Here is an interesting bit of news that came out in the Star Newspaper today 31 July 2014:
PETALING JAYA: Norwegian fund Norges has allotted RM800mil more to invest in small to mid-cap stocks in Malaysia.
A market source said the foreign fund appointed Eastspring Investments Bhd about a month ago and was investing in general equity, with a preference for the small to mid-cap equity space.
“There are no specific guidelines as to which sector Norges is keen on. It wants to look at good companies and it so happens the local small and mid-cap space is doing well this year,” the source said.
Norges has been one of the largest foreign fund investor in Malaysian equities since 2010.
In April, StarBiz reported that the foreign fund had invested about RM1.7bil in 53 Bursa Malaysia-listed companies, managed by Kenanga Investors Bhd.
At the time, the fund was already sitting on a paper gain of some RM600mil, with its entire holdings in Malaysia valued some RM2.3bil. Its performance in Malaysian equities was attributed to the big run-up in many of the small oil and gas companies since last year.
-end quote-
Many NEW investors would be asking this question: So, how can I benefit from this?
Well, in order to benefit from this, you would need to outsmart the fund manager that is managing this RM800 million bonanza.
Unless you have a crystal ball that monitors the investment committee of the fund manager, you would probably have not got a clue or very little.
Well, lets look at the information we have from the news paper above:
1. The investment mandate is to invest in small-cap companies (companies with small market capitalisation).
2. The investment is managed by a fund manager.
Based on the "Information 1" above, the easiest step would be to put our money into small cap unit trust funds and hope the fund manager of our unit trust can outsmart the managers of Norges' money. If there is an ETF that tracks the small cap fund, then we can also take this investing route via the ETF as the ETF would remove the headache of punting.
Boring? Well, we can always try our 'luck' in a more active investing by using the second piece of information, "Information 2" above these funds are run by institutional fund manager. If we want to try to narrow down our investment selection, we best know the nature of the fund manager.
1. Fund managers usually are run by mandates.
In this regards that means investing in small and medium companies. Larger cap companies, although they would be very attractive like for example SapuraKencana could fall outside the mandate and would not attract this investment despite all the favorable outlook. The fund manager would not score any point if they invest outside the mandate, in fact usually they would avoid it as they risk being accused of going beyond the authority given to them - a very very bad thing for a fund manager. The first thing in narrowing down your focus is to look at the mandate.
2. Fund managers usually have a benchmark to beat.
In rewarding a fund manager, the investors would need to be to assess the performance of the fund manager and that means assessing the absolute return and relative return performance of the fund manager. When it comes to relative performance assessment, that means comparing the performance of the portfolio of investments of the fund manager against an index, usually. In this case, it should be a small cap index which are provided by various index providers like MSCI, FTSE and the works.
In order to beat the index, the fund manager invariably would have to keep a significant portion of their investment in the index stocks as a cushion in trying to beat the index. Therefore, the next place to look at would be the stocks that make up the small cap indices. The is a chance that some of the Norwegian money turning up there.
3. Fund managers usually target companies with higher (or potentially higher) liquidity (relatively speaking)
Fund managers, like other investors, would need to convert all the paper gain into paper money: cash. That means liquidity plays a role as the last thing a fund manager wants to to be holding a dead stock which no one wanted - big messy publicity that would be. Liquidity or persistent active trading would be on thier screening criteria.
4. Fund managers usually have a much much longer holding period
The Norwegian money can stay for a very long long time in a particular stock.
5. Fund managers may look for companies with better fundamental analysis to better keep their job
No one has a crystal ball and that includes the fund managers. In order to make sure their make sound decision, or at least appear so to the investors, they need as much justification as possible. There is a term in the industry called "Cover-Your-Ass investing".
One of the best cover would be fundamental analysis. There is no guarantee that any price derived from fundamental analysis would actually materialize but it would give the fund managers something to show the investors if the price tank. Fundamental analysis would also be used to convince the investors from pulling out from the stock if the market is feeling a bit bearish.
Therefore, the third place for you to look at are companies with solid fundamentals as these would be the same target for the fund managers. Bust as we mentioned in item 4 above, the institutional money has a very very long staying power so be prepared to wait in some cases.
Created by Muhamad Yazdi | Aug 01, 2014
Created by Muhamad Yazdi | Jul 03, 2014
Thanks guys. I was thinking about it. Let me get you the index stocks to begin with :-). I will post it here later. Anyway, in a related article, UOB Kay Hian mentioned this with regards to small and mid sized caps:
“We advocate being selective, picking beneficiaries of compelling investment themes or with specific event catalysts. These include Deleum, Barakah Offshore and Malaysian Resources Corp Bhd (MRCB),” it said.
2014-07-31 12:24
This RM800 Millions by Norwegian Fund Will Further Lift Up 2nd & 3rd Liner Shares of KLSE - Including Penny Stocks.
Since KLSE Is Dominated by Only 20% Genuine Investors & 80% By Day Traders, T4 Players, Punters, Gamblers All Stocks Can Move Up Irrationally Unless They Are Unfortunate To Fall Into Delisting Status.
So Load Up On All Undervalued Shares Like MFCB, KPSCB, MASTEEL, SOUTHERN STEEL, MP CORP, MULPHA, HTPADU, ITRONIC, XDL (Only Exception for China Shares), GSB, OPCOM, DUTALAND, NOTION, SUPER & PM CORP.
PM CORP?
I First Recommended PM Corp on 20th Sept 2013 in i3 Forum.
The Price was 15 cents. As of this moment PM Corp is 23 cents. So PM Corp is up 8 cents or 53% in less than one year.
Now On September 20th 2013 Those Who Bought Into Blue Chips Are Suffering Losses After Losses.
September 20th Closing Price Current Price
1) NESTLE - RM67.80 RM66.52 (Lost Money)
2) DUTCH LADY - RM46.46 RM46.12 (Lost Money)
3) PETDAG - RM28.70 RM18.76 (Lost A Lot!)
4) UMW - RM12.90 RM11.72 (Lost Money)
I bought UMW for RM2.40 in 2004 (10 Years ago.) After 10 years UMW has grown into A Heavy Weight Blue Chip.
I am happy for holding UMW for so long. But I NEVER ONCE Recommended it in i3 Forum.
The First Wave of HOT MONEY lifts Up Heavy Weights (Big Oceanliners) When They Come. Then It Lifts up The 2nd Liners (Ships) & Finally When The 3Rd Waves Reaches The Shore It Lifts Up All Smaller boats and sampan.
The 3rd wave is the weakest wave. KLSE is now dominated by penny stocks or 3rd liners. This Is The Indication That The Bull Run May Finally Be Over after 6 Years of Bull Run.
Many are oblivious to the danger ahead. However, there are those who left the Party too early & missed the euphoria and the madness. Take TTB of Icapbiz for example. He already turned bearish in 2009. And missed the better part of the rally. But TTB may yet have the last laugh when the tide goes out. Only then will we know who are swimming without cloths!
Since Norwegian Fund has joined the 2nd and 3rd liners' party now with RM800 Millions Fire Power!
Now It's Your Last Chance To Make Some Money Before Winter of Market Downturn comes.
SO TRADE WISELY.
Warmest Regards,
Calvin Tan, Singapore.
2014-07-31 12:34
calvintaneng XDL was plunge heavily. May i know what are the reason in your wishlist?
2014-07-31 13:23
Sorry I didn't reply earlier,
Funtrade,
I recommended MPHB Cap at around RM1.90. Price has risen to a high of RM2.60. Calvin's first rule is - Don't make a lost. And second rule is, "Don't chase a good share after it had suddenly gone up and also don't sell a good share after it has suddenly dropped a lot."
Although MPHB Cap will still move up - it will not move up in a straight line. If you invest longer term try to buy on weakness. But punters better be careful.
Cherry Tomato,
Recently Dr. Marc Faber said that China Shares looked inexpensive. So I took a look at China counters. Most of them might cook the books and siphon money due to dishonesty.
For Many counters Directors did not exercise share buy back. I was surprised to see Insider with 51% bought XDL at 40 cents. XDL is also in sport apparel like M Sport which ran up. And XDL has good NTA plus fair earnings.
Since XDL's price has fallen 50% from Insider Buying Price I think Price Is Cushioned by Insider Still Holding and not dumping.
If Insiders Dare To Use Their Own Money (Not Co share buy back) they are like Generals going in front of the army fighting a war. If share price crash further they will be exposed first as casualties. So unless they know something they will not be so foolish to endanger themselves.
This line of logic is given by Warren Buffet
2014-08-03 22:25
johnny cash
good article
2014-07-31 11:47