HUPSENG has been ripping upwards the past 2+ months going from 80 sen to 1.28, despite being a biscuit maker, not exactly a sexy stock.  

Trade Reflections

I started accumulating nearly 2 years ago and accumulated 5 times on 5 different dates at an average price of 67.7 sen.  Subsequently, I made 3 profit take sale to lower my average cost.  I also collected dividends 6 times.   The chart below showed my entry and partial exit dates:

Entries.  The first entry was not that good but are close enough when you trade over a longer time-frame.  2nd entry almost perfect.  Third entry is to get a bigger position size on retracement anticipating rise but when price fall, the 4th and 5th entry are at low price which was a gift from Mr Market.   I would grade 2 "C+" (average entry) and 3 "A" (excellent entries).

Exits.  Later, when price rose, as I didn't want to over-trade, I took a small profit take near my highest entry price (essentially squaring off that position - a mistake).   Then, I waited at the RM1 resistance zone and today, I waited at RM1.28 and my GTC order got filled.  I would grade "C", "B-" and "A-" for the profit take.

Position size.  Small - after 5 accumulations, total size is only 1.2% of today's capital.   I would grade "C" for position size (average), as neutral could arguably in a 50+ stock portfolio perhaps closer to 2%.

Stock Selection.  This wasn't a true investment but a turnaround trade play, because at the time of entry, it didn't meet Warren Buffett's criteria of selecting superior business.   Here are my personal notes a couple of years ago.  It is clear that I was banking on a "turnaround" play after HUPSENG repricing - I figured, there was enough signs to show that things will improve and I am surprised how long it took the market to discover this.

The Bad …

• Earnings & Div declined past 8 years
• Payout ratio > 100% past 8 years.
• High Div Days over unless Earnings up

The Neutral …

• Net Cash 80m ~ 10 sen.
• @80 sen, business sold for 70 sen.
• EPS ~ 5 sen. P/E ~ 14 = fair.

The Good/Speculative …

• Q1/23 EPS higher than Q1/22 EPS #and#
• Net Cash Increase 8m ~ 1 sen;
• Revenue higher too;
• Turnaround expected due mainly to repricing

So, where to Next?

This chart pattern is unusual for me - not many waves over the past 2 decades.   

Fundamentally, the stock appears to me to be fairly valued - the fast rise the past 2+ months have turned this stock from being an under-valued stock to close to fully valued IMHO.  

However, upward momentum is strong with this one, and one of the rules of trading is never trade against the trend.  There is a 50/50 chance a breakout is possible and if this happens, the first key resistance to me should be the all time high at RM1.46.  Second target on charts is probably the popular RM1.99/RM2 round number resistance, but from a fundamental basis, I think this is very low chance of happening (maybe 10% chance?).    It is hard to imagine - business wise - that this biscuit, confectionary and beverage maker valuation can change so much over such a short time.  

In hindsight, it was clear that my accumulation buys 1-2 years ago was near the bottom of that long uptrend line drawn that connects several points and drawn over 2 decades.   At the time of accumulating though, it was less clear, but there was some anticipation.  So, there is also an element of luck involved as well.

Other Reflections

Up to today, at RM1.27 close, the trade IRR exceeded my expectations:

1. Excluding Dividends, IRR = 41.3% per annum.

2. Including Dividends, IRR = 46.5% per annum.

3. Dividends alone contributed 5.2% per annum IRR, but the Price Gain is 8 times bigger!

4. This has been an easy trade to make and hold because most of the time, I don't watch the market or the charts at all.   All I know is that if I get my entries close to right from both a long term chart perspective, as well as from a fundamental business perspective (with the repricing as a potential catalyst), and don't watch markets, time has a way of eventually working its magic, for market to revalue the stock with positive returns that beats EPF and FD rates, here, many times over. 

In short, Turnaround Position play = entries based on long term charts + fundamental catalysts = wonderful returns.  Sometimes.  Not all the time.

Thank-you HUPSENG!  Thank-you Mr Market!