kcchongnz blog

2015 Christmas reflection of my portfolios kcchongnz

kcchongnz
Publish date: Mon, 21 Dec 2015, 07:21 PM
kcchongnz
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This a kcchongnz blog

Tell me who your heroes are and I’ll tell you who you’ll turn out to be.” Warren Buffett

I have been following the core principles and methodologies of investing propagated by the true super investors in the United States in the link below.

http://klse.i3investor.com/blogs/kcchongnz/88007.jsp

These core principles and methodologies are summarised as below:

  1. Investing in a stock should be viewed as investing in a part business.
  2. Focus on return on capitals
  3. Have estimates of the value of a company, and hence the intrinsic value of its stock using a variety of methods and compare with its price
  4. Buy at a wide margin of safety
  5. Cash flows, and especially free cash flows is king
  6. Buy good companies with high return on invested capital at cheap price as measured by high earnings yield (Ebit/Enterprise value) of the Magic Formula.
  7. Focus on the downside and let the upside takes care of itself. Invert, always invert.
  8. Be a second-level thinker. If something is easy to compute and understand, it is extremely unlikely that the market will misinterpret it. Therefore, such information will not, by itself, provide evidence of mispricing.

These core principles and methodologies in fundamental investing have proven to work very well as shown in the chart of annual excess return over and above the return of S&P 500 by various fundamental value investors at various investment periods below:

The chart above shows Warren Buffett has an annual excess return of about 13%, or an absolute annual return of about 25% over a 55 years’ periods, while Joel Greenblatt of the Magic Formula Investing fame has an annual excess return of about 30%, or an annual absolute return of about 42% over a period of more than 20 years. 

I knew these core principles and methodologies of fundamental investing would work for me investing in Bursa. As the new year approaches, it is time to review how well they have worked for me in this mid-term horizon.

This also serves a purpose that I am not bullshitting, that I have established records to show, not necessary implying I have made tons of money, or trying to mislead anybody in this largest investment forum for Bursa, but merely to prove that those core principles and methodologies work not only in the US and around the world, but also work very well in Bursa. Hopeful critic like the one below can be enlightened.

[Posted by koonthebest > Oct 20, 2015 01:48 PM | Report Abuse
empty tong PONG PONG PONG! where your bursa statement! PONG PONG PONG response got lah!
please post the bursa statement past 3-5 years.unless proven to be real, his writing and analysis can be justified rubbish.]

So far, Tan Kian Wei, one of the major contributors in i3investor has put up two official portfolios of mine in i3investor in 2013 which have reasonably long duration, one in January 2013 as “GE 13 Watch – kcchongnz”, and the other on August 1 2013 named “Stock Pick Challenge 2013 2H – kcchongnz”. They can be viewed from these links below.

http://klse.i3investor.com/servlets/pfs/13147.jsp

http://klse.i3investor.com/servlets/pfs/19386.jsp

At that time, there were only 2 i3investor forumers participated in these two “challenges”; myself and Ooi Teik Bee, who uses technical analysis in his stock selection.

I have provided detail analysis on the stocks chosen and their investment thesis in i3investor following the links above. I always feel sharing the process of the stocks selection is more meaningful, rather than telling how much I have made after the share prices have gone up.

The link below shows the outcome of my usage of the core principles and methodology of fundamental investing which I have described about.

http://klse.i3investor.com/blogs/kcchongnz/78390.jsp

 

GE13 Watch

Table 1 in the Appendix shows the performance of the stocks and the portfolio for the 2 years and 11 months’ investment period for “GE13 Watch” as at to date.

During this period, the broad market has gained 5.7%. All 10 stocks in the portfolio have positive total returns which varies from 0% for Pantech to 517% for Prestariang. There is not a single stock which loses money, absolutely none. Pantech is the only stock which under-performed the market, by just a small margin. The average return of the portfolio is 134%, beating the broad market by a whopping 128%!

The total return is equivalent to a compounded annual growth rate (CAGR) of 34%. RM100000 invested less than three years ago has grown to RM233500, compared to just RM105700 if invested in the broad market.

Four out of the ten stocks have triple digits return; Prestariang at 517%, SKP Resources at 339%, Pintaras at 203%, and NTPM 106%.

Investing following the core principles and methodologies of the super fundamental investors for the above portfolio has shown that it has yielded superb return, and with very low risk as evidenced from the lack of a single loss making stock.

Is the superb return of this portfolio using those core principles and methodologies of fundamental value investing an exception?

 

Stock Pick Challenge 2013 2H

Table 2 in the Appendix shows the performance of the stocks and the portfolio for the 2 years and 5 months’ investment period for “Stock Pick Challenge 2013 2H”.

During this period, the broad market is practically flat as shown. However, eight out of eleven stocks, or 73% of the stocks in the portfolio have positive total returns which varies from a minimum of 20% for Tienwah to 565% for Datasonic. The average return of the portfolio is a whopping triple digit of 120%, beating the broad market by the same magnitude.

There are only two stocks which under-performed the market; Daiman at -6.9% and Kumpulan Fima, by just a small margin of 2.2%.

The total return is equivalent to a CAGR of 38%. RM100000 invested two years and five months ago has grown to RM220500, while the amount of money invested in the broad market remains unchanged.

Three out of the eleven stocks have triple digits return; Datasonic at 565%, Homeritz at 424%, and Fibon at 117%.

Again it has demonstrated that investing following the core principles and methodologies of the super fundamental investors has yielded superb return, and more importantly, with very low risk as again evidenced from the minimal losses of just a couple of losers.

Is the superb return of this second portfolio using these core principles and methodologies another exception together with the first one?

 

Stocks selected throughout 2014

I have another portfolio which is not officially published in i3investor but the stock selections were shared in i3investor which you can search from the link below:

http://klse.i3investor.com/blogs/kcchongnz/

The stock selection also come with detail analysis as published in i3investor. I like to share the principles and methodologies in investing, which I think it is a better sharing, rather than telling others what stocks to buy without any thesis. I have compiled them into what I call “My Third Portfolio”.

How has this “My Third Portfolio performed in the short period of less than two years?

Table 3 in the Appendix shows the performance of the stocks and the portfolio for “My Third Portfolio”. Here I have omitted a couple of company warrants which were shared as educational purpose on the usage of financial risk management using options. Nevertheless, the effect on the total return of the portfolio is not that significant.

During this period when the portfolio was formed, the broad market was almost at its peak with KLCI at 1844. Since then, it has dropped by 8.2% due to the various problems at home and abroad. However, the portfolio of stocks has performed very well too.

Eight out of thirteen stocks, or 62% of the stocks in the portfolio have positive total returns which varies from 5.1% for Kuchai to 188% for Latitude Tree. The average return of the portfolio is 46.3%, beating the broad market by another wide margin of 54%.

The three stocks which under-performed the market are Plenitude at -35.4%, Perak Corporation at -28.3% and Tong Herr at -14.2%. This time, the loss is relatively larger than before. However, I believe it is just a temporary setback as I reviewed my investment thesis, there is no serious concern about those companies, in my personal opinion.

RM100000 invested less than two years ago in “My Third Portfolio” has grown to RM146000, while RM100000 invested in the broad market has diminished in value by RM8200 to RM91800.

Again there are three stocks with triple digit return, even in this short-term investment horizon; Latitude at 188%, Prestariang at 146.7% and Magni-Tech at 143.3%.

Again it has demonstrated that investing following the core principles and methodologies of the super fundamental value investors has yielded superb return, but with relatively low risk.

This return on “My Third Portfolio” demonstrated that one of the principle of fundamental value investing of diversification is important for ordinary investors.

Is there other proof that investing basing on the core principles and methodologies of the super investor yield good results and with little risks. Yes, of course.

 

Stock picks by my online course participants

I have posted an article with the stock picked by my previous course participants here:

http://klse.i3investor.com/blogs/kcchongnz/88314.jsp

Many of my previous course participants have become very good fundamental investors. In fact, I have been relying more of their recommendations and information for my investment.

Here is the summary of the stocks selected within the last one year and the return of the portfolio as on 17th December 2015.

  1. The seven stocks shared return an average of 33.5% within an average of six months’ period, compared to the loss of the broad market of 8.6% during the same period.
  2. The excess return, or alpha is a commendable 42.1%.
  3. The median return is even higher at 42.1%.
  4. There is only one loser and under-performer (14%), APM at a loss of 11%. The negative alpha is minimal at just 2.4%.
  5. The risks of those stocks selected were generally low as most of them are with steady earnings and cash flows and healthy balance sheets.

 

Conclusions

It has shown in the above that, all the four portfolios of stocks in Bursa selected using the core principles and methodologies of the fundamental value super investors, three from me, and one from my course participants, outperformed the broad market by a very wide margin. The consistency in the superb performances implies they are unlikely as a result of luck. This is also in consistent with the good performances and proven records of the fundamental value super investors.

Hence following the core principles and methodologies of sound investment has a higher probability of building long-term wealth in the stock market. Don’t you agree?

So, what are you waiting for? Don’t you also like to learn and acquire these proven core principles and methodologies of investing for your investment to build long-term wealth surely and safely by your own?  Please contact me for an online investment course which will start soon for a small fee.

ckc14training2@gmail.com

Tis goeth down to a fundamental aspect that “An investment in knowledge pays the best interest”           - Benjamin Franklin

This course will start with stock picks for the new year 2016 as a new fundamental value portfolio.

 

K C Chong

Appendix

Table 1: GE13 Watch Performance

 

Table 2: “Stock Pick Challenge 2013 2H” Performance

 

Table 3: My Third Portfolio Performance

 

Table 4: Stock pick by course participants

Discussions
4 people like this. Showing 39 of 39 comments

hissyu2

investors are getting smarter... pretty hard to spot hidden gem... KC's picks are mostly time-proven-strong... anticipated to look for your 2016 picks...am surprised padini wasn't in your previous porfolio.

2015-12-21 19:56

Intelligent Investor

Mr. Chong, merry Christmas.

Are you coming back?

2015-12-21 20:23

77huat77

Marvelous ....

2015-12-21 20:23

Intelligent Investor

An investment in Mr. Chong course provide me the ever best return.

2015-12-21 20:24

Probability

Thanks for the portfolio overview KC..

2015-12-21 20:45

kcchongnz

Posted by hissyu2 > Dec 21, 2015 07:56 PM | Report Abuse

investors are getting smarter... pretty hard to spot hidden gem... KC's picks are mostly time-proven-strong... anticipated to look for your 2016 picks...am surprised padini wasn't in your previous porfolio.

Padini is in my 2015 stock picks. The stock selection is less than two months ago when it was at RM1.62.

http://klse.i3investor.com/blogs/kcchongnz/85828.jsp

2015-12-21 20:56

hissyu2

sir, that's why trader hates you~ your picks are always gaining after a "long" period... traders can never wait... they want to "invest" to get quick gains(though i thought gambling is faster)...
I remember you have an article talks about the return vs time... I see a few stocks in red for 2014 picks but all green in 2013 picks... It's proven again the theory works:)

Merry Christmas and congrats to your gains... Thanks for continuing sharing your hardwork...

2015-12-21 21:35

PISANGBESAR

Mr Chong

Thank you very much and Merry Christmas

I believe many have benefited from your writing

Of course including me

May I take this opportunity to share my success with all the readers here

Join KCChong online course, learn the true skill of investing in the stocks market

That is the best way to protect your hard earned money

I name Pisang besar ,

so that it is more appropriate to hit back at those who like to bullshit you.


Hahaha....

Talking nonsense again,

Hope have not cause any dislike here

If any, very very sorry loh....

Happy New Year.

2015-12-21 21:52

joe2703

An investment in knowledge pays the best interest.... I've learned so much from your online course and I made quite some good profit with the knowledge that you taught me, thank you very much and Merry X'mas!

2015-12-21 22:22

Frank Soweto

Thank You Mr Chong for another year of many great articles and all the hard work and time u put in to share with your followers who seek the truths n did not follow blindly :) Merry Xmas n a happy New Year :)

2015-12-22 05:35

Frank Soweto

opps solly take your space a bit n wish my good buddy invest88 Merry Xmas n happy new Year n make lots of whiskey bottles in 2016 :)

2015-12-22 05:37

YiStock

Merry Xmas to my guru Mr KCChong.

I have a 55% overall portfolio gain (36% realized and 19% unrealised gain) for the year of 2015. I must say big thank you to you and you are true guru of all.

I am 99% confident that my portfolio have another 300-350% upside potential for 2016 where i recently has completed my portfolio restructuring. I am still sharpening my investment skill.

Looking forward to meet you in next year June during the KCChong Investor Club 1st Annual Retreat in Johore. Thanks and may you are blessed with all the good health and wealth.

From, YiStock

2015-12-22 08:11

zbaikitree

Wakaka. Yistock who predicted frontkn another inari.
Latest flop johotin.

2015-12-22 08:14

saddiqsepakraga

zxbaiktree, what's yours?!

2015-12-22 08:16

YiStock

hi zbaikitree, good morning. happy to see you still in bursa. Merry christmas. Do grow up to be a mature investor and able to think logically for 2016 ya..Cheers!

2015-12-22 08:17

Icon8888

@YiStock

I believe I am entitled to join also

I am a graduate of KCChong Business School

I attended his online course

But I quiet quiet never tell anybody

2015-12-22 08:18

zbaikitree

Yistock. I grew up ady. But i still like to make fun.

Merry christmas to u.

2015-12-22 08:19

YiStock

Icon8888, i know you are among the mr chong's most outstanding disciple. I seriously want to meet you and learn from you.

2015-12-22 08:20

NOBY

Icon888, wow you are KC's student ? Come on please share your marvelous stock write ups on the KC Chong facebook page first la... sharing is caring... :)

2015-12-22 08:50

Intelligent Investor

Glad to learn there is so many classmates.....

Merry Xmas to all fellow course mates...

2015-12-22 09:42

Icon8888

yes, Noby, I like to learn from sifus

I also attended Uncle Bee's course. He is a funny guy

2015-12-22 09:59

Icon8888

Yistock are you joking you want to learn from me ? I am the one that should learn from you.

For example : I study RGB after reading your articles

I like to drink Kopi-O : )

2015-12-22 10:02

kcchongnz

Merry Christmas and Happy New Year to all my friends here. Many of you I haven't even met before but in my heart, you are my true friends.

This song is dedicated to all of you.

https://www.youtube.com/watch?v=6lbPgfKK7m4

2015-12-22 18:17

paperplane2016

Time to show off?

2015-12-22 18:29

MG9231

Merry Christmas KCChong. Although I am not your online student but I treat your articles as a lesson for refreshing what I have learned in our places.

2015-12-22 18:57

calvintaneng

Merry Christmas to kcchongnz & MG9231,

Yes, MG9231 first told me that the only one true sifu in i3 forum who can analyse stocks property is kcchongnz.

MG9231,

You better come out and contribute your gifts.

2015-12-22 19:04

tamarindo

Icon8888 can u write more review on comitel corp. Donu know whether this stockgot to do with hsbb contract?

2015-12-22 19:05

kcchongnz

Posted by MG9231 > Dec 22, 2015 06:57 PM | Report Abuse
Merry Christmas KCChong. Although I am not your online student but I treat your articles as a lesson for refreshing what I have learned in our places.

Hi MG9231,

Glad to see you here. I remember we first "met" in Pintaras, then in icap.biz.

I know you are a great investor yourself. Appreciate if you could give critical comments in my posts in the future.

2015-12-22 19:41

aikwais

Wow! Gathering!

2015-12-22 20:22

YiStock

Icon8888, actually i win by learning. 活到老学到老。投资最忌不学无术。学人之长,补己之短。有心学, 永远学不完。

2015-12-22 20:24

inwest88

Frank - thanks for the greetings. You too together with your loved ones have a blessed and merry Christmas and a great year ahead. Cheers !

2015-12-22 20:27

Icon8888

Yi Stock, Yi is your name kah ?

2015-12-22 20:28

Chin Pin Tan

Merry Christmas KC! Really enjoy your article! Keep it up!

2015-12-22 22:42

regnig

happy holidays to everybody!

2015-12-23 09:58

Kevin Wong

Merry Christmas everybody!

2015-12-23 10:51

Intelligent Investor

Merry Christmas to all...

I think we can setup a forum for kcchong students and followers....

2015-12-23 11:10

Intelligent Investor

Mr. Chong and my beloved course mate...

I take the initiative to create a forum

Come and say hi here - http://klse.i3investor.com/servlets/forum/902389132.jsp

2015-12-23 11:13

muzes23

Hi KC.May I know how do you get the adjusted price of kfima? thanks.

2015-12-23 14:49

kcchongnz

Posted by muzes23 > Dec 23, 2015 02:49 PM | Report Abuse
Hi KC.May I know how do you get the adjusted price of kfima? thanks.

It is from the daily prices available from Yahoo Finance, adjusted for dividends.

2015-12-23 15:28

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