Monday, January 17, 2011

First post for the year

Dear Readers and Investors, this is the first post for 2011.
While last year was pretty much a bull hidden in the choppy prices, this year is set to be a consolidating market. There are definitely much less opportunities compared to last year and I have instituted the following:
  1. To start selling if the price is right 
  2. Demand more safety in valuations and not to venture into relative valuation buying (I.e, Co A & B not cheap but A is cheaper vs B so buy A)
Anyway, I have spotted yet a few quality firms but pricing remains an issue. Todays market has come down hard on many small caps and hopefully more so in the next few days and weeks. Ill start to post and write in time to come, my timing is bad so do not assume whenever I write, its the best time to buy. 

Answering some readers queries:
  1. Why did I buy Roxy and not Tuan Sing and Guthrie, since both are property plays?
    • Do note that Roxy is very undervalued and their hotel assets are not carried at market value
    • Tuan Sing, Guthrie or perhaps even Gallant Ventures as an extreme example has assets that are deeply under-reflected in their firm market value but requires a certain amount of effort/cost or both to unlock it. The hotel for Roxy is already there.
    • Last but not least, management of Roxy are locals and are conservative individuals, they think and act on behalf of shareholders, and are experts in the Joo Chiat area. This can be backed up by their historical purchase prices I have set out in my earlier posts.
  2. Should I buy Gold to hedge or perhaps miners?
    • This depends largely on individuals, to me - I subscribe to the thought that Gold itself serves little use except for storage and it is a relatively inert element (I.e, does not mix or react) and we can be sure the supply will be pretty constant. 
    • Further, inflation hedges may removes opportunity costs for your money. You may well buy good companies or unit trusts that gives good payments. Gold has also had quite a run up since
    • Miners - theres only one in Singapore and relatively new. Miners have inherent risks and their prices may not track the gold prices. Many factors such as transport, extraction costs etc will come into play. Miners are mainly listed in Australia, US and UK. There may also well be a case of USD/Pound depreciation and yet Gold prices will fall. Do full research to protect your capital.


NSS said...

Sweet analysis pal; I like small caps for their hidden potential (and risks!) and affordability. You may chance upon an unpolished gem sometimes.

Mervyn Teo (MT&Co) said...

I certainly agree with you NSS. Small caps are not covered by institutions and less followed.

A good contact with the industry of the firm you are investing in will be a superior advantage versus reading the reports or just looking at financials as they are backward looking.

Do feel free to post on my blog and if you have any other ideas / comments etc. Will be happy to reply!



Great first post.

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