FY17Q3: STI, TTI Is Hot On Your Heels!
As always, some admin/frivolous stuff first.
For those who have contacted me to get your complimentary SGX Bull Charge 2017 tickets, SGX should’ve dropped you guys an email the past week to register. If you have not received it, pls check your spam folder. If you still have not received it, pls drop me an email to let me know. (hope I didn’t input your email wrongly)
For those who did not manage to get the tickets, I’m sorry but I’m only given 10 complimentary entries for my readers + another 2 for Team TTI (which I’ve also given away to readers). Maybe next year?
I’m going on holiday next week!
OK, this is one new year resolution I’ve failed badly. 2017 is supposed to be a not-too-much-holidaying year. (I think I wrote that in a post at the start of 2017) But I’m on my 5th for this year, and likely the last. Each time my wife suggests bringing the kids somewhere, she always ends with the phrase “next time they go to primary school, you want to bring them also cannot already……..”
That never fails to work on me. Damnit.
I’ll be off on a cruise to… dunno where (I really dunno where, I just do the paying part). Truth be told, in my 35 years of existence, I’ve never been on a cruise.
Well, neither have my parents. And since they indicated interest, I thought I’d bring the whole family along. Anyway, my parents just wanna spend time with the kids. I suspect it doesn’t really matter where we go actually.
I’m kinda at the stage whereby as long as my parents want to go somewhere with the kids, short of it being to Mars, I’d find the time and money to do it.
I was pleasantly surprised when it came to making payment. Cruises are soooooo much cheaper than the usual holiday involving flights.
Quick Tip: Royal Caribbean has some promo deal now whereby kids travel for free! (You still have to pay for certain administrative fees, taxes and gratitudes.)
Total Cost for 4 x adults + 2 x kids, occupying 2 rooms?
Freaking under $5k! ALL IN.
Woo hoo hooooo! I was so surprised. I was expecting something like $10k. Or even higher. Whenever we flew, the flights alone would cost me $10k. (For those who are unaware, flight fares for kids above 2 is the same as that for an adult)
Truth be told, I’m not a cruise person. (which is why I’ve never been on 1). My idea of a holiday is a high octane, intensive schedule. See as much as possible, do as much as possible, cram as much as possible. See, feel and experience.
A cruise just seems too… lazy and idle for my liking.
But hell, for $5k for everyone…. I can go every month! LOL.
OK, here I’ve a question for anyone reading this who is a regular cruiser. I received an email with the times to embark:
Is it OK to go late?
LOL, I know it sounds like a dumb question. But the cruise is supposed to set sail at like 6pm. I’m not sure why everyone is rushing to get on board. I guess the earlier you go on board, the sooner you get to enjoy the facilities, eat food or whatever? Anyway, I’m planning on squeezing in some hours at the office in the morning, and may possibly be late if I do so, so just wondering what happens if I have to check in later than the stipulated timing.
I actually cannot find any instructions on their website whatsoever on what happens if you check in late. They only say that you CAN’T check in early.
Pls let me know in the comments or drop me an email if you know.
I’ve also received a teaser email from the guys at InvestingNote.
Seems like they are going to introduce new exciting stuff over at the investing platform, and totally revamp the model. At first glance, it seems like they’re going to be a bit more like SeekingAlpha? That can only be a good thing cos for international equities, SeekingAlpha is kinda like the leading authority for social discussions.
I really gotta give it to these guys, they sure are moving along just fine. Not resting on their laurels, constantly growing, constantly working, constantly tweaking.
About a year plus ago, I made a comment saying that if they’re doing financing and wouldn’t mind having me on board, I sure wouldn’t mind taking a look and possibly parking some money with IN.
They seem driven enough, and the prospects are as bright as they come, when it comes to pre-IPO. I’ve written about PE stuff not too long ago.
Anyway, I think they’ve deep pocket institutions behind them, so that’s just too bad for me.
Anyhow, I’m not sure what exciting new developments they are conjuring up. I’ll have more info after our meet up early next week, or the week after, when I’m back.
Last week, I’ve also managed to meet up with Alain T.
Regular readers would know that he’s the contributor of (I think 2? or 3) guest posts and/or investing theses here.
We met at 730pm, chit chatted till……… 2am!
Yes. The cafe closed. The lights were switched off. The mall entrance was shuttered. And I had trouble getting to my car at the end. Had to jog up dangerously along the slope up the multi storey carpark. TTI’s life would’ve ended right there with a car coming down, exiting the carpark.
It was well worth it.
We had such intense discussions, and I think at the end of the day, we pretty much inspired each other in our journey. I can see the unmistakable glint of passion in his eyes. The energy firing up.
I say this genuinely, and not because Alain is a friend. This guy is going to go places and have a great career and future ahead of him. And I think I’m a good judge of character. Comes with my job.
Anyway, I promised Alain I’d update more on my options activities, so that’d come in a while later.
Now for the main course.
As the title suggests, this is the customary Q3 comparison between TTI’s portfolio results vs the benchmark, STI ETF.
I’m doing this a week earlier cos I’d be on holiday next week.
Q2’s comparison is here:
For 9M2017, TTI’s XIRR return stood at 19.31%, a substantial increase from 1H2017’s 12.81%.
Total portfolio value increased to $1,238,928.36, a slight increase from 1H2017’s $1,201,907.53.
I’m particularly pleased because there was no capital injection in this past quarter, and in fact, I made a withdrawal, as my house was due for refi, and I wanted to pay down the loan quantum.
Yes, I know it doesn’t make sense to pay down housing loans because the interest rates are low. But I intend to buy another house soon, and I’d like to not to have to worry about installment payments. Right now, property as a portfolio, is basically on autopilot.
I define “autopilot” as:
Returns from my investment property, less all MCST costs > Monthly installment payments for my residential property + MCST costs
Basically, my tenant pays for my mortgage and maintenance fees.
Paying down this current property would mean that when the time comes, this becomes an investment property without any baggage, and this investment property pays for my new next purchases’ monthly installments.
Like I said, autopilot.
Oh and for those who may be looking to refinance soon, as far as I know, Maybank now offers one of the most competitive rates. Check it out.
Alright, back to portfolio discussion.
STI ETF on the other hand…
For 9M2017, STI ETF’s XIRR stood at 21.11%, which is a drop from 1H2017’s 28.58%.
Yes, this does mean that as of now, TTI is STILL lagging behind STI ETF.
On any given year, a +19.31% return at the 9M mark means I’d go out and pop a champagne. Not 2017 though. STI ETF has been a freaking beast.
I’m still excited though cos comparing to Q1, where we were miles apart, now I’m not too far away.
19.31% vs 21.11%
And there’s still 3 months to go.
THIS IS SO FREAKING EXCITING!!!
I feel like… like errr… errrr….. I’ll let a video describe it.
TTI = UCC
Notice how at the start, UCC is not even seen in the frame. UCC literally caught up in the equivalent of “Q4”!
“UCC from the depths of hell, are coming through…..”
“I don’t believe it! What a run!!!”
I don’t mind landing flat on my face, splayed out on the floor at the end like that lady, if this happens.
In earlier posts on portfolio returns, there was some discussion about the methodology. Afterall, the STI ETF returns given by websites and in articles is currently not 21.11%. It’s more like 15%+
So let me explain.
I utilize XIRR. That’s the internal rate of return function in Excel.
I’d input each time there’s a cash infusion or a cash withdrawal. This XIRR includes cash that sits idle in my portfolio, not generating a return.
The rationale is simple. I’m assuming that if I have $X amount of capital, what I want to know for any given year, is if I had put in this $X into STI ETF vs managing this $X under TTI’s portfolio, at the end of the year, would STI ETF or TTI have had given me more bang for my bucks.
STI ETF’s dividend distributions are recorded accordingly as cash distributions.
So in this way, the value of money is weighted according to the amount of time STI ETF or TTI has had the discretion to use it for.
So STI ETF’s XIRR would look like this:
This method would annualize the return, that is, it’d exaggerate any outperformance/underperformance during the part thereof of the year. The true returns would show up at the end of the year.
Also, I think I’m particularly conservative because I generally err on the side of caution: I’m more likely to incorporate things that would drag on TTI’s portfolio returns. I rather the figures constantly look bad, but quietly and privately, it feels good to me.
So for example, I include any cash that’s been earmarked for investments, even if it does nothing but is held as pure cash. That’s popularly known as “cash drag” in investing circles.
STI ETF has no cash drag. As seen in the XIRR table above, it’s just pure up a fixed unit of investment at the start of the year. This alone would give STI ETF a competitive advantage over TTI. I don’t know how big an impact it’d be, but I’m fine with rules stacked against me.
Also, I deduct the dividends distributed by STI ETF when they are paid, so again, there isn’t the “cash drag” component, whereas TTI’s dividends are held as cash for investments. (Unless I make a withdrawal for other uses)
Now let me run down my holdings with a quick commentary.
The share price chart is self explanatory. YTD, it looks like this:
Currently, I still own 240,000 shares. Haven’t divested any.
The share price did dip somewhat in recent weeks, and on IN, someone asked me why did the share price dip even though steel prices have rallied.
My answer: I don’t know.
I don’t try to figure out what the share price does on a weekly basis. It’s full of senselessness.
On the same note, at the start of the year, again on IN, while talking about my thesis for LTC Corp, someone commented that steel prices have been dropping and my thesis is debunked. I think the chart above speaks for itself.
I’ve recently written about LTC so I won’t repeat myself here.
This is a great example of why you can’t predict the share prices in the short term. It’s senseless.
BBR Holdings reported a loss in the mrq.
TBH, things do NOT look good for the company. Reporting losses in the mrq also leaves investors with the question: How about the next quarter?
Yet, YTD, the share price chart looks like this:
Sure doesn’t look like a company which has reported losses in its mrq, although for they are still profitable when assessed on a 1H2017 basis.
The company did a series of aggressive share buybacks.
The share buybacks were very effective in putting a floor on its share price. I personally benefited as I recognized that and traded around my positions in BBR Holdings, divesting some at $0.24 while buying back at $0.225, $0.23.
Aside from that, Mr Chiu Hong Keong further increased in stake in the company, buying up 441,500 at an average price of about $0.23, giving him a substantial 8.08% stake in the company.
This is significant news as Mr Chiu Hong Keong is not your run of the mill investor. He’s the chairman and founder of Malaysia listed Pintaras Jaya Berhad, and is an industry veteran.
I don’t know what plans he has, and this is the 2nd time in recent times that he’s slowly buying up BBR’s shares. But you know the saying….
There can be many reasons why management/insiders sell their shares, but there can only be 1 reason why they buy shares.
On top of that, BBR is likely to have increased activity in Malaysia. They just fully acquired their Malaysian subsidiary, and have won some contracts for big projects in Malaysia. In recent years, it’s also their Malaysian activities that have been profitable and doing well.
All this makes it very intriguing.
I currently hold 1,480,000 shares.
I’ve only just initiated a position in this 2 trading days ago.
It’s a puny 10,000 shares position, done at $1.98 a piece.
CDG is not for the faint hearted:
In the past 3 years, many brave souls with grandiose dreams of being “contrarian” have fallen off that sleep sloping edge of the cliff to their deaths.
I’m hoping I’m not going to add to the body count.
CDG must generate a lot of interest. My simple post on taking up a position in IN generated a ton of comments, and I even received a few emails about CDG.
I won’t comment too much about it as I’ve yet to write up an investing thesis.
Not to mention that this is just a puny initial position.
Long time readers would know that I don’t usually like to hold positions that are worth below 6 digits.
All I would say is that I’ve done my usual deep value DD for the past month, and I have a clear plan on what to do. For all you know, I might just not add to my position and end up with an insignificant 10 lot position.
I’m acutely aware of the numerous guys ahead of me who have fallen, and I think/hope/pray I would know what to do when it comes to CDG. Let’s see.
More of the same. What can I say.
They lost their way, and King Wan should really go into the textbooks as a case study for business schools.
Management dabbled in stuff they didn’t know, thought they had the intelligence that they didn’t have, ended up with the results they thought they wouldn’t get, and now shareholders are left with the shit they thought they weren’t going to buy into.
I’ve cut my position substantially in late Feb/early March at $0.178 or so, and more recently in June and July at $0.162 or so.
Currently, I still hold 430,000 shares.
They’ve resumed paying dividends, and the risk is substantially lowered now with the drop in the share price.
The share price tanked rapidly recently, so I placed in an order at $0.83 and left it there for good.
1 big fine day, during lunch, I noticed that I’ve received notification that it got through. By the time I checked, the share price has recovered strongly.
I ended up selling a day after for a ROI of 7.83% in a day!
LOL! It’s just a small quantum, but still it gave me a huge kick for the day.
Currently I still own 40,000 shares at an ave price of $0.6 or so. (I can’t tell exactly cos I used to take scrips as dividends, plus with the distribution of dividend in specie of Boustead Projects, I kinda lost track what’s my ave price but it should be around $0.6)
GEO ENERGY RESOURCES
YTD, Geo energy is up, yet it sure feels like it’s been down.
Having risen rapidly in Q1, Geo suffered a massive drop before hovering around the current price in June.
I currently own 500,000 shares, and am still pretty confident of my DD.
The markets can disagree with me, but Geo’s valuation has to be higher when my thesis plays out. And it won’t be too long from here. Market participants can disagree with my judgement, but they can’t disagree with the figures when they arrive.
Indo HBA has been hitting new highs, so has China’s QinHuangDao coal prices.
TBH, I’m surprised the share price isn’t much much higher from here.
I’ve been asked why I’m confident their production will recover from here. So let me provide a little update on the investigative work I’ve been doing on Geo.
As mentioned, both Indo and Chinese coal prices indices have been hitting new highs:
“Indonesia’s Aug HBA thermal coal price surges 44% on year to $83.97/mt”
That much is known.
The production volumes though, is the big unknown.
Having reported below average production volumes in Q1 and even more disappointing figures in Q2, it seems that participants are scared away by the failure of Geo’s management to meet it’s guidance thus far for 2017.
I think the market’s worries are justifiable, but short sighted.
Since we know the prices are at all time highs, I sought to try to investigate the potential volumes in Q3. The weather is supposed to be much better in Q3, and production volumes are supposed to increase going into the 2nd half of 2017.
To do so, I targeted BUMA. Geo’s mining arm was divested last year, and BUMA now does all the mining for Geo.
Fortunately, BUMA reports its monthly production figures:
We can clearly see a recovery and increase in production volumes in July and August 2017. BUMA said so themselves in their monthly report:
“Year-to-date overburden removal grew by 21% YoY to 228.0 million bcm and coal production grew by 27% to 27.4 million tonnes, despite unfavorable weather in the first half of 2017. Improved weather has led to better volume achievement in the first two months of third quarter 2017.”
Of course, BUMA doesn’t just mine for Geo, so we can’t take the data wholescale like for like. BUMA mines for several other coal mine operators, so one could argue that this increase could be for the other coal mines, and Geo’s SDJ could still suffer from volumes that are below expectations.
To clear that doubt, I analyzed BUMA’s mrq financials.
Amongst all of BUMA’s clients, Geo’s SDJ mine is the 2nd largest contributor to revenues as of 1H2017, accounting for 12% of BUMA’s revenue:
Berau Coal was by far the largest contributor.
Still, it indicates that it’s likely that BUMA’s increased production volume reflects that of Geo’s SDJ site, as SDJ is the 2nd largest contributor of revenue for BUMA.
On top of that, Adaro Energy has a coal mine that’s situated just north of SDJ:
And as recently as early Sept 2017, Adaro Energy reaffirmed their full year production volume guidance of between 52-54mil tonnes.
This is the same guidance they gave at the start of 2017.
If production volumes are affected, they would’ve cut guidance.
Since the site BUMA mines for them sits just north of SDJ (and AJE, Geo’s other smaller mine that they are helping to manage), it’s not unreasonable to extend their fortunes to that of SDJ’s as well.
Now, there are certain risks for Geo Energy that I am watching closely too.
I won’t go into detail as this post is getting too lengthy, but basically Indo’s export volumes are dropping. This means that proportionately, more of Indo’s mined coal has to be consumed domestically. This is exactly why Indo’s gov wants to achieve.
Geo is vulnerable as if they have to increase their allocation of mined coal for domestic usage, their margins will certainly be impacted.
All in, I’m expecting more good news ahead from increased production volumes, new offtake agreement for TBR mine site and settlement of their MTN loans before Jan 2018.
Without Dutech’s massive drop in share price this year, I’d most certainly would’ve beaten STI ETF handily. It’s amazing that I’m still in the game after this underperformance.
With the big drop off in their high security segment, and with increased operating costs from their acquisitions in end 2016, Dutech is in a perfect storm.
They will go through a tough period of 2-3 quarters as they transition from a safes and vault manufacturer, to mainly an intelligent terminals and services type of business.
Already the swing is underway as High Security revenue continue to fall while Business Solutions revenue continue to rise. I have every confidence in Johnny Liu to execute on the integration of metric and turn it around.
After buying up some shares just prior to their financial release, I sold into slight strength to pocket a few % points of gain.
I still own a very sizable 701,000 shares, at an ave price of $0.287.
As a contrarian, deep value investor, I have no qualms holding Dutech. I’ve been down this path before: with Hock Lian Seng, with Metro Holdings etc.
The markets will come around to my view.
I don’t normally exit core positions without at least a 6 digit profit gain, and my average holding period is above 3 years.
Alright, all that concludes my commentary for SG shares.
Finally, let me move on to my options activities.
After having tasted immense success in the US markets for 3-4 months, I suffered a massive loss in 2 subsequent months. Most of it is, ashamedly, my own doing as I got greedy, and wrote too many naked positions, and eventually got into margin trouble.
It didn’t help that volatility shot up sometime in June and July, and Interactive Brokers suddenly raised their margin requirements.
I ended up doing the exact opposite of what deep value investors are supposed to do: Buying High, Selling Low.
Painfully, that saga ended up with me losing almost 3/4 of the cashflows generated in the prior 4 months.
But I am thankful. Because of that, I implemented new golden rules that TTI would stick by.
It is this process of experimenting, analyzing, studying, judging, devising new rules, implementing these new rules, and finally reviewing the results again; that would ultimately make TTI’s investing process exceptional.
It can’t be taught, neither can I read it up. It’s a process that’d be unique to me.
I would understand it intimately, nobody else would.
Thus far, in September, the results have been indeed stunning again, generating a 12.98% (almost 13%!) return in these 3 weeks in September!
When I met up with Alain, he expressed incredulity when I shared with him my activities and results. Off the top of his head, he worked out that if I could generate the sort of cashflows that I did previously (about $14k USD per month on the back of $180k USD) it’d work out to be an annualized return of 60%? or so.
And that’s just ridiculous. That’d make me superior to WB, Carl Icahn etc.
A 12.98% return in less than a month is even more ridiculous than that.
Yet, I suspect that’s going to be how it’s like going forward: Some months I’d have superior returns, and some months would drop into negative returns, but on a whole, on a net basis, long term wise, my options activities should generate returns of approximately 20% per annum.
Coincidentally, I was playing around with the functions in Interactive Brokers and realized that they can actually generate very nicely done up reports for my portfolio there! I’m genuinely impressed. Wish I found this out earlier.
Yes, I know it’s crazy. But I don’t think it’d be a consistent 13% ROI every MONTH…
The change of +$42,498.01 includes a cash infusion of $20,710.76, so the actual “gain” is $21,787.25.
All figures are in USD.
More stats for Sept 2017:
Now, do note that these are cumulative returns, so the chart says it all.
The returns really took off in the past 2 weeks or so, resulting from successful positions in Diebold Nixdorf (which has shot up substantially in the past month), from shorting volatility (instruments of choice: VIX & VXX) and from selling options in CHK and VRX.
Of course, to show such superb results, naturally I must’ve taken on increased risk… as this “risk report” suggests.
Looks like my risk shot up, vs other benchmarks.
I’m not entirely sure how they calculate this risk, but I’ve included this chart as it looks dramatic. I totally disagree though. I think I got my TTI risk well controlled.
Alright that’s all I have for this uber long post.
I won’t be updating for a while, as I struggle to fulfill my responsibilities as a clinician, a father, a son and of course, my secret alter ego, ThumbTack Investor.
I’ll end with the same video above. I’m watching it again and again…
As we go into Q4 of 2017, I won’t end with my usual well wishes of “Happy Hunting”.
Filed under: General, Property