Correct me if I am wrong, Ray Dalio started his career as commodities trader before Bridgewater Associates.

Not sure if he's still using any trading system in his company now.

And the "Market Wizards" series by Jack D. Schwager.

He interviewed numerous successful traders and investors to give insights on stocks trading/investing but mentioned no specific trading system.

I guessed as soon as one trading system works well, other traders will use the same, nullifying the edge on that particular system. Hence, no technical trading system can work in the long term.

Hi Philip,

How about "Reminiscences of a Stock Operator" if you not already read it.

Its about the life of Jesse Livermore, made hundred of millions during the Great Depression and losing it all after, then committed suicide.

The book was written in 1923, almost 100years old now.

Apparently a must read for all traders.

Thanks

Do bear in mind this:-

When you are on holiday in a foreign country - "You are the guest"
When you migrate to a foreign country - "You are the competition"

I agree with Philip. I worked in Australia for 4 years before I decide to come home. Anyone familiar with the term "bamboo ceiling" ?

https://www.sbs.com.au/topics/life/feature/battle-bamboo-ceiling

"why, despite their (Asian) ....dominating results in schools and universities, in a country that sits on the edge of Asia – does a ‘bamboo ceiling’ relegate Asian Australians to the status of nerds, not leaders?.....Five per cent of ASX200 companies had Asian Australian CEOs, and 6.1 per cent had Asian Australian chairs."

Hope this helps to set the expectations for those intending to migrate.

Investhor, Thanks for the article. The asset disposal gain have already happen as you outlined in its Cash Flow Statement,ie, PCCS received the sum of RM8.5M.

The reason you are not able to see it in the income statement is because the gain of RM 0.45M (RM8.5m - RM8.05m) is grouped into Other Income along with other related items.

Using company's money to buy back share via Share buyback exercise (Resolution V) n give it to the directors via ESOS (Resolution IV).

http://malaysiastock.biz/Company-Announcement.aspx?id=1137573

Hi Jason,
I recommend this book "Mastering The Market Cycle : Getting the odds on your side" by Howard Marks.

Your investing is quite similar, he's quite a master for distress instruments.

In a nutshell, the industry is shit, so is the company, but when the pendulum swing to the extreme-end of undervaluation, it is a good buy.

Downside risk is low and any bad news will not have any big impact on the company.

Missed JAKS in the 0.40/0.50-ish. Still working on ignoring my emotions.

Kudos to you.

can share KYY's comment ? I cant find it anywhere. The blog with KYY's name is authored by Captain Marvel.

Hi Philip,

Thanks a lot for the beautiful advise. Appreciate it a lot. Thanks again.

Hi Philip,

Thanks for the prompt response.

The reason I invest is because the stock was selling at $0.18 while the Cash Balance was $0.20 per share, with no debt. Thus, I am getting the business for free.

Dividends is a plus only because it can be scrap as and when management see fit. (After 2 years, it proved quite a significant amount)

All the analysis above was done after I bought the stock. =p

In terms of growth rate, the closest comparison is Fortescue Metal Group as GRR is a pure iron ore miner. The other miners outlined above has other commodities in their mix.

Even when comparing to Fortescue, it is not an on-par comparison due to :-

1) Fortescue is a big miner
2) has a flamboyant founder
3) they specializes in low grade ore, ie, has very low margin, entirely dependent on economy of scale.

Small miners like GRR mostly bank on quality of the commodity. I am unable to find any other small iron ore miner which are profit-making.

How do I go about roughly estimating growth rates ? Compare to other small miners in other commodities like gold ?

Or do you think I over-analyse a little bit ? Haha

Thanks in advance.

I owned a stock, Grange Resources (GRR.AX) since 2017.

This is a high grade iron ore miner (65% FE) (high grade ore produces less pollution in steel making) and the majority of its ore is shipped to China.

The Company :-

1) P/E is 2.81
2) Market Cap - $312M
3) Cash & Receivables - $242M (historical trend shows its receivable is fully paid)
Cash balance increases approx. $9-10M each quarter.
4) Debt - $7M
5) Considering the above - you are buying the whole company for $77M
6) 2018 Revenue - $368M with Net Profit - $112M
4) Business Operations - offtake contracts with Shagang China who are also GRR's
majority shareholder.
Bluescope, Australia largest steelmaker are planning to contract with GRR.
5) Future Prospect - New exploration into North Pit in Savage River and looking for
strategic partner for SouthDown project (projected to contain high volume of
high grade iron ore). Production should increase in Q2 2019.
6) Dividend yield is 7%-10% (depending on entry price) for the last 7 years.

Market Outlook :-

1) Vale Dam collapse in Brazil and Cyclone Veronica in Western Australia shave off
75M tonne of iron ore from the market in 2019. Cyclone Veronica does not affect
GRR as it is located in Tasmania.
2) Near/Medium term view iron ore prices are optimistic
3) Weakness in AUD/USD increases profit margin
4) Long term view - high grade ore demand to increase as it reduces pollution in
steel making, which has China govt's support.

Downside :-

1) Chinese controlled - 3/5 directors were previously Shagang employed.
2) Directors have no significant stock holding, more like a caretaker.
3) Operate like privately owned vessel company as it venture into luxury property
development without minority shareholding approval
4) Stockpiling cash with no plans for expansion/stock repurchase/dividend increment
5) Racism as it is listed in Australian Exchange

This is a penny stock for 5 years now. The other miners has appreciated 100% in the last 5 months while GRR only appreciated 35%.
Due to the supply shortfall and AUD weaknesses, their margin should be higher in Q1 2019 at current production levels.

I appreciate anyone's input to give me some insight that I might have missed out as I cannot make sense of the current stock price. As at today's closing, there are 8M sellers vs 4M buyers.

Thanks in advance.

Philip,

What do you think of Australian mining stock ?

Thanks in advance

This stock is a good buy after market's reaction to lower earnings in Q1 2019. Taking into consideration the one-off deconsolidation gain from last year.

Management seem realistic. Will include into my watchlist for future buy call.

Thanks a lot for the assessment.

It is a beautiful article but I believe that multidisciplinary assessment is required when valuing a stock.

Reason being that assets are subject to asset impairment testing. This process allowed impairment costs to be charged/reversed based on market conditions, management assessment, value in use (utilization rate) etc. There are risks such as manipulation, assessment being wrong, changed market conditions etc.
This is especially true for asset heavy companies.

These costs can be charged in this reporting period and reversed in the next period, thus impacting the company's earnings and balance sheet. Below's extract from a listed company's annual report:-

"an impairment charge of $13.1 million, representing approximately 2.6% of the book value of vessel assets. This compares to a reversal of previous impairment charges of $8.4m during the half year ended 31 December 2017."

What are your thought on this ?