Friday, May 16, 2008

2008 mid-Q2 Portfolio Update

Half of Q2 has passed. Presently, my portfolio contains:

Sinotech
Fujian Plastics
Sihuan
C&G
Karin
Valutronics
Changtian

Transactions made since last update:
Sold: China Hongcheng and China Precision
Bought: Changtian and Cacalo

Sold China Precision due to the unexpectedly poor Q1. China Hongcheng was sold due to two reasons. One, my original investment reason was incorrect as I may have overlooked the large amount of debts carried by China Hongcheng. Two, I wish to be less concentrated in chemical fiber industry, since I also have stocks in C&G and Sinotech. Both positions are sold at a loss.

Added more Cacalo shares to my portfolio, due to the unexpected good Q1 results.

Initiate a position on Changtian due to low PE and the interesting prospect of higher revenue & profits for the coming two years. Changtian will be increasing the production capacity of BOPA film and 2-A2MPS, and initiating the production of UV cured PE release film.

Year-to-date, my portfolio returns are negative at around -3.5%, slightly better than STI (-5.9%).

Book Review : Invest Like a Dealmaker

Invest Like a Dealmaker is written by Christopher Mayer, an editor of two investment letter.

The book will be an interesting addition to a value investor library, as it briefly introduces an value investor to other probably more obscure search method.

The book started off by denoting two types of market, stockmarket and the private business market (or Wall Street vs Main Street). Following that, it introduces three concepts on how to think about private business values: that is (i) focus on whole companies, (ii) focus on cashflow and (iii) focus on asset values.

Then it borrows from Marty Whitman's Value Investing the four methods that companies can create value. They are earnings, free cash flow, resource conversion and access to capital markets.

The most interesting part comes next, whereby the author discuss on the eight possible search methods, ranging from Greenblatt's Magic Formula to Distress Investing.

Finally, the book starts to dwell on the philosophy/methods of other great investors such as Rahph Wanger, Bill Miller etc, as well as some academic studies and views of businessman. And also a chapter on when to sell stocks.

Except for the chapter on when to sell stocks, the great investors' philosophy/methods portion may or may not be to your liking, especially if you have already covered a lot of ground in value investing philosophy. Nonetheless, some ideas are quite interesting and may be worth re-reading.

On the whole, the book will be great for aspiring value investors.