Thursday, January 6, 2011

2010 - Year End Investors Summary

Dear Readers,

2010 was an eventful year.I am thankful for the people who encouraged and continued to believe in me. I did not have much interaction with the public except for a few emails exchanging pointers and learning from one another on investing and businesses. So feel free to keep those emails and phone calls coming in.

Hopefully the blog helped some people in their fight against poverty. It was enriching to get involved in managing a sum even though it is unofficial and as a one man show, tough challenges surfaced and were solved, lessons were learnt and I was pleased to know that the recommendations did well. I only started in March 2010 when market has already ran up from its 2009 lows and intermittently I had to work a few months. Effectively, I spent only 6 months on investments in 2010.

I always believed investment is 50% analysis and 50% execution. In 2010, I became more aware of my personality especially in buying or exiting positions and I must say while analysis is fine, my execution is not. I have spotted many opportunities but often unable to pull the trigger due to various reasons. This led to a less than satisfactory performance and missed chances. It is also not often there are chances and of course courage to double down and one should buy more irregardless of price movements if theres sufficient value left.

The year also taught me to look beyond numbers and understand business as it is, for example Parkway. Not excellent numbers but do understand the rationale, the bargaining forces involved. Management as well as industry factors is crucial and should be accounted for. I still remain pretty much a sector agnostic person who continues to look for cheap and good stuff, taking into account the occasional macro winds.

Lastly, there should be a lot of cash in the holdings only when the general market is overvalued.

Turning to the portfolio, I am pleased to put up the list as mentioned. Dates and positions are definitely not back-dated and follows the posting for each of the positions in chronological order. Mentioned in the blog positions are generally larger positions I have and others are small or miscellaneous positions I did not enter into and hence did not blog about but do contact me if you wish to view my write up on the position. I do have a write up for all positions listed here.


2010 saw the STI being up 10.09%. 
Mainly Roxy and AEI corp are carried over from 2010. Roxy had a good run due to some coverage (albeit lagged) by the institutions but I firmly believe there remains substantial value in the hotel as well as icing on the cake from the development projects. As mentioned, management is astute and are highly focused on value rather than volume and looks set to recognize another year of good earnings (Directors implicitly agreed too with their share buybacks and set up of new hotel subsidiary). AEI on the other hand is a leader in the Aluminium extrusion field and has a large collateral coverage from its loans to an external firm. Free cash flows are strong and firm was sold down on Aluminum derivatives losses. I subsequently bought down more on that and it turned out that losses became realized gains as the firm pared their derivatives stake. Management is young and continues to support the share price by buybacks. Only risk foreseeable will be Aluminium costs which I believe will be hedged out well.

Looking to 2011, I am sure macro will continue to be dominant and increasingly certain sectors like energy (especially coal), consumables and agriculture will be more in play. Also, your author will strive to focus all energy into investing and the blog since I have ended my work and left that role. We will continue to seek undervalued counters and beat inflation whilst making a modest annual return.

I enjoy and look forward to hearing more from you, the readers and investors and all the best to 2011.

Best Regards,
Mervyn Teo

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Great summery

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