s North American loan origination and servicing business. Berkshire and Leucadia each invested $217.2 million of equity capital to fund the Capmark transaction. In addition, Berkshire has provided a $1 billion five year secured credit facility to Berkadia, of which $580.5 million was outstanding under the facility as of December 31, 2009. ( Read the rest of the story here )
I do not know that the " float " could actually be created in other industry. This is something cool. A good weekend read.

P/S : I like putting this sentence. The author long (LUK). :)... Have a great weekend.

                      "  I'm gonna make him an offer he can't refuse. "
                                    ~ Don Carleone ( The Godfather (1972) )

Thursday, April 15, 2010

Market Outlook 15 April 2010

Markets soared yesterday on the back of “better than expected" earnings from JP Morgan (JPM) and Intel (INTC) in US. Again the big title today in major business news portal is " China GDP Grows 11.9%, Prompt For Tightening ". The news eventually doesn't excite the Asian market muting the HK market which I pay more attention to since I park my capital there. In my view :

1. Th raise of the interest in China won't be as drastic. The inflation is still under control from the latest report. A drastic interest shock won't be good thing. PRC would try very much for the shock. A revaluation of RMB is more likely the policy maker would choose. Shall the policy maker make the move, the market would adjust according in new term. Over a middle term or long run, HK market still looks rosy to me, especially the H. However it is still more to stock selection than the broad base. The only worries is the properties bubble. Even though the PRC policy maker is trying hard to control it. It is still the major concern of mine. Shall it burst, it could be as people said " It is Dubai x 1000 ". So I will hold for the time being.

2. US market. As long as the interest rate remain low, I don't see any reason which to kill the bull which has been running since March 2009. And the rate would remain low for the time being. The inflation is still under control and the current recovery just doesn't produce jobs enough to ease the unemployment rate. I don't think a mild increase of the rate would kill this bull. It need something major. So I will hold for the time being.

3. Bursa. Hmmm. It is just plain boring. Nothing really exciting. The transacted volume is not high. Almost everyday you would find 50% of the counter in Bursa Malaysia is not transacted. But boring doesn't meaning there is no " moola" to be made right . :). I am not expecting any surprise here. Just of that the appreciation of the RM would attract more foreign investors. Otherwise, it is hard to see the super bull base on the local participation.

In conclusion. HOLD the 3 markets for me. :). I am more of the greedy type. I ride the roller coaster when it was going down hill so want to enjoy the up hill thirll a bit more lah :). This post was delayed a day because the network was down yesterday.

P/S : If you like the previous Academy Award host Billy Crystal, I am sure you didn't miss this movie. :)

" Women need a reason for having sex, men just need a place"
~ Mitch ( City Slicker (1991))

Wednesday, April 14, 2010

Revisit Transmile ( 7000 )

I eat my own cooking before, it is just a revisit to the same dishes. :). the news was old actually. Visit here for the announcement. But today with the big title of The Star saying " EPF Seeks RM50 million debt repayment from Transmile " the hell breaks loose. How the situation will develop from here ? How come the public reacts to The Star but not the previous announcement ?  Maybe because of the little word mentioned by The Star " EPF " ?  Frankly I don't give a damn about it. Anyway, red flag is flagged again and again. The risk could not be justified at this juncture. It is not like in the state where there is Chapter 11 which could allow the debtor be given a period of time to reorganized their debt obligation. But honestly speaking from the day one till now it is almost 3 bloody years for Transmile. We could not blame the creditor who is loosing their patience on Transmile.  So just forget about it !!! The dish stinks and there is no way I could swallow it. I am out. I have to get out.  I do not buy the story at this juncture. I chicken lah.

   "   Frankly, my dear, I don't give a damn. "
                      ~ Rhett Butler ( Gone With The Wind (1938) )

Tuesday, April 13, 2010

Investor, Trader, Speculator, DUN KNOWER .....

I was reading Dali's post about the term Investor and Speculator. HERE . It is an interesting post and a good morning read. It is very subjective and every individual has their own interpretation. Here is mine.

1. Investor : The one who does their homework and studies. He understands how the company works and understand the risk involved. He buys the share and treata is as a business ( like WB) and never bothers about  the price fluctuation in short term. He reacts to the structure changes of the company and it would sell the share once  it meet his target price/his valued price. ( Warren Buffet is in the different category because I don't think generally we could have free flow of  "float money" which allow one to have very long term haul ). Of course it could be branched out to Value Investor and Growth Investor which I write about it before in previous post. So I will just leave it as it is here.

2. Trader :   The one who carries out technical analysis and believes that the price fluctuation is because of the the supply and demand of the share. They are traders out there in Bursa buy and sell within T+3 days on margin. They are traders out there who buy and sell in matter of hours or even minutes for the super high frequency trading ( in more matured market like NYSE or HKSE ). The theme play in local market is popular a few years back. It is not as hot as before, but it does make some traders very happy nowadays. Normally the time horizon is short in nature. In short they are mostly taking advantage of the market volatility.

3. Speculator. The ones who try to manipulate the share price by any mean they  deem convenience to them. In Bursa, they sometime jack up the share price by multi bidding to create a disillusioned volume to lure the public. ( Classic example is Fountain View .. Remember ? ). They could release false material information to attract other traders. ( In these cases, you might not surprise to read something like " according to unnamed source", " According to the people who are familiar with ...", " "According to the source who doesn't want to be quoted ..." etc etc ) in local news paper.  I am not surprise if they blog to speculate it. Is it legal ? Yes and No. I am not sure, I am not a lawyer after all. As far as I am concern,  previous case show us sometimes they were merely being punished by a slap in the hand.

4. DUN KNOWER. The is the group of people who do not know what are they doing. When the stocks they bought turn out to be a very bad investment, they " long term " it and call themselves long term Investor. There is not cut lost strategy so they can't be categorized as Trader. They don't call themselves Speculator because they loath the Speculator of taking advantage of them. They hope for something and keep on saying " last time I made so much so much ....", " It is only paper lost ....", " The price will bounce back ..." etc tec They deny their wrong and will never admit their shortcoming or mistakes. In short, they have no idea what are they doing. Buying and Selling of share is a zero sum game. They would be always at the negative/disadvantage side.

OK now here is the funny thing or the tricky part. Sometime the 1.Investor think that they are investor, but they are actually 2. Trader. or 4. DUN KNOWER. Sometime the 4.DUN KNOWER just simply bought the stock which perform very well for years ( i.e they just bought PBB, PPB, CIMB, VADS without knowing what the company is about ) which turn them into a value 1. Investor. Sometimes the 2. Trader becomes a 1.Investor. They are people who are a mix of 1. Investor and 2. Trader.  And the beauty of it is sometimes it evolves from 1. to 2. From 2. to 4. and from 4. to 1. mix with 2. :)....

But one thing rarely change is 3. Speculator. The are the ones who are always taking advantage of 2. Trader and especially 4. DUN KNOWER. I do not like them a bit. I loathe them of taking advantage of the others for their own benefit. Niah Mah.... I can't continue to talk about them with the big F word. SO I would stop here about them.

So which group do you belong to :) ? Hmmm who care lah as long as you made $$$ and not a 3. Speculator. I have no idea to which group should I suit in. Maybe you should tell me by leaving a comment here :). As far as I am concern, as long as you take care of the downside the upside would take care of itself.

"It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another. " ~ Gekko ( Wall Street (1987))

Sunday, April 11, 2010

Sometimes " No Reason " is The Reason

I am not a fan of  ICAP' boss Mr. Tan. However I do follow ICAP from time to time. Then suddenly I came across this article this morning HERE. To say that retailers are still  high in pessimism at this moment is a bit hmmmm let put it this way I do not agree with that statement. If retailers are still is high pessimism state, I don't think we could see the high volume in the penny stock. If retailers are still is high pessimism state, I don't think we can see the KLSE touch 13,000. I do agree if one says that Bursa Malaysia is not a efficient market. But to say that retailers are still  high in pessimism at this moment is like saying that the retailers are dumb and fool which does not follow the up to date information.

Back to ICAP. According to the article,

" iCapital is selling at almost 20% discount to its NAV. The level of pessimism is same like March 2009 in matured market. This means our market is highly inefficient because the institutional investors have not been doing enough research to swallow the mispriced stocks. If you buy into iCapital now, you are getting Public Bank, F&N, Petronas Dagangan, Parkson and etc at 20% discount"

Well it sounded like he is the only one that discover the "gem". The question is whether generally the retailers are so dumb and do not notice that at all ? Well, I had been asking me the question " why the discount" for the past 2 weeks. I am a retailer. Again, it stressed this " At the peak of pessimism in March 2009, these funds are selling at 20% discount and now is narrowing but not at a premium yet "  So during the crisis, it was selling at the 20% discount, now it is also selling at the 20% discount. Should there be a reason a reason behind that ? Because it is close end fund ? Because generally people doesn't like the CEO? hahhaha....

Well, all I know is the 52 weeks high and low for the counters mention above is as below :

1. ICAP : 1.46- 1.90    : a return of  30.0% if one bought at the lowest and sold it at highest
2. PBB  :  8.10 - 12.14 : a return of  49.9 % if one bought at the lowest and sold it at highest
3. F & N  :  8.55 - 11.60 : a return of  35.7 % if one bought at the lowest and sold it at highest
4. F & N  :  8.55 - 11.60 : a return of  35.7 % if one bought at the lowest and sold it at highest
5. Parkson :  4.04 - 8.60 : a return of  112.9 % if one bought at the lowest and sold it at highest 

So it sound like buying directly is a better strategy. So why the discount ? I myself could not find a reason. Maybe can't find the reason is the Reason I shall not jump into it. After all these years, it look like there is no correlation between the share price and its NAV.  After all I don't like the guy who boast that he is better than Warren Buffet openly in the local news paper. So I would have to give it a pass. For the one who bought the story or would buy the story, I wish you good luck. Adio.. :)

P/S : The Best Batman Movies

                                    " Why SO Serioussssssssssss "
                                                  ~ Joker ( The Dark Night (2008 ) )

Friday, April 9, 2010

The Yuan !!!


At last the renminbi is coming to a new regime. Have been wondering when the China would come to an end of keeping the yuan artificially low. Does that imply that the China is now ready to power its growth through more internal consumption rather than rely on its export. Does that imply that the exporters of China is now ready to compete rather than rely on its cheaper currency advantage ? Does it imply that China itself is scare of the inflation which can massive with its cheap currency and stimulus package ? It is a rather tricky question. But one is rather certain that with that in mind, the people of China consumption would start to pick up compare to its peer like Japan, Germany or Europe. The question is what should we do as the investor when we see it is coming .... hmmm that is interesting. Would need to go through Jim Roger book to look at China company which is listed in HK. There is no other way to access to China Market if not through HKSE... Too bad that it is " ma fan " / leceh  to to but the renminbi ETN  in NYSE..... Hence would give it a pass on the renminbi  ETN.... However, it you would like to read something about it. HERE is the link
Talking about currency.... RM is clmbing to RM3.19 / USD ... damn my US market share and HK market took a 5% hit alone this month. But for you out there ? Don't you think it is a good chance to buy US market and HK with the RM ? Market is a bit high I know... but ... aiii... At least you could get in with a better rate now compare to a month ago ... ( 5 % cheaper lah ... which is huge for me :) ) .... for the one interest, open an account with CIMB. ( better still CIMB-GK which  offer multiple currency trust account ) They offer much narrow exchange rate spread. Or you could even hedge the current RM rate by buying gold ( Public Bank Gold Investment Account ). After all gold is also a good asset class even though it is a bit boring. But if you want to buy gold and doesn't want to pay the spread offered by Public Bank. Then buy GLD spider which is the most cost effective  was. Here is the info.

P/S : One of the  best performances by Tony Leung
                                           " ..................."
                                               ~ Lin Wen-Ch'ing ( City of Sadness 1989 )

Tuesday, April 6, 2010

Everyone is God !!!

Believe me or not. During the bull market even the " macik " at Pasar Selayang sound like a guru to you. OK now, KLSE at 1383.83, I will say it is a small bull if you judge it by the daily volume. It is a long way to call it a super bull which might not even come to materialize. Sometimes super bull just doesn't show up.
If you are loosing $$$ now, then you should seriously do some soul searching on your investment plan. I am imagining the several scenarios as below :

For Value Investor
1. A Value investor who still holds the counters which price is still at or even lower than the crisis price level. You really have to ask yourself what is your definition of Value. If your definition of Value is not recognized by the market. Then you are doomed. It is hard for this group of people to admit their flaw. If you are in this group. Needing " soul searching " is immediate. If he think he doesn't need any, probably share market is not for him.

2. A Value investor who starts contemplating to sell the counter which price is same or a slightly higher than the crisis price level. It is better to let it go. Remember Philip Fisher 3 years rule. If the company is not appreciated by market in a given time period of time, it is probably never will. Furthermore it is the crisis price that we are comparing with. So it is better to deploy the capital to somewhere else than hoping another buyer who sing the same tune as you to pay a higher price to get the share from you. Revaluation of the company is essential to reassess whether it was a Value buy or not. Falling into a Value Trap would lead one no where.

3. A Value investor who still holds the counters which price is much higher or 2x, 3 x higher than the crisis price level. Congratulation, you may find the gem during the financial tsunami. At this point of time, one should revalue the company and set a price tag for it. Everything in share market has a price tag. One should pay a lower price tag for a good company and try, I said try to sell at the higher price tag. It is rather funny that Mr. Market is offering higher and higher price tag when the bull is charging. It take a lot of skill to sell. Personal opinion feel that selling is actually need a lot of skill and mental readiness than buying if you are a Value investor.

For Growth Investor
1. A Growth investor who still holds the counters which price is still at or even lower than the crisis price level. Admit it. There is a high probability that you bought the company which haven't grown or maybe never would. Selling the junk is the best way out. Deploy the capital somewhere else. Bite the bullet and carry on. Dreaming of the another super bull run like in '93 or '94 is just dream. Even though it does occur, it does not guarantee the the price of your Growth Stock will ever "grow". If one can't admit that one might be wrong, maybe he should rearrange his strategy to look for Values Instead. If one insists that he can't be wrong, then share market is probably not suitable for him.

2. A Growth investor who starts contemplating to sell the counters which price is same or a slightly higher than the crisis price level. It is a rather difficult situation because one would never be 100% sure he bought the right stock. At this juncture, the 3 Years Rule is kind of handy. One doesn't need to set 3 years time frame. In Bursa Malaysia sometimes, a year or 2 or maybe months would do the same trick. It is rather hard for the ones in this situation. The only thing one should do is doing more homework. If too lazy and impatience, just sell it. Time is too precious to be used to struggle with it.

3. A Growth investor who still holds the counters which price is much higher or 2x, 3 x higher than the crisis price level. Congratulation, you might be owning a piece of a company which might enjoy the growth for years to come. At this point of time, one should evaluate the stage of the growth. Is it at the teen stage or old stage ? It is a high possibility that the company which is at the old stage of growth would become a Value stock eventually. Get what I mean ? It is something like the company give away all of the profit as dividend which is yielding at 6-7 %. ( No retaining profit for future growth ). It is the easiest decision making zone. Just hold and wait until it growth story running of steam. Only then, one should start contemplating what to do with it.

I would better stop here. Bo lat liao..... Happy trading :)

~ Mathilda : Leon, what exactly do you do for a living?
Leon : Cleaner.
~ Leon - The Professional (1994)

Sunday, April 4, 2010

Sometimes It Is Just Purely Luck

Well, I blog about Transmile on 29 March 2010 ( ). Bought it because I bought the turnaround plan story. But sometimes when the luck hit, I just have to grab it. Sold 100,000 unit of Transmile at RM 0.48 last Friday. It is just purely luck. It went up too fast too furious. I had to let it go. Now at RM 0.52. Am I kicking because I should have hold it ? .. nahhhh... One just can't have it all. I am very very, extremely happy with it. Of course I still bought the turnaround story. Will keep an eye on it for sure. Good luck for the guys who jump into the band wagon today ... Adios ... :)

P:S : The most memorable romantic comedy ever.

"You see? That is just like you, Harry. You say things like that, and you make it impossible for me to hate you." ~ Sally ( When Harry Met Sally (1989)

Saturday, April 3, 2010

7083 The Turn Around Plan

Several financial celebrity blogger blog about 7083. OK well, most of them were impressive with its current financial result. But not Moola, well he is someone who would just simply too pessimistic about any company. He wrote about 7083 as well. ( read it here , it is a detailed story about 7083. It even back track to year 2007.
OK now. Here are the comments which catch my attention :

1. Investment in equity securities. Yet another company again making such investments. Sigh.
2. Cash balances shrunk. ( See cash flow statement below)
3. Receivables increased.

Correct me if I was wrong ok. Lets go to the item
2.Cash balances shrunk. Well, it is well known that the make the acquisition of COVERIGHT SURFACES MALAYSIA SDN BHD back in July 2009. The settlement was paid in cash. Of course one will find the cash balance shrunk. The point is the acquired company is making $$$. Would it increase the company cash flow ? We would have to see in the coming quarters. The key point is the cash was wisely used.

Point no 3. Receivables increased. Well when the company bought over a company it is inheriting the the receivables as well. I don't think it is a big issue here. I would be more concern if the receivable is keep on increasing for the comings quarters. I glimpse trough its 2nd and 3rd quarter receivables, a slight increase from 23.726 mil to 25.275 mil. So I don't see the red flag here. Why make a big fuss about it ? I really have no idea.

Abut Point 1. 1. Investment in equity securities. Yet another company again making such investments. Sigh.
I really have no idea why we should make such a big deal if the company bought the security for as a long term investment. I personally would like to know what kind of security that the company hold. ( I wrote to them, and yet receive their reply ). I would raise my doubt if the company treat the security as the Current Asset which would imply that the company is intending to held the security for sale. It would sound like the company is treating the security like a " Casino Chip " in Bursa Malaysia or Other Market. Well, of course if the company doesn't have a good idea what to do with the cash it might as well held it in the form of security for its dividend. Of course the share holder would be delighted if the cash was given out. But, I really can't see the big deal if it holds it for its dividend. RM 14 mil in security seems big. But if the company bought PPB, PPB, Tanjong CIMB with the RM 14 mil. I would say why not. It is not a good thing for a company to hold too many cash. If not given out hold it in securities is a better option. No kah ?

Moolah carry on with the blog and question the reader whether we should buy the company which WAS shun by the market. The is rather funny. How do you judge or say it would be shun by the market forever ? The key point is if one is chasing after a company which was the market favourite, what is the different of the investor who is chasing after the market favourite than the market trader ? It is the company that the Value and Growth investor are looking for. Because when the market start to appraise it,it would then sky rocket. That is the one which will make the killing. What do you think ? So it is better to set a rule like Philip did. Guru Philip put a 3 years rule of the company that he invested. If the market doesn't appreciate the company, it would probably never would. So how many years or how long is your time frame on certain counter ?

P/S : No hard feeling. Just simply not aggree with Moola. :) Bought 20,000 Analabs at RM 1.38

"One Ring to rule them all,
One Ring to find them,
One Ring to bring them all
and in the darkness bind them."

~ LOTR movie trilogy ( 2001, 2002, 2003 )

Thursday, April 1, 2010

Price Is What You Pay, Value Is What You Get

While " blowing water " in the coffe shop, a friend told me that his friend stated that in order to score big in the market you have to keep on searching the growth instead of value company. Hmmmm sound like my buddy friend is fan of Philip A. Fisher fan. He further on by giving me the example. Public Bank and Tanjung. During the greatest financial crisis in recent history ( 2008 ), you could get Public Bank at RM8++ and Tanjung at Tanjung RM10++. So now 2 years later you have to pay RM11++ and RM18++ for Public Bank and Tanjung respectively. A handsome return by any stadard in 2 years. But if you look into it carefully, the return is not so proudable if one takes the crisis into account. You could have fetched higher return if the capital invested in others counter. So put it this way, how much discount you expect to get even during the greatest financial tsunami ? 40% ? 50% ?
On the other hand if you choose a growth company the return could be 4x or even 5x. He gave a very clear example Hartalega. He bet on its grwoth at RM1.80 and bought even more at RM5.40. Now at RM8.++ Good job done. Doing homework does pay kawan. In conclusion : Growth always beat value.
OK now, 2 school of tought. Value vs Growth. Mr. Ben Vs Mr. Philip. Hmm which way should we look into to.
The answer is I dont give a damn. As long as we make more $$$ which method do we us does not really mattter. However, I must say that you could still find 2x, 3x or even 32x with buying Value Company and hold it. Example :
1. Well Fargo ( WFC ) = During crisis USD 8.++ now USD 31.++ >>> a 3.65x
2. General Electric ( GE )= During crisis USD 7.++ now USD 18.++ >>> a 3.65x
3. General Growth Prpperties ( GGP )During crisis USD 0.5+ now USD 16.++ >>> a 32x
( Maybe you could only get 4x, 5x with Value in more mature market like Wall Streeet .... Not Bursa Street ... Aiiiisyehhhh mannnn )

So, I still agree with my kopitiam buddy. During crisis buy Value. Normal time buy Growth to maximize one's return. For me ? I would choose the middle. A portion in Value and a portion in Growth. Well you know sometimes you think it is a Growth, but it turn out it never grow mannnnn... I just need a safety net to fall on ... in short I CHICKEN LAH ..... I hope investing would be as plain easy as 1+1 = 2 .... In Wall Street or Bursa Steer or whatever street it is .... 1 + 1 is not always = 2 ..... it might be 3, 4 or even -10 .... Niah Mah .... !!!!

P/: One of my favourite Hitchcock's

"I didnt realize you were an art collector.
I thought you just collected corpses."

~ Roger (North by Northwest(1959))