Bye Bye Breadtalk

I will be bidding farewell to my Breadtalk shares soon, having entered this year at 0.495, exiting at the current price of 0.67 gives me a tidy capital gain of $175/lot. More than 30% on principle.

Like most non-robot stock investors, I am affected by the emotionality of the trade. Make money, happy. Lose money, sad. To be unaffected, is a tough job.

Have not hit the sell button yet. The big "what if" question holds me back. What if the transformation in Breadtalk morphs it into a bigger F&B player with integration into the real estate business? Does management have the ability for such a play?

Perhaps?

To sell or not to sell? That is the question. OCBC encourages it, a recent stock report came with a sell call.

What bothers me with Breadtalk is the relatively poor execution of certain brands in their stable. Din Tai Fung seems to be the more successful of its siblings. Icing Room... hmm...
(Image from www.breadtalk.com)

Retail & Orchard Road

It's 2 am in the morning and I can't sleep, so here I am blogging on my favorite stock: Starhill Global REIT.

Despite the irrationality of liking one's stock too much, I love Starhill Global REIT. Part of the reason stems from it's major stake in key Orchard Road retail assets and part from being a star performer in my tiny portfolio.

In a recent The Edge Singapore feature, CEO of Starhill, Mr Ho Sing defended the defensibility of his Orchard Road properties. Starhill's stake in Takashimaya and Wisma Atria are good despite the incessant building and asset enhancements along the road. His argument hinges on the limited supply of retail space, quality supply. His argument of how Orchard Road begins and ends with sleazy joints. How true. Hence, the limited supply of quality retail space on the road that is king for retail in Singapore. 

Considering the supply of retail space to come and the price at which I've entered the stock. I'll be happy to hold for income. Be determined. This is a dividend stock. Don't sell!

In an earlier post, I defend my liking for Starhill Global REIT. For a more officious report, read Kevin Tan's analysis at OCBC Investment Research site. This is all confirmatory bias, you know, but who isn't a victim of such perceptual errors?

Ha! Merry Christmas 2012!!

Wisma Atria, always looking spectacular. 

(Image from: www.thesmartlocal.com)

-----

My meagre attempts at paraphrasing the idea I have. 

• The mention of shopping to a Singaporean would bring up the thought of Orchard Road.
• Mention Orchard Road and you'll think of shopping.
• The association between Shopping and Orchard Road is like BF Skinner's dog association of treats with the bell.
• Say shopping and I think Orchard. Say Orchard and I think Wisma.

$$$ Prevent Credit Card Fraud!

In our age of online shopping through the many websites available, the focus on online security is doubtlessly important. But, we shouldn't avoid primitive forms of attacks. Recently, a close family friend was rudely awakened in the wee morning by a call from the bank. Someone had 'phished' credit card details and gone on a shopping rampage. A 5-figure sum was quickly spent by the thief within a night!

How did it happen?

The credit card parted with the owner at a food establishment. The service staff swiped the card details, including the CVV code while settling our friend's bill. What technology do you need? Primitive. No card scanner, RFID card replicator... Just a good memory, pen & paper or a camera phone to swipe the data that is unencrypted.

Scratch out your CVV after you memorize it.
(Image from cvv.number.com)

Now, my card goes around without the CVV code. I've scratched  out the 3 digits. It wouldn't prevent more sophisticated attacks like server attacks, trojan hacks or phishing scames. But at least, I can pay my bills knowing the staff can't do any hanky panky.

Keep safe, enjoy life!

IMPORTANT DISCLAIMER: Please check with your bank if rights are provided to you for the defacement of your credit card. Any consequence or inconvenience resulting from this action is, without doubt, your own. 

Quality, always. Cycling v.s. SMRT

Always buy quality.

Cheap or poorly made stock AA batteries supplied with my $35 Rav-X rear light leaked within 3 months and the bike store had to offer a 1 for 1 exchanged. While there's no monetary costs to me, is there no impact on our already fragile environment? I think the Rav-X brand is pretty good, the light worked well. I did not expect my user-experience to be impacted by the battery that Rav-X chose to supply with the lights.

Rav X super bright rear light.
(Image from bikebug.com)

Always procure quality.

Rapid depreciation of brand value is not worth the low OPEX in the short term. Serving your customers disgust is the fastest way to cheapen your business. Sounds familiar? Think SMRT and their cut-cost-on-maintenance strategy.

Rekindled Passion - Cycling

Wind ruffles hair,

Speed beckons.

Follow paths,

Find new sights.

I cycle,

Witnessing life-cycles.

My Raleigh MV7 Mini Velo Bike

Stamford Land AGM Jul 2012 (STL:SP)

Very glad I made time to attend Stamford Land AGM at the Klapson Hotel. I made off with these key takeaways that strengthens conviction to maintain buying:

• The company has goodwill in Australia–2 board members are awarded the Order of Australia—Does this translate into higher ability to negotiate with the policy makers? I think it does but the company needs to follow due procedures to get development permits. A development in Sydney is still pending governmental approval.

• Board will be forming a Strategic Taskforce to review and refresh STL's long-term strategy, e.g. continue to focus on 5 stars hotel or diversify into 3 stars hotel, premium property development or mass market. This strategic planning will coincide with many major elections and global events around the world (China, US, Australia elections, Outcome to the Eurozone Crisis...). Could floating some assets as a REIT be on the cards? OCK alluded that it is a possibility.

• Some shareholders urged the board to consider floating the portfolio of Australian hotels as a REIT to tap on SG demand for such stocks. However, there are tax issues to consider. Essentially, a REIT needs at least one SG property to enjoy some form of tax advantage. (Interesting, this is a point to consider in my selection of REITs).

• STL bought several 5 star hotels (with freehold land deeds) during the slump in Australia property, and the books still recognize these prime assets at their historical value that are much lower than current market rates. If the properties were to be revalued, this could boost stock price. Management shared conservative, ball-park & pull number from the air estimation that the properties should be worth 30 to 50% more than their book value. That’s a lot. (But as a retail investor, the question to ponder is how much of 'undervaluation' is already priced in by Mr Market?)

If your shares are affordably priced, anyone can buy the right to enter. Some kuku uncle stood up and started humtumming (besieging) Chairman Ow Chio Kiat:

"Why you no have prezentations? You are a big company, you know? The other day, I went for a big company's (AGM), what was it... Errr... Ah! Metro (Holdings)! You know Metro? Very big company! They had presentation at their AGM. You no have presentation? I old man, I cannot read. Fine print (in the annual report), I cannot read."

There were other ludicrous questions & comments with the only point being to waste attending shareholder & board's time. ("Can you speak louder or not? I sit in this corner. Cannot hear. Speak into your mike. What's your earning breakdown?) OMG! Why can I remember what the kuku uncle said? He must have made an impression.

Image from wikipedia

A surprise came when an announcement was made for a female ex-minister to replace a retiring Director Wong. Round of applause to Ms Lim Hwee Hua.

SI@SG has some nice posts on STL:SP in his blog Sustainable Income@SG

Excerpts&Thoughts from Readings

The Small-Cap Investor by Ian Wyatt

"Value investing emphasizes what already exists, and growth investing looks to the future."

Before I can evaluate the efficacy of my trading strategies--I need to know my roots--I need to know my trading style. Over the years, with the onset of responsibilities as a family man, I have moved from speculative and sentiment driven trading to a focus on companies with good fundamentals, ability to pay dividends and defensive business models. 


I am conservative and risk aversive by nature. If our family is planning a trip to a new place, it'll be my wife who suggests. If it's an idea to revisit a holiday destination, it'll come from me. I am the chicken and stock shrimp.

My skew towards Value Investing has not generated astounding results and I'm envious of those technical analysis based day traders who seem to get much better returns from all the market volatility.

"Investors benefit by focusing on growth when markets have fallen. Buying bonds, treasury bills and conservative debt instruments will not bring an investment portfolio back from the brink of extinction. It may preserve capital, but it won't make up for significant losses. To recover, you need to take an intelligent equity-based approach."

I know of someone (60years++) whose fear has locked up all life savings in a normal POSB savings account, generating miserable interest return. The bank is laughing to itself. A failure to invest early enough in life and to manage portfolio risk profile that changes with age has paralyzed the person. Fear is the worst partner for investing. I've seen the person buy when the market is up and sell when the market is down.

If I go back in time to 2008-2009, a dream of many, I would leverage to buy stocks. The gains would be amazing. Even monkeys can trade, just pick any stock and it would have doubled or tripled in value since.


If you don't succeed at first, try and try again.

"Big shots are the little shots who keep shooting."

SMRT at S$1.735, to enter or exit?

I wonder how many shareholders of public companies in the world share a similar experience as us owners of SMRT? The experience of enjoying - or enduring - the CAPEX injection of S$1.1 billion for 550 buses into the transport systems. The aim of the government injection is to coax - or force - the transport companies to service relatively unprofitable routes. LTA plans the bus routes via central bus network planners.

• Would LTA plan for SMRT proftiability or for the public? 
• Wouldn't this lead to SMRT running routes that erodes overall proftiability? 

SMRT lacks pricing power as transport fares are determined by the Public Transport Council. 2011's fare increase was much lower than SMRT's desired 2.8%. This inability to control their price, the amount of profit margin makes this business less attractive.

In 2009, SMRT and Comfortdelgro did not just forego their fare increase, they decresed their fares by 4.6%. This decrease wiped out the annual fare increase from the previous 3 years (2006 to 2008). This is a long history of SMRT's inability to set their price (hence less attractive an investment).

I can only see 2 options for improved profitability to negate their weak pricing power:

1. To covert even more operational space into retail space and this was implemented successfully by the previous CEO from a retail background. However, the tenants attracted seem to be from a much lower tier as compared to the tenants attracted by REITs near to the stations. There's hardly a shopping experience at the few SMRT X-changes I've observed. 
2. To lower operational costs however it had proven unacceptable with the visible dips in quality and operational reliablity. SMRT's core business is still the provision of rail services in Singapore. Failure to adhere to service standards will only draw more scrutiny and further disruptive meddling by the government. 

There seems to be a lot of vacancies at SMRT this week, if you check their career section, there are gaps from the operator to senior management level. Employee turnover is a systemic issue that cannot be ignored for any company. Hiring and training new employees lowers productivity and increases costs of operations.

Last year I discovered that SMRT did not hedge against upward fluctuations in diesel price but ComfortDelgro did. In subsequent months, SMRT reported lower profitability due to increases in diesel price. That flipped an alarm bell - why wasn't management to managing this business risk?

Lack of capability?

Nonchalance?

Flippant?

SMRT is trading at 19+ PE. It is very high for a business that is quite weak in several areas.

So what if SMRT enjoys a captive market? A company that can't set prices nor control operational costs seems like a bad investment - for now.

I bought in at S$1.96. Bad decision... I didn't understand the transport sector well enough. Not waiting for the COI investigations to be completed, I sold off at S$1.74 last week. I think the investigations will lead to more profit dampening measures.

Without a supportive customer base, additional fare 'negotiations' between the public, the PTC and SMRT will be politically difficult. And the additional rail lines will probably grow operating costs without tandem improvements in revenue.

Not going to wait around and collect dividends to fill a hole caused by capital loss. At 1.74, I've already made 200+ losses per lot. If I wait, I'd need 2.5 years to cover back my losses! I'm cutting losses and going elsewhere.

Annual General Meetings (AGMs)

AGMs for a few of my stocks have been called. I have never attended an AGM partly out of uncertainty, partly out of nonchalance. As a minority shareholder, I feel that I have little influence on the running of the business. If I do attend, it'll be for the gathering of insights about the intricacies of the companies' business.


Currently, I don't know what to expect within an AGM nor the benefits of attending one. I am clueless about etiquette and the questions one should pose to management & the board. It is a known unknown to me. But I plan to make it a known known.


Hence, am targeting to attend AGMs for:

1. CapitaMall - 12 Apr 2012, Raffles City Convention
2. Cache Logistics Trust - 18 Apr 2012, Suntec Convention Hall
3. Starhill Global REITS - 26 Apr 2012, Hilton Hotel

What kind of questions would you ask at an AGM?

Don't know? Research. 


A prepared person rarely appears foolish. This guide by PriceWaterCooperHouse gives hundreds of sample questions to ask:

http://www.pwc.com/en_US/us/corporate-governance/assets/shareholder_questions_2009.pdf

I will identify a few common questions to ask at an AGM. Will be adding to this post again.

While the PWC guide in the link above is scoped for the 2009 economic situation. I feel a good number of questions, if answered well, will yield beneficial understanding of our stock investments.

Stock Portfolio: Starhill Global REIT.

Irrational Decision Making - Confirmatory Bias


Today, Kim Eng published a "Buy" report on Starhill Global REIT

I love to see Buy ratings in brokerage reports for stocks I already own. Don't you?

One, it increases my conviction of holding on to the stock. Two, I hope it entices more to join me in the musical chair game for this stock (so that I can sell you my seat for a higher price - that's the reward for joining the game earlier).

I bought Starhill Global recently for the third time. Here's the overall affair I've had with this stock since 2009:

a) 2009-2010, bought at $0.565, $0.54 & $0.52 and sold at $0.58
b) 2010-2011, bought at $0.565 and sold at $0.62
c) 2011-present, bought at $0.565 and holding.

After listing the 7 trades above for Starhill Global, I feel a little sad. Much more prudent for me to buy and hold the stock instead of buying and selling through the price movements. I would like to do some kind of IRR or XIRR comparison between buying & holding versus trading as I did above from (a) to (c).

Currently standing on a capital gain of ~13%, not counting in the dividends received thus far. It is quite tempting to realize the profit and put more spending money into my wallet. But where would I deploy my funds? Cordlife IPO? Haha..


Starhill Global

Top 3 reasons why I like Starhill Global:

• CEO Mr Ho Sing is the brother of another prominent family member in Singapore (Source: The Edge, can't remember which copy). The spreadsheet factor of this relationship cannot be analyzed but it does lend weight to my decision of buying in to this stock again and to acquire more on weaknesses in price.

• The tussle with Toshin (master lease holder) for Takashimaya property would eventually be ironed out for improved rental income. It would be either done immediately in the courts or eventually when the lease runs out post-renewal. It's an eventuality that the rental rates for this part of the REIT be improved.

• Decent if not good financial ratios for a retail sector REIT. I bought in recently at $0.565, that made the overall numbers like discount to Net Asset Value (NAV), dividend yield etc look attractive enough for me.

Thoughts and Side Notes

Between now and 2014, it is estimated that there'll be about 2 million square feet of retail space coming online. It's a similar scenario for industrial space. As my overall portfolio is relatively heavy on REITs (about 2/3), I'm quite apprehensive if there'll be enough tenants to go around for all this space that's being built.

Distribution Per Unit (DPU) growth is good news for shareholders, I don't think it bodes well for tenants. REITs are like jockeys and their tenants like horses. Ride them too hard and you might find that you are out of a ride. Or worse, thrown off the horse.

With additional industry and retail space coming online with all the hectic building going on - I ought to focus on REITs with some special qualities, e.g., iconic feature of the landscape like Wisma & Takashimaya of Orchard Road, Starhill Gallery of KL.

Funny how we keep building property. If population size declines, would there still be a need for so much urban built up space? With all the push to cloud computing, pay as you use in the business sphere - is it still
logical for me to continue ploughing in to REITs?

(After coming back from Perth, I wish I could have made a quick detour over to Starhill's David Jones Building. I like to see and observe the businesses that I've invested in.  From this thought, I realize I'm the kind of investor who likes to interact with companies in which I hold stock. So what? If I can't interact, would I be less likely to invest? Would I miss out opportunities because of this preference??)


Cheers,

Why I Invest?

My first object of desire was the 8 Bit Nintendo - who could resist computer games in VGA color, of Super Mario and Contra. Such nostalgia. What's the link to my interest in stock investment?

The Nintendo cost a few hundred dollars and I could barely afford a good meal in Primary School. Stickers, erasers and other frivolous stuff beckoned me. Wanting to buy, I dug out my bank account book and studied the balance, it wasn't much. But every few entries, there would be an INT entry (annual bank interest with far and few deposits in between). That sparked a realization - an understanding of compounding interest. Money has an FV - a future value.

Imagine, a small boy motivated by the desire for a Nintendo doing manual calculations via his rudimentary understanding of percentages. Saving 20 cents out of 50 cents a day at an annual interest of 2.5% = too much time for target! Little kid me could not bear that. Instead, I chose to study hard for my exams, for the reward of a Sega Megadrive 16 Bit.

That epiphany was the beginning of my investment journey, it planted a seed in my mind. I want to master personal investment - the art of sowing and replanting financial fruits, specifically in stock investment. Why equity? It pairs well with my other love, which is for entrepreneurship. Stock investment is like a form of self-gratification for an aspiring entrepreneur, you get the pleasure of owning a business without the sweaty hardwork.

My portfolio is puny, like a shrimp lost in the deep blue ocean. My wife asks me to teach her how to invest - I can't seem to articulate my method unlike the many established investment bloggers whom I follow regularly. I'm thankful for their knowledge sharing. My methodology is a strange, shifting mess of fundamental analysis, a tiny bit of technical analysis, lots of secondary brokerage reports and macro trend study. I hope to evolve an articulable investment approach that I can share with my 3 year old kid.

Here in this blog, I'd like to document and share this part of my life journey, particularly for my kid and wife. That's if it can interest them.

I am a tiny stock shrimp in the deep blue.
Research and learn I must.
Sharpen my analysis daily please.
Do comment heartily and let us feast.

Cheers!