CWG

Zhulian

Tasek, Apollo.

Some idea for your next blog post-: "Generally speaking, I believe most investors would benefit dramatically from viewing their investments in the belief that their ownership is completely illiquid and that the only source of returns will be dividends. Owners therefore would only generate returns from the receipt of dividends accruing from operating cash flows or from the liquidation of assets. In this thought experiment, the market price with all its fluctuation will be forgotten, and any terminal sale will also be forgotten- they will consider themselves owners until complete liquidation leading to dissolution. "

Stock: [HAIO]: HAI-O ENTERPRISE BHD

Sep 27, 2018 08:21 PM | Report Abuse

Peaked at 5.39 in May 2018. Today's price is 3.80. A drop of 29.5% from its peak price.
========================================================== Is Hai-O a high ROIC business or a low ROIC business??

Does growth create or destroy value? When does growth destroy value?

So, would you be better to invest in a company that is earning 15 to 20% on the invested capital and compound it or have a 3% bond which can never earn more than 3% while you own it?
========================================================== Me : Are they any adjustment needed when you calculate earnings on invested capital? just take earning from Income Statement ?
==========================================================
Are there such thing as emerging moat (moat that is yet to be reflected in ROIC) ?
Is Amazon a good compounder ?

@3iii
Hi 3iii , what are the differences between owner's earnings and FCF ? what are the pros and cons of each ? can shed some light on which one you prefer to look at or use ?

Posted by 3iii > Aug 28, 2018 10:30 PM | Report Abuse

ProfitSonar

I do my own investing. I do not invest in mutual funds, though I have money in iCap closed end fund, managed by Tan Teng Boo. =========================================================
Me : Your sifu is it?

Posted by 3iii > Aug 25, 2018 09:12 AM | Report Abuse
My simple advice to the young investors. In your early years, perhaps, park some money in funds. Why? Because you may not have acquired the knowledge or skill to navigate your own investing.

Hopefully, while being invested in the market in funds, you would have taken the initiative to acquire and learn on investing and reach a level of confidence to invest on your own.

Those still incapable for various reasons, would have acquired enough skill or knowledge, to search out the right fund manager to park their money or be happy with just index linked funds.
============================================
Me : Which is better fund to park money in Malaysia ? ETF or UT/MF ?

What Happens When You Don’t Buy Quality And When You Do? by Sanjay Bakshi

How I Made a Killing in the Stock Market
I’d like to start by telling you a story about a killing I made in the stock market many years ago involving a very cool risk arbitrage operation. By 2001, I had accumulated six years of experience in risk arbitrage with very satisfactory overall results because the arb spreads were very good as the competition was low. So, in December 2001 this company announced a buyback at Rs 250 per share. I bought the stock at Rs 215, held it for about 40 days and then just prior to the tender offer, I sold it for Rs 240, netting a gain of Rs 25 on an investment of Rs 215. That’s a flat return of about 12% and an IRR of about 110%. Not bad at all!
What was the name of the company? Gee, I wish I could get away without telling you my trade secrets but I confessed today morning that I will tell you everything. The name of that company was MICO. Now, it’s called Bosch Ltd (NSE:BOSCHLTD) (BOM:500530).

Some of the dumbest things I have done have produced very high IRRs.

Let me now tell you about another fascinating experience with Graham’s low-priced common stocks theme.

Low-Priced Common Stocks
This is another one very cool Graham and Dodd strategy that works during severe bear markets. It really does.

Graham called it the “low-priced-common stock” strategy which involved selectively buying shares of companies selling at absolute low price (so called penny stocks) during severe bear markets and holding them for a few years. He cautioned investors against the typical penny stocks of dubious companies which were “pushed” by intermediaries who were incentivised by fat commissions. He wrote such penny stocks were not genuine at all and their pseudo-low prices were

“accomplished by the simple artifice of creating so large a number of shares that even at a few dollars per share the total value of the common issue is excessive.”

He recommended that investors should buy low-priced common stocks of the genuine variety which

“will show an aggregate value for the issue which is small in relation to the company’s assets, sales, and past and prospective profits under favorable business conditions.”

Using his approach of finding such companies, back in the scary days of March 2009, I came up with a few names which displayed the characteristics of the genuine variety of low-priced common stocks:

Low absolute price;
A huge drop in stock price from its previous high;
A very low equity market in relation to size of company’s revenues (i.e. A PSR <20%); and
A high cash flow yield (operating cash flow/EV > 20%).
Here’s what happened to two of those names over the next three years Omax Auto:+131% ; Nifty:+96% ; Nestle:+192% ; Finolex Cables:+68%

As the charts show, I would have been better off buying a Nestle (a far better quality business) instead of buying Finolex or Omax. Indeed, you can virtually take any number of much higher quality businesses than Finolex Industries Limited (NSE:FINPIPE) (BOM:500940) and Omax Autos Limited (NSE:OMAXAUTO) (BOM:520021) and you’d find that while Graham’s low-priced common stock strategy works quite well, buying better quality businesses would have worked even better.

Let’s now turn to looking at three of India’s well-recognised high-quality businesses.

ITC Limited
Take a look at ITC Limited (NSE:ITC) (BOM:500875), one of India’s high-quality businesses. The chart below plots its stock price and P/E multiple since Jan 2002. The stock price (blue) is on the left vertical axis and the P/E (red) is in the right vertical axis.

Quality Stocks

As you can see the stock has done very well over the long term. Now take a look at the P/E part of the chart. The P/E of ITC has ranged from a low of 11 in March 2003 to a high of 39 in July 2013. Let’s ignore these two extremes and focus on the P/E band of 25 which I have highlighted in the red rectangle.

Now, think about this for a moment. Paying 25 times earnings is considered as very risky and speculative by classic Graham & Dodd investors, right? I mean, most deep value investors, who consider themselves to be disciples of Ben Graham won’t touch a stock with a P/E multiple of 25.

So, let’s see what happened to people who bought the stock at a P/E multiple of 25 in the past and held the stock till date. The table below highlights several such occasions

Source: https://www.valuewalk.com/2014/11/happens-dont-buy-quality/

>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
qqq3

correct strategy of one era, one location is wrong strategy in another era, another location.
-----------------------------------------------------------------------------------
Me : Why is the strategy wrong in another era? Is it proven wrong?
-----------------------------------------------------------------------------------
buy and hold? every 10 years a crisis comes and wipe off all the gains of the buy and holders.


the mini crash of last 12 months already wiped off the gains of many buy and holders of last few years.
-----------------------------------------------------------------------------------Me : For long term value investor , they really looking forward to Bear market as this give them the opportunity to buy at a discount. As for their holdings , they will keep holding if the fundamentals of the business is remain intact. The loss is just a paper loss (unrealized loss) -----------------------------------------------------------------------------------
(when discussing generalities, we should use the Indices to represent the average and the medians......not stock pickings
-----------------------------------------------------------------------------------Me : What do you actually mean by this? -----------------------------------------------------------------------------------

because like I said, for next 2 years, not more than 2% of stocks is expected to give you 100% returns)
-----------------------------------------------------------------------------------Me : Really? 2% of stocks of? FBMKLCI? Why only next 2 year? What about the next decade? If it really is , so what ? ----------------------------------------------------------------------------------- <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Posted by 3iii > Aug 14, 2018 11:04 AM | Report Abuse

Like your questions. Better than the harping by raider, which is rather senseless and unproductive.

======================================================================

Thank you. I take it as a compliment. I have been trying to reach you thru PMs in investlah but no avail. Do you hold SCICOM ? Because its ROIC is quite attractive I think. But i really don't know about the future of the company. I wish I know something –but i don't. So , how to increase ones circle of competence? I know that the size of circle of competence is not very important however knowing its boundaries is vital. But I also love the idea that ones is able to increase its circle of competence.

My Golden Rule of Investing: Companies that grow revenues and earnings will see share prices grow over time.

==========================================================
The thing is not all growth stocks is a good stock because growth is not free. Substantial amount need to be reinvested in order for company to grow. So, how do you differentiate good growth stocks vs bad growth stocks? For growth to be meaningful it needs to exceed the cost of capital right? How do you calculate cost of capital? How do you determine how long will the growth last and at what rate? Your description of "My Golden Rule of Investing: Companies that grow revenues and earnings will see share prices grow over time." is generally applies to small cap stocks. But based on your previous comments you dont really promote small cap stocks. Why is that? Small cap isnt good enough?

Posted by 3iii > Mar 23, 2018 08:03 PM | Report Abuse

>>>Staying within one's circle of competence is a great discipline. I too have screened through the stocks in the KLSE and found only about 20 stocks that fall into the category of great companies. Applying a stricter requirement, reduces these to only a few. Often, as you mentioned, these stocks are trading at fair to high prices.<<<

How do you screen these stocks?? by reading manually or use some sort of screener??

@3iii
Thanks for your input. What method does buffet use to calculate intrinsic value?? I always thought that buffet use DCF bcoz of the way he define intrinsic value.... and i think buffet always use absolute valuation rather than relative valuation.

osted by dragonslayer > Mar 27, 2018 07:49 PM | Report Abuse

>>>Aiyo profit...too bad..your atta not fit into his book..kena reject...aiyoyo...kikiki<<<

Aiyya dont laugh at me la..

@3iii
Have you ever attend any investing class or something similar??

Do i need to go to class to learn like you? Or just read book will be enough already?

@3iii hi. would like to ask your view on ATTA

@dragonslayer Ok. Noted. thanks

@dragonslayer how to ask him??

@dragonslayer not question on penny stock.. the stock i want to ask is not hot stock one..

Posted by dragonslayer > Mar 27, 2018 04:41 PM | Report Abuse

>>>Aiyo....mana ada orang so rude one...force ppl to email track record one....personal matters can like that email out meh...bo nao one lah....never email anything to stranger lah...your teacher never tell you meh...very dangerus doing that lah...wakakaka....kikiki<<<

Sorry for being rude.. I just want to bait him out bcoz i want to ask some question.. i want to ask privately but this i3ivestor has no dm/pm function(or im the one whocant find it). Haiyo. And agian, sorry for being rude.

@3iii hi, i want to ask you some question. Any ways that i can pm/dm you? Perhaps through telegram or email or whatever you are comfortable with. thanks

@3iii hi, i want to ask you some question. Any ways that i can pm/dm you? Perhaps through telegram or email or whatever you are comfortable with. thanks

PE is good due tu Q2 2016 .. If we adjust the Q2 2016 EPS i think PE is not that good..

@RJ but if QR is bad.. earning will decrease and PE will increase