TTI Portfolio Updates – April 2017
If there’s 1 thing I’d like to have right this instant, this is it:
HUGE grass patch just beside the driveway for the kids to run around and for me to do a little kick around too. (There’s a goal post at the side, not seen in the photo)
Ah. Simply next to impossible in Singapore.
Now, I could really really get used to staying here. This massive complex is 1 house btw.
Apple Orchard. Rows and rows of apples.
Growing up, whilst all the other little kids say they want to be policemen, teachers, doctors, lawyers blah blah blah, what I really wanted to be, is to be a farmer.
It sounded like the most fun job then. It still sounds fun now.
Anyway, back to investing.
Yesterday, I divested my puny position in S i2i at $2.67.
My initial investing thesis is here:
Which is barely 3 weeks+ ago.
The gist of it is quite simple actually. The company has to have an average share price of $2.92 over 6 months before March 2018 so that it can exit the SGX watchlist. The management is currently embroiled in a little unhappy tussle with ex business partners, and the son of one of such related parties was involved in a group that sent a letter to Si2i management recently, demanding certain changes.
So my simple postulation is that Dr Modi, a billionaire, ain’t going to let Si2i fail to exit the watchlist. It’d be almost fatally embarrassing, isn’t it?
I mean, if I’m a billionaire, Si2i has low liquidity, and I could easily buy up shares to support the share price and ensure it exits the watchlist, why wouldn’t I do so?
Particularly since an opposing party has tried to embarrass me.
You can’t put a price tag on pride.
So it’s a very simple investing thesis, with a logical and current catalyst. And since I vested, it’s worked like a charm.
Plus I noticed this in the recent issue of TheEdge:
Pretty much concurs with my thoughts, isn’t it?
Anyway, my purchase price is $2.45 barely about 3 weeks ago, so my ROI from this little side show is a very good 9% within 3 weeks. That’s…. gotta be quite crazy on an annualized basis.
Still, it’s already starting to look like a dumb move to divest cos even as I type this right now, the share price has shot up today to $3! Uh-huh. The day AFTER I exited. No shit.
But I’m on holiday, mood is good, fantastic place, with family. So, nothing gets me down today. (OK, plus it’s a 2,000 shares position. So who cares…)
So why did I divest and leave some gains on the table? I mean, I’ve already indicated my reasons for vesting in the 1st place, and $2.67 is still some distance away from my targeted $2.92 as written in my investing thesis.
The simple reason is that I’m intending to deploy more capital in my options strategies as indicated in my previous post.
Which leads me nicely to the next part.
In my last post, I mentioned that I’d be making some changes. I’ve given a lot of thought to refine what I’m doing, and have since implemented it.
It’s only been just under 2 weeks, so obviously any result is not reflective of longer term. I’ll have to continue to dry run it a bit, and preferably under different market environments. But the initial results have been nothing short of amazing.
In a much earlier post, I described my results:
Well, in the past 2 weeks, I have effectively doubled my cashflows from options. I’m not celebrating prematurely, because it may be just a case of a confounding factor. But I am very pleased to say the least.
At this rate, by just maintaining the same amount of capital for my options strategy, I’d effectively double my CFs every month, and that’d work out to be somewhere between $10k – $16k USD every month.
If so, I don’t see why I shouldn’t increase my exposure and shift some assets away from SG. STI has run up a lot anyway. A bit too much IMO.
It’s quite amazing how some simple, small changes can result in major changes, results wise.
I haven’t really made too big a change in my actions, but my thoughts have changed dramatically. And it’s really not ground breaking.
For example, I used to find companies with high IV, because high IV leads to high premiums right? Yet, I stuck to selling far OTM options because the likelihood of exercising is small. These options though, have low premiums. So this train of thought is really contradictory and counter productive.
I also failed previously, to relate a particular option strategy to the underlying company of the derivative. Yes, it sounds like common sense now, but I’m not sure why I didn’t think of it earlier.
There isn’t 1 silver bullet option strategy for all companies, obviously.
And all I needed is someone to point that out.
As to how to relate the strategy to the underlying company… well, I’m not obliged to talk about that here.
In this same vein, I now own 600 shares of Wells Fargo (WFC). This is a company that I’m familiar with, having analyzed and bought into it in the depths of the GFC back in 2009.
At that time, during the depths of the crisis, I bought at $9, sold half when it reached $12, and the other half when it reached $18. I then gave myself a pat on the back and thought that was the smartest thing anyone did.
Well. It’s $54 right now. LOL.
Anyway, with my new thoughts, it’s logical to go back to WFC. I understand the company better than most people, and the amount of DD needed is lesser since I’ve already done the groundwork some time ago. (At that time, John Stumpf just became CEO and now he’s kicked out)
WFC is undergoing a mini crisis of sorts currently. Their new management is still dealing with the fallout of the multiple accounts opening scandal, and the share price reflects that.
My current position of just 600 shares was accumulated at a nett price of $52.9, but this is the result of my options activity, not a direct purchase.
This means that this position is likely to keep changing in a matter of weeks. It could increase, it could decrease and in fact, it likely WOULD change.
Also, I’d miss out on Dutech’s AGM this coming Wednesday. I know there are some serious investors reading SG TTI, so please kindly drop me a mail to update me after you have attended.
I’d really love to know what Johnny Liu has to say, and what are the questions being asked.
Also, a BIG shout out to Xin Long who has kindly agreed to help me ask some questions at the AGM.
Filed under: Companies, General, S i2i