kcchongnz blog

Dayang: When to Sell kcchongnz

kcchongnz
Publish date: Sat, 09 Nov 2019, 05:58 PM
This a kcchongnz blog

When you open up i3investor website nowadays, you always find Dayang as one of the top ten articles there. Sometimes half of the top articles are related to Dayang. Dayang has become a darling stock in i3investor nowadays.

One particular subject appears repeatedly in all the articles above was that there is “a famous chartist and fund manager”, let’s call him FCFM, who sold his Dayang shares and recommended his clients and subscribers to do so at RM1.50, was wrong and stupid, and many people are misled by him. The accusations were made repeatedly because the share price rose to close to high RM2.20 last month, and he continued to be a punching bag after the share price dropped and stayed stagnant at around RM1.90 for some time. In the last two days, there seemed to be some upward movement of the share price of Dayang and it closed at RM1.94 on 8th November 2019 as shown in the price chart below.

Many people I believe, initially wondering who this FCFM is until finally that person was named by the most recent article on Dayang. Although the article was a proposal by the writer to the management of Dayang to give some freebies, the FCFM was bashed again, with no way to run as his name was then mentioned. It made my jaws dropped too.

In the recent article, another investment bank, PublicInvest, also kena hantam kau kau too from the writer for making a sell call on Dayang at around RM1.90 using technical charts and with a target price of RM1.72, and then RM1.62.

Do this FCFM and the investment bank deserve that kind of constant bashing, just like the same FCFM did not recommend to buy Jaks and three investment banks issued sell calls on Jaks when it was trading at about RM1.70 two to three years ago, and then plunged to just 40 sen a few months later?

Well, there have been numerous times analysts, professional as well as amateur, issued buy or sell calls and the share price, instead of going up or coming down, goes the other ways. It is so common. It is an occupation hazard as an analyst as there are too many uncertainties about the future of the company, as well as macro factors, as well as the emotion of the crowd. No need to keep on harping on it lah. What for? Are they destroying your plan?

Sorry for a little side tracking. Now, let us go straight to the point and discuss a topic on “When to sell stocks”, and we will use Dayang as an example, ok?

 

Disclosure

I should first declare that Dayang has been one of the stocks picked for my stock pick services; one time when it was trading at 82 sen on January 11, 2018 and the other time when it was trading at RM1.41 on 30th April 2019. I must also tell the truth that each time I issued the investment thesis to my participants, the share price of Dayang dropped, the first time to a low of 50 sen for a loss of 39%, and the second time to a low of 70 sen for a low of 50%, on paper, not too long after I sent the thesis to my participants. I should also declare that I have sold all my Dayang shares, the last bit was at RM2.14 on October 15, 2019.

 

When to sell?

There are many reasons why an investor/trader sells a stock like Dayang. It depends on his way of investing; is he a follower of technical chart or a fundamental investor? How is his personal risk profile, etc. In investing, like life in general, there is no one size fits all.

 

The Chartist

In PublicInvest’s recommendation, they made the sell call based on technical chart. It says,

[DAYANG’s share price is showing signs of pullback amid persistent profit taking activities, signifying possible halt in prior surging rally. Weakening RSI and fast-paced MACD indicators currently signal an exit to sell into strength, anticipating performance in momentum and trend to remain weak in near term. Should support level of RM1.85 be broken, it may continue to drive price lower to subsequent support levels of RM1.75 and 1.65.

Note that the potential halt in uptrend presents an opportunity for profit taking instead of intraday short selling.]

I am not a follower of chart, but I fully understand what they are talking about and agreed fully as I think the reasons given are logical, and with facts. Chart won’t lie as the chartists will tell you. In fact, I do not need to see the chart to know that the share price has some problems of going up as buyers who are willing to buy at a certain price are obviously less than sellers who are willing to sell at that price. The share price has obviously lost its upside momentum recently and the share price has no strength to go up. If a share can’t go up in price, it is likely to come down.

Since I have made enough for this share, I think it is a good decision to sell to realize the profit. Without selling, your gain is only a number and you won’t realize the “real” profits.  In fact, for most stocks, if you don't sell at the appropriate time, the benefits of proper buying disappear.

It is the same for the “famous chartist”. He is obviously a chartist and he always say his chart comes first. Since he had made enough money from it and the chart showed weakness, why couldn’t he sell to realize the profit?

 

Price versus Value

For a value investor like me, a stock should be sold to realize profit if the share price has risen rapidly above its perceived intrinsic value. This is especially true for cyclical stocks like Dayang which has risen too much too fast in price during their up cycles. If we don’t sell at their high prices, we may not see the profit later when the down cycle comes as the good time may not be sustainable. The question is, what is Dayang’s intrinsic value (IV)? What is the margin of safety (MOS) we want to have?

IV and MOS are subjective matters. It can take up a whole chapter, or even a few chapters in a book to discuss about it. Let us just do a simple market valuation of Dayang using the simplistic PE ratio which most people understand, though it is not my favourite valuation method.

Dayang made about 20 sen per share for the last twelve months. Let us use the famous PE ratio of 10 as a valuation criterion. The share price of Dayang should hence worth RM2.00. At RM2.00, it is a fair value and there is no longer a MOS as usually demanded by value investor, and he sells. Or he sells at RM1.50 as he demands a minimum MOS of 30%, say because of the higher debt level of Dayang.

Is there anything seriously wrong with it?

 

Sell when making a mistake in analysis

A stock should also be sold if we discover that we have made a serious mistake in our investment thesis for the stock. In this case, it doesn’t apply as I do not see a mistake in my original thesis yet. My emphasis is that it will continue to get jobs in his niche market so some more years to come, its good management and the excellent cash flows it has, and still is, etc.

 

Sell when fundamentals change

We should also sell a stock we have bought if later, there is a fundamental change for the worse of the business, something we did not see or anticipated in our previous analysis. In other words, the story has changed. I do not see this also. In fact, I expect it will do better when the next quarterly report comes out, but don’t know by how much, and for the coming years. However, I am not a fan of the Golden Rule. I sell, even though it is a good stock, mainly because I find something better to invest.

 

Sell when I think I find something better

As a retail investor, our investment capitals are limited. If we have found a better stock at a price which may provide better return, we may have to sell the existing stock for some proceeds to invest in the better stock with better future. It is the opportunity cost we are weighing on.

Let us assume that he had found a stock like Jaks which he thinks has a better potential for price appreciation in the near future and bought himself and replaced a buy recommendation on Jaks which was at about 75 sen then.

Three months have passed. What has happened?

At the close of RM1.16 on 8th November 2019 of the share price of Jaks, RM1 of the FCFM’s capital has grown to RM1.41m, or 41% gain. With his subscription of his rights in warrant of 500k shares at 25 sen, and at the warrant price of 92.5 sen now, he has made another RM338k on paper for the warrants. His total profit is RM748k, or 66.4% with his total cost of RM1.125m of buying Jaks and subscribing for its 500k entitlement of warrants at 25 sen.

Compared to if the FCFM had held on to Dayang's share until today, he would have only made 29.3%, or 293k. Not bad but far below the 66.4% return he got from Jaks during the same period.

So, what had FCFM done wrong selling Dayang at RM1.50 and bought Jaks at 75 sen three months ago? Who made better gain? Who is laughing and who is sulking now?

 

Conclusions

No, I am not telling you that you must sell Dayang if you have the shares now. Everyone buys or sells his shares with all kinds of different reasons, all according to his own personal circumstances and risk profiles. I have discussed that one may sell to realize profit when the he has made a mistake buying it, when the fundamentals have changed, that the price has risen above its intrinsic value, or when he has something better to buy, or simply needs money to do something. But how to determine all these?

It is not easy. However, you can make much better decisions if you are armed with some fundamental knowledge in investing, to know the language of business in order to understand it. Otherwise, whatever you do, you only depend on luck. That will not be a good and predictable way to build long term wealth investing in the stock market.

I have written a eBook to provide some guidelines on the above. If you are interested on obtaining the eBook, you may email me at,

ckc13invest@gmail.com

The eBook is free.

 

KC

Related Stocks
Discussions
2 people like this. Showing 17 of 17 comments

cheoky

You hold grudges more with Jesse rather than Herbert the chicken. Both are heavy promotion. Care to divulge more of the history with Jesse?

2019-11-09 18:18

kcchongnz

Posted by kcchongnz > Nov 9, 2019 7:24 PM | Report Abuse X

Posted by cheoky > Nov 9, 2019 6:18 PM | Report Abuse
You hold grudges more with Jesse rather than Herbert the chicken. Both are heavy promotion. Care to divulge more of the history with Jesse?

Like I said in the article, everyone who buys or sells Dayang has his own reason.

Likewise, everyone who reads an article has different interpretation; some see it as an educational article, some view it as what, holding grudges against someone?

There are many articles on Dayang in i3investor. May be you should just read and enjoy those many written by someone. Mine doesn't seem to suit you. You don't learn anything and you are just wasting your time reading and commenting on it. Seriously.

2019-11-09 19:36

UnicornP

At year end.

2019-11-09 21:12

Zhuge_Liang

I feel very upset that this old idiot is bullying OTB.
OTB helped him to make so much money from VS, Liihen, Latitud, Hevea, Gkent and Gamuda-WE.
If he had listened to OTB not to invest in Jaks and Sendai, he would have save a lot of money in these 2 stocks.
I know OTB very well, he is a careful investor and made a lot of money.
Please lah, OTB deserved a better treatment.

2019-11-09 21:36

Sslee

There are many reasons why people sell.
3iii and philip never because they bought growth stocks that will grow it profit for many years.
Stockraider sell to cut win.
CPTeh sell to cut lose.
Superinvestor sell too much XO and margin call.
Herbert sell to buy back and beg others to buy as super profit is within sight 2020 Tokyo Olympic.

qqq3 sell because he is super trader.
Paktua and hng33 buy low sell high.
OTB sell his TP acheived or TA signal sell.
Icon8888 sell because he found another better stock or he know he had make a mistake in buying the stock.
Others sell because bad quarter and many sell too causing everyone rush to exit door.

2019-11-09 21:40

TanDavid88

I had just received an email from OTB explaining the situation to all his subscribers.
I do not care whether OTB is angry with me, I just repost it here to show to all other readers here.

Subj : Dayang - I swap my Dayang shares to Carimin shares on 18/9/2019

Dear valued clients,

I feel very upset about the below article which is written by Mr Koon whom I have high respect for his charity work. I will not at any time to offend Mr Koon because he had helped me a lot. I feel grateful to him and hence I will just keep quiet.
https://klse.i3investor.com/blogs/koonyewyinblog/234576.jsp

My code of conduct
Please note that before I recommend any stock, I have to tell myself that I must write the stock based on true facts and figures.
I must write the article without any fear or favour.
I write it honestly and sincerely.
This is my code of conduct, I want all my subscribers to remember me for what I had done my best for them.
Below is the last article I wrote to compare which stocks is the best and I rank them accordingly.
Quote !!
Please review the below statistic, you should able to see all 4 Oil and Gas maintenance players are equally strong in earning.
I used the latest 2 quarter results to compare the EPS.

26/09/2019 last 2 Q Adjusted 2 Q Target P Potential
Stock NOS Ratio Price PAT PAT EPS PER =15 gain %
Carimin 233.9 4.12 1.08 11.837 48.8 0.051 1.52 41%
Dayang 964.8 1.00 1.65 50.955 51.0 0.053 1.58 -4%
Penergy 321.8 3.00 1.11 15.830 47.5 0.049 1.48 33%
Uzma 320.0 3.02 0.87 14.289 43.1 0.045 1.34 54%

Note :
NOS - Number of share issued. Dayang is the biggest among them.
Ratio - You can notice that Dayang is 4.12 bigger than Carimin. Likewise, Dayang is 3.02 bigger than Uzma.
Adjusted PAT - I used the last 2 quarter result multiply by the ratio so that all 4 of them are of the same size in term of number of share issued. You can notice that the earning is equally strong for 4 of them. Uzma is the weakest.
I used PER=15 to compute the target price because the second half earning is higher than first half.
Based on the above statistic, the share price of Dayang is fully valued.
I am not biased against Dayang, in actual fact I like Dayang the most. I cannot recommend to buy Dayang at such high price because of right issue and private placement. Moreover, the share price of Dayang is supported by someone which will not last forever. Someone purposely push up the share price of Dayang at the close almost everyday.
Ranking = 1 is the best
Uzma
Carimin
Penergy
Dayang
Final decision to buy is always yours.

Thank you.
Ooi
寧可天下人負我, 休教我負天下人
Unquote !!

I swap all my Dayang shares to Carimin shares on 18/9/2019
I sold all my Dayang shares at 1.57 on 18/9/2019 and use the same amount of money to buy back Carimin shares.
Below is my analysis to show you whether I am right or wrong to swap all Dayang shares to Carimin shares.

My analysis
The share price of Dayang on 18/9/2019 was 1.57
The present price of Dayang on 8/11/2019 was 1.94
ROI = 22%
The share price of Dayang is 1.53 times more expensive than Carimin.

The share price of Carimin on 18/9/2019 was 1.02
The present price of Carimin on 8/11/2019 was 1.39
ROI = 36%
The share price of Dayang is 1.53 times more expensive than Carimin.
I use the same amount of money, I can buy 1.53 times more shares in Carimin.
Effective ROI = 36%*1.53 = 55%

My comments
I make 55% ROI on Carimin compared against 22% ROI on Dayang.
My target price for Carimin is 1.52, another 9% to gain.
My target price for Dayang is 1.84, the present price of Dayang had exceeded my target price.
Hope every subscriber should know that I had done my homework before I recommend any stock.
Thank you.
Ooi
寧可天下人負我, 休教我負天下人

2019-11-09 21:43

David Gunter

Honestly I have been a subscriber with OTB since 2014 with a break in between and again sincE 2018. He is an honest man who wants best for his subscribers, I always believe you need to pay for someone to give you quality work. I see that in OTB. KYY is no god he depends on people like OTB. KYY is out of his depth. When I see my X3 I cant help smile thanks to the great run up for Dayan, Carimin, Uzma, PEnergy, Naim early this year. KYY you can stuff it. He isn’t doing anyone any favors except for himself. FACT!!!,

2019-11-09 23:50

Dato Seri John Lu

Mr OTB help him so much and he attack Mr OTB, come one la, shame on you, i pray this oldman lose another 64 mil

2019-11-09 23:50

kcchongnz

Posted by Dato Seri John Lu > Nov 9, 2019 11:50 PM | Report Abuse
Mr OTB help him so much and he attack Mr OTB, come one la, shame on you, i pray this oldman lose another 64 mil

This article is written with the aim of sharing a concept; when to sell stocks. Certain stocks were used, purely because they are the most relevant ones in i3investor at the present moment. It just happened that they are related to certain individual.

We want to discuss about things, ideas, and sharing of investment.

It is not meant for anyone to start attacking and cursing anybody.

2019-11-10 08:42

Dato Seri John Lu

Noted KCchong

I use to admire uncle Kyy but after his U-turn in PCCS, I try to avoid his stock ald

2019-11-10 10:34

Ravi Kumar

We have seen KYY may times speak with his foot in his mouth. Classic case of a has been. I used to have respect for him but time and again we have seen him in the papers Tan Sri ship, saying things about the armed forces etc. Must need his marbles checked.


Posted by Dato Seri John Lu > Nov 10, 2019 10:34 AM | Report Abuse

Noted KCchong

I use to admire uncle Kyy but after his U-turn in PCCS, I try to avoid his stock ald

2019-11-10 13:38

kcchongnz

Posted by Ravi Kumar > Nov 10, 2019 1:38 PM | Report Abuse
We have seen KYY may times speak with his foot in his mouth. Classic case of a has been. I used to have respect for him but time and again we have seen him in the papers Tan Sri ship, saying things about the armed forces etc. Must need his marbles checked.


You are not the only one. There are many, including me, and many others I know.

Probably he is getting to old and not aware what he is saying, what kind of thing he propagates, not able to differentiate right from wrong, what is more important in life, a good reputation or more money, etc.

But at least those who are close to him should enlighten him. But again I know it is very hard. Everything is already hard wired.

I seriously think that his reputation has deteriorated so much. But anyway, there is none of my business.

2019-11-10 16:06

DickyMe

Dayang have more potential. If 2.30 does not halt the rise then expect RM3.30+.

2019-11-10 16:22

Totalpackage

Sour grapes. Let's see if he is gonna buy back Jaks. Sour grapes. Be grateful. All in all, you do good things at the expense of the bad & manipulation, in the end it balanced out. Then? So? Fikir fikirkan lah

2019-11-10 20:36

kcchongnz

Posted by Dato Seri John Lu > Nov 10, 2019 10:34 AM | Report Abuse
Noted KCchong
I use to admire uncle Kyy but after his U-turn in PCCS, I try to avoid his stock ald

Actually people in i3investor for a long time will know.

The U-turn happened many times. Gadang was the first and most spectacular U-turn, followed by HengYuan, Jaks, and many more. Teoseng and the latest your PCCS.

The worse is those who lost money following some of the tips were ridiculed; being branded as stupid for not selling when they are at high price, and not buy back when the share price retraced.

I have never get involved in his stocks. In Dayang, it was my own analysis while he was still peddling Jaks and Sendai. I made some money in Jaks lately too after he had deserted Jaks, and started to say bad things about Jaks.

That is what I meant by my question,

What is more important in life; more money when you already got so much or a good reputation now and when you are gone?

You are lucky and only got caught in PCCS. I understand you have made a lot of money following his tips, especially in Hengyuan, and you have been praising him like a stock God because of him, and ridiculed others whoever express any negative view on him or his stock, and that included me, for many times.

I don't think it is fair for you to blame him for your only losses in PCCS, while you have made so much money because of him previously.

In any case, one has to bear responsibility of his own action, such as following stock tips and lose money.

This is a comment not meant to personally attack anybody, but a truthful comment hopeful open up somebody' blocked mind that he needs to seek opinions from his close ones to change for the better.

Anyway, it is none of my business.

2019-11-10 22:04

Anti_debt

Not all have $ to subscribe RI. Some may sell to book gain.

2019-11-10 22:43

Anonymous69

Post removed.Why?

2021-08-11 20:09

Post a Comment