calvin,

I was actually very surprised of your statement that TTB, a self-proclaimed value investor, advocates the speculation in the Second Board in 1997.

calvintaneng

Thanks very much for your input here.

Yes Espirit is a classic example of over-emphasis in growth resulting on heavy gearing and over stretching its resources in its civil engineering and property development works. I remember it was doing a land reclaimation work in Malacca which failed miserably. When the credit squeeze came in 1997, it was just helpless and had no way to hide. Bankruptcy was so predictable.

If a public company couldn't stand the results of its high leverage when a black swan event which seems to happen quite often, what do you think about an individual borrowing large amount of money for investing and speculating in the stock market?

Thanks rambutan. I have just amended the mistakes in the post based on your comments.

Posted by ks55 > Mar 30, 2015 11:45 PM | Report Abuse

I totally agree "Stock market has been providing good wealth to those who know, but it is not very forgiving to those who are ignorant". Just look around and you may know who are the winners and who are the losers.

No one can be an 'expert' in stock market, but surely one can be better equipped with knowledge, skill and peritus than others provided he is willing to put in more effort. With the slight edge over the commoners, those better equipped will always at the upper hand. It is immaterial whether you are market operator/driver or merely a passenger. It also doesn't matter if you are KYY or ks55.

To invest based on FA coupling with TA and with sound buying strategy will make one stand a better chance to make profit most of the time. Another ingredient for successful investor is ability to overcome greed of oneself. Make decision to buy is easy, but to sell will be difficult.

For value investment, I just follow one simple principle on DY: 生平無大志 只求八巴仙



Good wisdom.

The only super investors I know of are those of the school of Graham and Doddsville.

http://klse.i3investor.com/blogs/kcchongnz/50988.jsp

Sorry that I don't know of other schools as I only have limited knowledge of merely the value investing.

Appreciate others can share their schools of taught and provide evidence that they can work consistently.

Posted by CCCL > Mar 30, 2015 08:23 PM | Report Abuse

the 97's have plenty of big sharks ( few Datuks some still around ), KLSE rules too loose, short selling, T+7, George Soro's, reformasi etc.. Is a PERFECT STORM ( TWISTER Category 5 ).


One of the sharks started with "I" and without an "r" and still strong with the recent Kenmark saga.

Posted by ks55 > Mar 30, 2015 05:35 PM | Report Abuse

Mr KCChong. What message do you try put forward?
Will appreciate if you can summarize and highlight the selling points for all to learn. Tq.

We all can learn many differrent things I worte about here from others about the stock market.

The power of the wisdom and Whims of the Collective.

You would certainly be a big contributor here.

"KC, how come I don't see any stock recommendation from you nowadays?"

That was the question posted to me during a lunch meet with a couple investment banker friends recently in Empire Shopping Gallery.

Sigh, I am just a small time retail investor and I realy don't know the business of so many listed companies in Bursa. I have limited analytical skill as well as limited information.

I was actually surprised recently to see my articles of Homeritz, Kumpulan Fima and Pintaras Jaya etc which were posted in i3investor appeared in "What is buzzing" in The Edge Magazine.

So may be what apini said below are true to a certain extent.


Posted by apini > Mar 3, 2015 03:45 PM | Report Abuse

I like this phrase " Sometimes the best stocks to buy could be ones that you own and know very well, whenever it is "

Posted by apini > Mar 3, 2015 03:47 PM | Report Abuse

佛在灵山莫远求，灵山只在汝心头, ( sometimes we are not aware the best is already in our possession, but still going far to seek for the best)

Posted by ks55 > Mar 28, 2015 10:50 PM | Report Abuse

不求有大功 只求無大過

The above saying is one of the most fitting as a phylosophy in life, in my opinion, more so in investing.

Posted by truthseeker1 > Mar 13, 2015 04:05 AM | Report Abuse

Latest qtr EPS only 1.02. Insas is not all about Inari. Perhaps other division is losing money hence the poor performance. Insas dividend only 1sen better place FD.


This is a basement-level thinking, very shallow.

1) When Insas's latest trailing twelve month EPS is 14.1 sen, and average 11.2 sen for the last 5 years, he harps about one quarter EPS of 1.0 sen.

2) Just Inari market value attributed to Insas shareholders alone, it is higher than the market cap of the whole of Insas, (and Insas has a few hundred million worth of other assets). And Inari is not significant for Insas?

3) Which division (s) is losing money,and how significant is that? Basement level thinking always use "perhaps" without nothing to substantiate.

4)Poor performance? of what?

5) Is dividend the only thing in investment? What if I own a big bungalow in say Bangsar with market value of RM10m, and I rent it out for RM10k a month (like dividend), or 120k a year, does it mean because of its poor earnings, it should only worth RM1.2m?

Posted by Jophiel123 > Mar 11, 2015 09:00 AM | Report Abuse

@truthseeker

How u judge this stock?


Yeah man, show us how you value this stock, the mother share, preference share or and the warrant? Anyone or all.

Posted by Wong Heam Kiew > Mar 10, 2015 10:22 AM | Report Abuse

kcchongnz, I dun encourage people to use margin. But if they can handle and insist to use margin, I just wanted to point out that it is better to use shares instead of FD to get margin facility. And the other better alternative to get leverage is to trade call warrants instead of margin. For example, to buy FBMKLCI-CR at RM0.15 at yesterday closing, it is equivalent to get financing to buy a basket of blue chips at an interest rate of 6.1% per year, the "interest" is actually the premium and loss of dividend, the beauty is if market crash, the call warrant holders are not required to be responsible beyond the amount that already paid.


Me: I Used to play a little on call warrants since 5-6 years ago and initially made some money. However, I have given back all I have made and donated more. I didn't place much chip in each bet, but still lost a few thousands here and there.

Mind you I made use all what I learned and experience in this gamble.

The play field for call warrants is very uneven here. I have given up this terrible game some time ago. It is not wise to dabble in it in Bursa.

Posted by Wong Heam Kiew > Mar 8, 2015 08:26 PM | Report Abuse
Instead of using 100K FD to get 250K margin, He should use that 100K cash to buy shares first, then use these shares to apply for 150K margin. Now his anticipated return would be (100K*0.06+150K*(0.06-0.0485))/100K=7.725%.

Good comment here. Let us put aside your own money of 100k which subjects to the same risk return of investing aside and focus on your 150k margin.

Your expected return on Reits of 6% less of the interest of 4.85% gives you a return of just 1.15%. Actually the future outcome can be better, say 10%, we just don't know. but since we are more concern about risk, let us focus on this risk thingy.

Your risk can be the broad market can drop by say 40% and individual Reit by 50% as shown in the US Sublime crisis which affected Bursa in 2008 and as described in this article itself.

Does an expected return of 1.15% justifies the potential loss of 50%?

Wont happen? Didn't I say it just happened in 2008 (-40%), or 7 years ago? Heard about the Internet bubbles in 2001 (-42%), the 1997 Asian financial crisis (-57%) followed by Anwar saga (-58%)? The Second board meltdown in 1997 (-68%)? A small scale but still significant down market in 1994? Black Monday in 1987 (-46%)?

This time is different? Are you aware that the market cycle is about 5-7 years as shown in the history of US market as well as the more frequent happenings in Malaysia? And when was the last big market down turn and just how many years ago?

Still envy of people saying they made millions using OPM, but forgetting how much they have lost?

Posted by AzmiMerican > Mar 8, 2015 06:51 PM | Report Abuse

kc

Now that u see correct return is 6.375% risk free, macam mana can pakai or not cara ni guna leverage beli REIT... lagi risk free.. lagi mungkin capita gain lagi

guna margin financing for leverage dan beli REIT lagi... all against your advise


Me: Correct return? Risk free? Capital gain?

Non of such thing in Bursa. None of them in investing in Reits, or any investment.

"When you locate a bargain, you must ask, 'Why me, God? Why am I the only one who could find this bargain?'" - Charlie Munger

Try understand what the article is trying to convey, and read some of the good comments in this thread and you may understand.

I am giving my opinion, not advising you. If you still think it is a good idea to use margin finance, go ahead. It is your choice.

And if interest rate goes up, you lose value in Sukuk bond, or any bond for that matter. And your margin finance interest rate will go up as it is based on base lending rate. A double whammy.

Margin finance doesn't sound good for any investment thing, generally, not for ordinary people.

There ain't tooth fairy in investment banks.

Tell me your margin fiance rate, cost of setting up, Sukuk price, face value, its coupon rate, year to maturity, your intention for holding for how long you intent to hold etc.

Otherwise can't answer you.

I doubt the return can cover your costs, even if it does, doubt you have any worthwhile margin.

Posted by Kian Leong Lim > Mar 8, 2015 08:03 AM | Report Abuse

You don't have to tell people loudly you know finance, accounting, or economics to be able to do what you want to do, that is just to think logically for yourself:


Me: I fully agree with you. but unfortunately this sentence of yours above doesn't apply to you. Look what you have been rambling?

That is still not fatal until you simply personal attacking others of bohong, take money, misleading etc. Very sad case of yours.


Yes, in investing, just sound and logical thinking will go a long way too. This guy below also no training in finance. But look at how logical his thinking is compared to yours. It is not correct theoretically, but there is logic in it.



Posted by Fat Cat Tim Buddy > Mar 6, 2015 04:23 PM | Report Abuse

let me show you how to get 10% at 80cents step by step

1. RM1-RM0.8 = RM0.2
2. RM0.04(annual interests)*5(years) = RM 0.2
3. RM 0.2 + RM 0.2 = RM 0.4
4. RM 0.4/5(years) = RM 0.08
5. RM 0.08/80cents = 0.1(10%)

Posted by Kian Leong Lim > Mar 8, 2015 08:06 AM | Report Abuse

What we usually learn from smart people are how to make mistakes?


There are indeed a lot of smart people in this thread. But with your mindset and mentality, your sentence is not right above. You have to change that "we" to "I".

For others people, please change the word "make" in your sentence to "avoid".

Posted by matakuda > Mar 8, 2015 07:34 AM | Report Abuse

Hi kc, based on my broad observations (fundamentals not visited) over the years, bankers would normally issue call warrants when they strongly believe that the mother is reaching its peak, the upside is limited for the next 1 year. I wouldn't want to buy the call warrants that is for sure, and at the same time I would not want to touch the mother for the above reasons.


I think your observation may be right. More of they think there is not much more upside for the underlying share price, especially during the time the euphoria on the underlying share is high.

Actually they can issue call warrant any time. It is just that they will sell to the public at very high implied volatility of the underlying share.

Hence one must understand the game in call warrants, how to value them. Even that the probability of losing is very high.

The play field for call warrant is very uneven here. Issuing houses can somehow easily manipulate them, in my opinion.

Hence I have given up looking at call warrants some time ago.

Posted by kcchongnz > Mar 2, 2015 12:36 PM | Report Abuse X

Sorry, you have lost all your RM100600 as your punt has become zero, kosong. I have lost too but just RM4788. I used to lose this type of money sometimes. But now I have shy away from punting in call warrants any more. If anyone asks me about this, I will give this advice.

You can’t blame anyone but yourself for your loss due to the actions of your own. Even if I advised you to buy (I never do that), you still have to take responsibility of yourself. You didn’t read the messages in the article properly too.

Posted by truthseeker1 > Mar 7, 2015 10:59 PM | Report Abuse
Why KC Chong never recommend Hua Yang. If you read his blogs carefully he recommend Plenitude and Daiman. He condemned Ivory. Can someone check whether Cold Eye ever own it?

Me: This is a very interesting comment and I wondered why was it flagged. It is interesting as the writer of that comment is a perfect object for study of psychology; the psychology of the mindset of negative people of energy vampires.

1) Yes, you are right. I never recommend Hua Yang, neither do I recommend Crecendo, MKH, Tambun etc. In fact those who read my posts they will know I have said I know little about property companies and I admitted it a number of times, and I never recommend anyone to buy any share. As I have mentioned in this thread, they were raised by other forumers in my thread such as the Magic formula, Graham net net, Coldeye etc and I gave my comments after looking at their annual reports.

I wrote about KSL (+298%), Daiman (+105%, Plenitude (+78%), and PJD warrants (+100%+)in i3, quite a lot. But those articles were for knowledge sharing, and not stock recommendations. The return of Daiman at 105% and Plenitude of 78% is more than twice the return of KLCI of 42% during the same period. Anything wrong with my sharing of those articles? What about KSL which returned 298%? You never mentioned it in your post?

See what I mean by "Energy Vampire"?

2) I condemn Ivory? No lah, I share my analysis and comments on the management actions and the extremely poor performance of Ivory, and many other lemons, many times in i3. Ivory share price dropped by 68% while the broad market went up by 42% during the same period.

So what is wrong with my analysis, and what are your complaints?

If you heed my comments, you would have made tons of money investing in KSL, and save your heavy losses in Ivory. Some more acts like an energy vampire, all the time, endlessly. Padan muka.

3) Cold Eye owns Ivory? I don't know and don't care. But you mean everyone must own Ivory when Cold Eye bought it a few years ago, like you do? What is your investment thesis in Ivory? Cold Eye asks you to "cheak sai" you also cheak ah?

For me, I have written something about it here plus many comments in i3:

http://klse.i3investor.com/blogs/kcchongnz/45373.jsp

Where is your writeup? No I am not going to condemn you making a mistake in its share price or for promoting this thrash, knowing very well nobody can predict share price movement, but just to discuss with you your investment thesis on Ivory if you have any.

Ivory is just one of scores of stocks in ColdEye's portfolio. He made tons of money in his other stocks. He did make some mistakes in a few stocks. Doesn't everyone make any mistakes in investing?

Of course, no one is as good as you; never lose money in any stock, never made any mistake.

Posted by truthseeker1 > Mar 7, 2015 12:37 PM | Report Abuse

http://www.bursamalaysia.com/market/listed-companies/company-announcements/1895673
I don't side anybody but the truth.
KC Chong said Insas WB should fetch 35sen but Thong(Insas major shareholder) already selling. If 35sen is fair value for WB why is he not buying?
http://klse.i3investor.com/blogs/kcchongnz/


Me:

First Where do you find the statement "KC Chong said Insas WB should fetch 35sen" true?

I can find only one sentence in the article as below:

"Hence from the Black-Scholes Option Pricing Model, Insas warrant is worth 35 sen per share with the assumptions made."

Secondly try understand what the Black-Scholes Option Pricing Model is about, the assumptions and its limitations.

Sure there are a lot of controversial issues in the model and my assumptions, and hence the value given by the model of 35 sen, not me, but the model with the available data and assumptions.

But you need to know the model, understand the terms, the assumptions etc, then only go ahead and find faults in what I have written. Otherwise you are like a "blind idiot simply knocking at the fly", meaning talking rubbish.

Thirdly, again price doesn't mean value, and why the major shareholders sell the warrant doesn't mean he knows the value, or he doesn't know the value. Nor do we know what his true intentions are.

I still remember about a couple of years ago the major shareholder of SKP REsources was selling millions of his SKP REesources at a few sen each. Go check what is the price of this warrant now.

What kind of truthseeker are you? No wonder you have a "1" at the back, truthseeker1. A "play play" or 玩 type of truthseeker, meaning the opposite meaning, twisting the truth, one cleaver to false accusation, fault finding etc.

Posted by Kian Leong Lim > Mar 6, 2015 05:53 PM | Report Abuse

I study something engineering and I do not study finance, but this is how I think is happening, it is up to you to think through yourself but figure out properly yourself. If you discover the mistake in my writing, please feel free to let me know because you know no one is perfect.

So you are not that great in finance? But wtf you accused me of misleading people to buy Insas PA, that I takes money from someone (to promote Insas PA?), that I "bohong" etc?

Posted by ks55 > Mar 6, 2015 05:36 PM | Report Abuse

1. This PA is nonconvertible, meaning at the end of 5 years, you get back your one ringgit. This is similar to sukuk bond issued by government carries interest 6% per annum.
Me: That is correct. The difference here is you can use one PA as RM1 to convert one share of warrant to mother share as mentioned by gark above, any time before the expiry of the warrant

2. Company loan/bonds are not guarantee by any body, not even the company itself. So call 'payable when able'.

Me: Yes, it is true. That is why you demand a risk premium basing on Insas’ financial health. It is also true for any investment, including Reits.

3. High interest rate associated with the risk involved. MGS-Conventional 5 year is at 3.654%. We should expect company loan/PA to pay much higher interest, otherwise there will not giving sweetener up to 2 free warrant for each PA subscribed.

Me: Yes, that is why the sweeteners with “free” warrants

4. I have seen many examples of then seem solid company's bond not able to pay interest or/and redeem in full. Notably the first failed case was Faber Merlin, then UEM bonds (under Halim Saad with coupon rate 8% interest). Most recent one is LionCorp LCB Bonds/Debt/RCSLS. I am not sure how good is our 1MDB bonds now.

Me: You got to assess Insas balance sheet and financial performance for Insas PA, not 1MDB bonds.

5. Five years down the road, a ringgit now is equivalent to 1.27 ringgit with 5% inflation. What happen in between we have hyper inflation of 10 to 20% inflation? What you earn from PA will not preserve you buying power.

Me: Who can predict interest rate correctly and consistently?

6. Consider REITs. Yes, when economy no good, less business can survive. Things happened in US in 2008/09 where all retail malls REITs suffered. In our case, 1997/98 saw non of the existing retail mall shut down because of no tenant. Those fail malls were the highly geared company like Lion Group, or company that jumped into wagon putting up half completed mall like Kemayan.

Me: does it guarantee you the DPU during recessions when nobody rent the property?

7. When market crash, what type of counter fare worst? REITs or Insas? One Hektar(1.50) can buy 1.8 Insas (0.835). If Hektar fall to 1.00, how much do you think Insas then will worth? How bad business of Insas will be affect? How bad Insas cash flow will become? Can it service interest of PA? Can redeem PA in full?

Me: We are talking about Insas PA and the certainty or uncertainty of its interest payment based on Insas financial position, not Insas share per se.

8. In a very very bad case scenario like Zimbabwe, inflation in million % per year. It will be the hard asset that can hedged against all these madness. If Zimbabwe is extreme, think of Russia and Venezuela now. If Ringgit going to fall to 4 or 5 to a USD, what will be the thing you want to hold on? Land? REITs? Property Developer? Contractor? For me, of course, REITs is one of the best option. Probably you know I have other option as well.

Me: Properties certainly is a good hedge against inflation. Nothing against reits, just that I can’t find any Reits selling at good value. I prefer property stocks as I have said, many offer good value. Return is not just dividend return, but the total return.

9. In conclusion, I am of the opinion 8.5% interest from Insas-PA is good, but I will still prefer REITs like Hektar. I also opine REITs hedge against inflation, Insas-PA does not. And REITs is having much lesser risk.

Me: Like someone said, this is individual preference.

10. Thank you, and will appreciate if you can give some comment to the above. ###

Many people here do not know about finance too. It is ok as you know not everyone learns about finance. Some are Doctors, some engineers, some housewives, macham macham and they have their own skills. There are also many in the forums who are very knowledgeable too which we can learn from. I know by their names.

but this gentleman accused me of misleading people to buy Insas PA, that I takes money from someone (to promote Insas PA?), that I "bohong" not so good lah.

Posted by Kian Leong Lim > Mar 6, 2015 05:13 PM | Report Abuse

1)You imply that bond is very simple (no risk indication) and without much certainty (volatility), did you just wrote this just now!

Me: Simple = No risk? Uncertainty = volatility?

But actually the risk is low. Try learn from Noby above. You really meed to learn.

(2) The valuation shows Insas PA value is 93.5 sen per share.

Me: It is just a valuation. You need to know that 10 people will come up with 10 valuations. But where is 95 sen as mentioned by you?

(3) How did I "misled people and bring people to Holland or a trap."?
You said you do not know the discount rate or the inflation rate in fact. You did not tell them that the discount rate is the inflation rate, without a discount rate that you are sure of, how can you still apply the formula to determine the value of the Insas-PA. You did not mentioned to them because higher and higher in the future, their Insas-PA is going holland or a trap. You don't know one of the variable in the formula, but you can come up with a value (you said was in theory only). You think everyone is insane (you want to open on line class you ask people to use your formula but you tell them you don't know the discount rate but you still can come up with a figure). Are you pretending to be "insane" to people thinking that they would be scared of your formula.

Me: Discount rate = inflation rate?

Is it? So when you use a discount rate for an investment, say share, you use your 3.5%?

(4) When and where did I "keep telling people to buy the PA, keep giving wrong statistics"?

You can not telling people the yield is 9.5% to get people involve in the Insas-PA, when yields rises that indicated that the price of the Insas-PA is dropping, they may gain a higher yield, but their PA is worth less in price. What if the price drop some more from RM0.80+ to RM0.60+ in the future, have you warn them or not. You keep saying this is a profitable venture, but people who bought at RM1.00 already loses 20 cents because the price is RM0.80+. You still encourage them to buy by saying now is even better because the yield rises. But what if the price were to go down somemore, you did not tell them the price can go from RM1.00 to RM0.80+ so soon it may even go down even further in the future?

Remember what you said: You imply that bond is very simple (no risk indication) and without much certainty (volatility), did you just wrote this just now!

Why you can say simple when you don't know the discount rate (the formula is a dead formula everyone can get from the Internet) and the bond is without much uncertaintly (bohong here), even in actual fact the price already drop from RM1.00 to RM0.80+ or may be even lower in the future?

The yield can not be 9.5 percent now for bond buyer because if they bought RM1.00, they already lost 20 cents, or lost 20%, and still they haven't received any money from the company yet?

This is what I meant you are deceiving and misleading people: when yield go up price go down, what you pay become worth less, you lost money, your lost 20% or more if the Insas-PA go down some more in price. You bohong people!


Me: Wah, like that also can!!!!

Posted by Kian Leong Lim > Mar 6, 2015 04:15 PM | Report Abuse

Why do you want to reveal your mistake to people so easily: If they PA drop to 60 cents in the future, are you going to tell the people, now buy now, hey, now the return is even better, 20% or more.

ME: If it drops to 60 sen, no, I am not going to tell you to buy. I will buy in loads. Now I will start to use margin financing to do it already.

The people who bought that PA at RM1/= is willing to sell you now for 80+, willing to lose 20 cents also want to sell to you? You must think that the Guy who runs Insas is a Buddha. He bought the PA at RM1/= and sell you 80 cents.

Me: Who is the Buddha you refer to? did he sell you at 80 sen? When?

Common run man! Even he is running, that is why he is selling you 80 cent now. That is why he is propping up Insas to put up a show.

Me: Why do you think he is propping up Insas, and sell you PA at 80 sen?

And kcchongnz, probaby take money, he told people the PA has a value of 0.95 but is selling at 0.80+, quick, let us all rush in, are you all blind just like the fool I once was.

Me: I took money? From who? When and where did I tell you PA worth 95 sen?

How could something has of a value of 0.95 and sell at 0.80+, this you have to ask kcchongnz:

Me: In the stock market, price is not equals to value in the short term. Insas PA was down to 79 sen just this week, if price=value, how come the value changes so fast?

Remember this until you need to tell him: you told people the PA has a value of 0.95 but is selling at 0.80+, quick, let us all rush in, are you all blind just like the fool I once was.

Me: No wonder you were a fool from your confession

Posted by Kian Leong Lim > Mar 6, 2015 04:05 PM | Report Abuse
I am not teaching you KCCHONGNZ! I am just telling you not to misled people and bring people to Holland or a trap. See what you said and what Federal Reserve Chairman Yellen said on her article: Yellen warns investors on bond volatility. You said bond has no risk and violatility, you are misleading people, are you taking money from someone, that is why you keep telling people to buy the PA, keep giving wrong statistics, still have the skin to open online classes. Read for yourself, see what Yellen said not long ago.


When and where did I say "bond has no risk and volatility,"?

And when and where did I say Insas PA worth 95 sen?

How did I "misled people and bring people to Holland or a trap."?

When and where did I "keep telling people to buy the PA, keep giving wrong statistics"?

http://klse.i3investor.com/blogs/kcchongnz/71783.jsp

Yes, I have online courses and I have taught hundreds of people. You should learn from me too. No joke, seriously you need to learn some basics in finance and investing.

Kian Leong,

I have said many times you need to learn some basic in finance. Otherwise you will be going round and round and thinking everyone is wrong, except you. Or worse, you think I cheat to entice you to buy PA.

4% is the interest rate based on the issued price of RM1.00. You can payment of interest RM40 every year with 1000 shares of Insas PA. But the market price is 80+ sen now, not RM1.00.

Hence you need to know how to estimate required return, and use the cash flows to compute what is your yield-to-maturity. That is the return I am talking about, not the rate of return on the face value of PA.

Posted by Kian Leong Lim > Mar 6, 2015 02:22 PM | Report Abuse

From Lim Kian Leong: You really learn only after making mistake, you don't learn from textbook, or else, everyone is Albert Einstein already!
記住:你要做一個有清淨心的人，不要受自己的誘惑，人一次只能做一件小事情，注意別人做的小事情，不要受別人的誘惑，別人好康的事情是不會免費的報給你知道或留給你的，對別人你只是需要對他比他對你好一點就足夠了，不要再做螞蟻或蚯蚓也不要把別人當成螞蟻或蚯蚓了。

不要像：一隻螞蟻(天天為自己而活反而 “辛苦”)跟一條蚯蚓(天天為別人而活反而沒有 “好處”)一樣。沒有分別心，是誰在給別人“辛苦”和 “沒有好處”。

Remember what you said today! ok! KCCHONGNZ!


You really need to learn some basic finance like what is required return, what is real return, time value of money, present value, future value, annuity etc. Then only you know things like what is the value of Insas PA, whether a interest rate of 9% is better than the inflation rate of 3.5% etc.

You can invest and make money for yourself without having to know those stuff, no doubt but hard for you to teach me, or others.

My statement cited by you is very basic and fundamental, nothing to remember or what.

The more important factor for Insas warrant is volatility of the Insas share price, not premium.

An option has a higher premium has a higher chance of going up when the expected movement of its underlying share price is violent, than one with lower premium but subdue movement of its underlying share price.

If Insas share price move a lot, for example daily share price changes in sen, 80, 85, 90, 83, 95, 100, 80, 130, 90, 150, 120, 100 etc, warrant has a better chance of going into deep-in-the-money and hence higher value of the warrant than one of 80, 82, 83, 83, 84, 85, 86,.....100.....150.

This is especially true if the time to expiry is long. 5 years is quite long.

Posted by chankinwah > Mar 6, 2015 12:46 PM | Report Abuse
dusti and kcchongnz, if u still have any knm left , i suggest u keep and hold until the rights issue is officially declared, then only dump knm before the ex date. u r asking ppl to sell for all the wrong reasons now.


When did I ask people to sell KNM? Oh yeah, I got heaps of KNM?


"There's a sucker born every minute" David Hunnum

Blog: Rubbish stocks. Learn to Avoid all the Crap!

http://klse.i3investor.com/blogs/ongmali/71892.jsp

PA acts just like a bond and its valuation is as shown in the link below.

http://klse.i3investor.com/blogs/kcchongnz/71783.jsp

The valuation shows Insas PA value is 93.5 sen per share.

The only thing you may disagree with me is the discount rate, i, but if you consider the financial position of Insas, this "i" should not differ much and hence the intrinsic value of Insas PA.

Yes, when interest rate goes up, Insas PA loses value. But who is so sure that interest rate will go up when there is no statistical significance result to show that anyone can predict that correctly in the future?

Don't forget about the extra feature of the use of PA as RM1 cash to convert Insas W any time within this 5 years when Insas in deep in-the-money. The valuation of this "extra value" is complicated and unsuitable to discuss here.

Posted by Kian Leong Lim > Mar 6, 2015 05:02 AM | Report Abuse

"Everyone who says the preference share is a good deal is a joke! KCChongnz, I thought I can respect you after seeing how frequently you post, you are recommending this preference shares for people to buy without telling them it is risky and low return. What a joke!"


Kian Leong,

You need to learn some basics in risk and return and finance and investment to understand what I have been talking about Insas PA when it was just selling at about 80 sen.

Btw, valuation of a bond is a very simple thing to do without much uncertainty compared to equity..

Posted by gweilo > Mar 4, 2015 05:33 PM | Report Abuse

KC dead wrong ! insas earned 1,02 sen PER SHARE ! but there is only ONE PA per 5 shares ! So every 5 shares Insas has 5.2 sen income but oni have to pay out 4 sen for PA so still 1.1 sen left to pay mother shareholders. Idiots ! How can people here be so dumb ?


Which part of my statement is dead wrong?

Why is that 1.2 sen EPS the last quarter so important for you to split how many sen goes to PA holder and some to common shareholders in a year?

Idiots, dumb? Who? You or me?

Posted by truthseeker1 > Mar 4, 2015 03:01 PM | Report Abuse
Who has to pay for Insas PA dividend? Now latest Insas EPS only 1.02sen. In future how?

Me: So because Insas earns 1.02 sen for the last quarter, it can’t pay the 4 sen dividend to preferred shareholders? It must earn 4 sen every quarter to pay that dividend? What about its EPS for the last few years? Do you see it has such a big problem paying? What about its hundreds of millions in cash and cash equivalent and investments?

Year 2011 2012 2013 2014
EPS, sen 24.1 9.14 1.84 15.0


Posted by truthseeker1 > Mar 4, 2015 03:02 PM | Report Abuse
Those chasing Insas WB plan to convert their warrant is it?

Me: The beauty is warrant holders has the rights but not the obligation to convert, and they have 5 years to decide. No chance to go up to its exercise of RM1 in 5 years, any time within this 5 years? Go learn something about warrants.

Posted by truthseeker1 > Mar 4, 2015 03:04 PM | Report Abuse
Those buying/holding Insas WB remember it is going to be toilet paper if they don't plan to convert at RM1.

Me:Can’t warrant holder sell them? And any time in this 5 years?

Posted by truthseeker1 > Mar 4, 2015 03:55 PM | Report Abuse
Here is example of people who said how good is BRIM(Insas PA). Who has to bear the BRIM cost, why nobody mention despite this is Insas thread.
Is it those buying warrant plan to convert so that Insas got money to pay PA dividend?

"There is no such thing as free lunch".

Me: Insas needs money to make acquisitions, subscribe to more of its subsidiary shares in Inari etc. Instead of borrow from banks at 5%-6% interest rate, what is wrong to give 4% to existing shareholders, while the money it has is utilized for other better investments?

Posted by donfollowblindly > Mar 4, 2015 08:31 AM | Report Abuse

Why only gain stocks shown? What about the losses like Maybank C6, BIMB-W, MRCB-W, Padini, etc. What happen to Insas? Why not shown?


I showed you my first portfolio with 103.4% gain as opposed to 16.6% of KLSE, and there was not a single loser out of the ten stocks.

Here is my second portfolio of 11 stocks also set up by Tan KW in August 2013,just one and a half year ago. Yes, there are losers, but just 2 out of 11. The average return is 64.4% as opposed to 6.8% of the broad market over the same period. The loss of the loser stocks is small (3% and 18.4%)as compared to the gain of the winners. Homeritz and Datasonic gained 178% and 245% respectively.

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


Sorry, this must have disappointed you again. Don't worry, I will tell you about my third portfolio which you will be very keen to see me publish here.

Btw, instead of me showing those portfolios which were published in i3 all the time, why not show us one of yours also?




New 1/8/2013 4/3/2015 Dividend xxxx xxxx
Pintaras 2.495 4.370 0.225 2.100 84.2%
Kfima 2.060 2.050 0.160 0.150 7.3%
MFCB 1.700 2.610 0.105 1.015 59.7%
Haio 2.670 2.370 0.220 -0.080 -3.0%
Fibon 0.330 0.480 0.0125 0.163 49.2%
CBIP 1.450 2.040 0.100 0.690 47.6%
Tien Wah 2.510 1.900 0.148 -0.462 -18.4%
Homeritz 0.430 1.140 0.058 0.768 178.5%
Willow 0.530 0.770 0.040 0.280 52.8%
Daiman 2.530 2.560 0.120 0.150 5.9%
Datasonic 0.335 1.130 0.025 0.820 244.8%

Average xxxx xxxx xxxx xxxx 64.4%
Median xxxx xxxx xxxx xxxx 49.2%
KLSE 1773 1820 72.69 119.7 6.8%
Alpha xxxx xxxx xxxx xxxx 57.7%

Posted by donfollowblindly > Mar 4, 2015 08:31 AM | Report Abuse

Why only gain stocks shown? What about the losses like Maybank C6, BIMB-W, MRCB-W, Padini, etc. What happen to Insas? Why not shown?


Ok ok. We definitely will talk about the return of my the other two portfolios. Now let us talk about Insas first as insisted by you.

Some of my course participants asked me what to do with Insas when it dropped to 79 sen second half of last month. I said it would be better to go through the whole corporate exercise. I bought a lot more(in my standard) for myself and those others whom I manage their investment at average of 82 sen. I even apply for excess shares and I got 20% more of PA and warrant.

Go figure out these numbers if you can.

My return is about 10%, in about one month. I am happy about it. I don't care whether you are happy or not.

Posted by donfollowblindly > Mar 3, 2015 09:54 PM | Report Abuse

AyamTua, sudah kaya belum ikut KC? Hari ini ada beli Insas PS dan warrant?



Hooray, it is time to boast again. hard to find this opportunity.

If anyone followed my 10 stock picks put up by Tan KW on 21at January 2013, less than two years ago, he would have made 103.4% now after 26 months against the return of the broad market of 16.6%.

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

If he has bought Prestariang as listed by me then, he made 310%. Or 200% for Pintaras, 170% for Jobstreet, 141.2% for SKP Res.

Even AyamTua's NTPM made 70.2%.

You are very lucky losing your underwear buying Maybank C6, and lose soe in BIMB warrant. You lose not much lah in Padini. Have you forgotten that you also lose money in MRCB warrants. What else? Can't recall any more, just 4 or 5 out of a total about 40 stocks in three portfolios of mine so far.

Your luck is extremely bad, a six sigma event.


Date 21/1/2013 3/3/2015
Stock Name Ref Price Price now Dividend Gain % gain
Kfima 2.02 2.05 0.16 0.190 9.4%
Pintaras 1.56 4.37 0.275 3.085 198%
ECS 1.06 1.15 0.13 0.220 20.8%
Plenitude 1.85 2.38 0.12 0.650 35.1%
Jobstreest 1.20 0.4550 2.787 2.042 170%
Pantech 0.78 0.755 0.13 0.105 13.5%
SKPRes 0.34 0.770 0.05 0.480 141.2%
NTPM 0.47 0.73 0.07 0.330 70.2%
Kimlun 0.93 1.44 0.1 0.610 65.6%
Prestariang 0.605 2.32 0.16 1.875 310%

Average xxx xxx xxx xxx 103.4%
FTSE Mid70 12294 13454 615 1775 14.4%
KLSE 1632 1821 82 271 16.6%

Posted by fortunecheat > Mar 3, 2015 06:17 PM | Report Abuse

still working ? all this while i thought kcchongnz has done so well that he retires early to enjoy good life in NZ ?

never mind......


For your information, I officially retired as a civil engineer more than 10 years ago. No, I am still not that old.

Whether doing very well is relative as each person's needs and wants are different. Enjoying life is no doubt about it for me. so thanks for your concern.

Warren Buffett is a multi-billionaire. He is still tap dancing to work.

Do you know how one feels with statement below?


Posted by apini > Mar 3, 2015 05:19 PM | Report Abuse

thank you very much Mr kcchong, although I have (not)joined your on-line course ,I still had gained a lot of useful knowledge from your article to evaluate a stock before I make a decision to buy or sell .esp the the magic formula. thank you very much Mr Kcchong.
Good health

ks55,

This is what I call a constructive criticism is. Thanks for your comments.

Risk and return is interrelated. I can't fault any of your comments above. We just have different perceptions of risks for Reits and Insas RPS.

For me if I want to invest in property related investment, I prefer some undervalued property stocks and there are some in Bursa. I don't see any Reit is undervalued. May be I never explore them.

ks55, why are you so sure of REITs?

In an economic downturn when property owners can't lent out their properties, where do REITs get their return?

When property prices plunged, can REITs maintain its asset value?

When the share market plunged, can REITs stay at the same prices? i remember Axreit was less than RM1.00 during the US sublime crisis.

REITs are subjected to higher and more risks than fixed income.

apini,

Ebit already minus off the cost of D&A. If you want to ignore D&A, meaning not less off the D&A cost, use EV/Ebitda.

I don't normally use Ebitda as D&A is a real cost to do business.

Warren Buffett, in a prescient note to shareholders in Berkshire Hathaway’s 2000 annual report, said: “References to Ebitda make us shudder.” Too many investors focus on earnings before interest, taxes, depreciation and amortization. That makes sense, he said, only if you think capital expenditures are funded by the tooth fairy.

Posted by ashley88 > Mar 3, 2015 03:19 PM | Report Abuse

If warrant price at RM0.26 and need to pay RM1.00 to convert it to mother share,so total cost is RM1.26 .Why not buy mother share from market, it's only RM0.86!


Warrants have two parts of value; intrinsic value and time value.

Intrinsic value of Insas warrant is zero, kosong as the exercise price is higher than the mother share price, IV = Max (0, S-x)

What Insas warrant has is its time value which can be a lot depending on how volatile is the underlying share price in the future. If the mother share is volatile and can fluctuate up to say Rm1.50, Insas intrinsic value will be 50 sen, Max (0, 1.50-1.00). And Insas has 5 year to do that for warrant to have that IV.

What if gila gila Insas share price can go up to its net asset backing of RM1.82?

Is that really gila at that price at RM1.82 as Insas assets are mostly cash or cash equivalent and investment which if marked to market, will be a lot more higher than RM1.82?

And warrant has 5 long years to wait for that to happen.

Posted by Kris Wong > Mar 3, 2015 10:28 AM | Report Abuse

Mr. KC Chong based on your calculation and details, does this mean that the bond-like Insas-Pa I bought at RM0.80 this morning will give me a return of 6.42% pa if I hold it to maturity based on my simplified calculation ie. 0.935/0.80 multiply by 5.5% =6.42%. Please advise me if my calculation is not correct. TQ

Use a financial calculator, or a spreadsheet and put these values:

PV = 0.8
FV = 1.00
PMT = 0.02 for 2 sen dividend every 6 months
N = 10 There are 10 semi-annual payments

You will find that the yield-to-maturity equals to 4.53% per period, or 9.06% for a full year. That is the return you are concern of.

With RPS at 82 sen now, the yield to maturity will be 8.5%. It is still a decent return considering that it has little risk but twice return from FD.

Horsefield,

Thanks for your reminder below. Just checked what I first wrote about those stocks you mentioned. Just a little walk down memory lane here.
I started harping on Pintaras more than years ago when its price was less RM2.00 before 1:1 bonus. I first wrote about Latitude in i3investor about one and a half years ago when it was RM1.65.

http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/40360.jsp

Notice I don’t talk about it now with the present price though I still have a little for memory purpose.

Homeritz was alerted by one of your course mates may be two years ago and it was in the above article when it was trading at 57.5 sen.
MFCB was alerted by another of your course mates, can’t remember who. When I first wrote about its investment thesis in i3ivestor one a half years ago, it was just RM1.70.

KSL, Scientex were written when their share prices as stated by you, and it was not long ago.

So although I don’t recommend anyone to buy shares I wrote about, if they have blindly followed those articles and invested, they shouldn’t be blaming me for anything, and instead would gladly invited me for a meal when I go back to Malaysia. Won’t they?

I did make some wrong judgement though.

In i3 prior to I having a blog there, many forumers asked me all sorts of stocks in my thread such as “Coldeye 5 yardsticks”, “Magic Formula” etc, and I have answered hundreds of those questions. I don’t remember anyone faulted me although I did make some, but few, wrong judgements.

Posted by donfollowblindly > Mar 3, 2015 01:55 AM | Report Abuse
Does KC Chong indicate latest Insas QR which is actually down? Why Insas already stop going up recently? Some of 4200 comments KC Chong is actually condemning especially stocks he doesn't own. If Insas actually is good, there is no need for this of type fund-raising at all.

First you must understand what the investment thesis is for Insas. You may have missed the forest by focusing on the trees.

If those who were misled by those lemons in the market and took heeds on my “condemning” remarks on them, they would have saved a lot of money not losing in speculating on those lemons. Wouldn’t they? My blunt remarks and articles on those lemons, for your information is almost 100% spot on. I think these type of “condemning” remarks and articles are more useful for small time retail investors than all the buy calls.

Too bad you didn’t take heeds on my comments on lemons and lost a lot of money. For your information, the prices of those lemons dropped like nobody’s business is not because I “condemn” them, but because of their poor fundamentals.

Posted by fortunecheat > Mar 2, 2015 07:52 PM | Report Abuse

Relaxed... no need for such lengthy response.. I was just teasing you.

The reasons I like to harass u is because I notice that you are quite harsh to other forum members.

Do we really need to be so rude to others who have a different opinion ?

Can't we be a little bit nice and gentle ?


I apologize if I am too blunt in responding to comments but I don't think I am "rude". Please forgive me and continue to comment in my blog. A writer likes readers and comments, if not what is the point of writing?

However, there are many comments do not deserve "nice and gentle" response. Many of them are used as personal attack, not constructive comments. I am just "prescribing the right medicines for those kind of sickness".

I have no problem with your "teasing", or even "harass". Just "put your horses forward". No problem at all.

Posted by fortunecheat > Mar 2, 2015 08:17 PM | Report Abuse

Don't waste your time on black schole

GOOD COMMENTS. I DO AGREE WITH YOU TO CERTAIN EXTENT AS I ALSO DON'T DEPEND ON IT TOO MUCH. BUT THAT IS ONLY THE FIRST LEVEL THINKING.

The biggest issue is how to determine volatility

You use 50% as Insas volatility for illustration purpose. Do you know whether that is the one month volatility ? one year volatility ? Three years volatility ? or five years volatility ?

DIDN'T I EXPLAINED TO YOU HOW I DID IT MYSELF IN THE ARTICLE? TELL US HOW YOU DO IT THEN.

Even if you can answer the question above, the next question is "which figure to plug in ? one month ? one year ? three year ? or five years' volatility ?"

SAME ANSWER AS ABOVE

it is too subjective. The whole valuation exercise is meaningless.

TO A CERTAIN EXTEND, YOU HAVE A POINT

Your sensitivity table is meaningless too. Take Insas share price of 80 sen as example. The table gives a range from RM0.036 to RM0.409. The range is simply too wide and is of no use in real life.

THE SENSITIVITY ANALYSIS SHOWS WHAT THEORETICAL PRICES WILL THE WARRANT BE WITH DIFFERENT PRICES OF INSAS WITH THAT CONSTANT VOLATILITY IN THE NEAR SHORT TERM. JUST AN IDEA OF RELATIVE PRICES.

The best way to value warrants is by using conversion premium. I presume you know how to do it.

READ MY PREVIOUS POSTS ON PREMIUMS, GEARING FINANCIAL RISK MANAGEMENT ETC USING WARRANTS. OH I JUST DON'T WANT TO AGONIZE YOU AGAIN WITH "LEFT OVER RICE".

BY THE WAY, PLEASE ENLIGHTEN US HOW YOU USE CONVERSION PREMIUM TO VALUE WARRANTS.


Posted by fortunecheat > Feb 24, 2015 08:22 PM | Report Abuse

Same old story

Leftover rice goreng again and served to you. Yummy meh ?

Posted by fortunecheat > Mar 1, 2015 09:23 PM | Report Abuse

Oh my god... Pintaras and London Biscuits again....


There are different people posting different things and messages in a public forum like this.

1)People who tell you to buy this stock and that stock. Some keep telling you to buy certain stocks, and some tell you new stocks every time. Just follow that and you don't have to know why.

Sometimes the best stocks to buy could be ones that you own and know very well, whenever it is.

2) Some reproduce analysts reports on stock picks here for you to follow. Some are good and some seem to have their own agenda. Bear in mind that the best person to depend on in investing is your own self.

3) Some write articles about certain stocks with quite detail analysis. They are many good ones. Of course there are some not so good one too.If you want to follow in the hope to make money,follow those good ones who have no agenda behind, and you may make some money.

4) Some just post some educational articles for sharing and learning purposes. If you want stock picks, especially new stock picks everyday, these are not for you and you don't have to waste your time to read.

5) Some people post comments, just to antagonize or hantam people without any basis. They seem to get fun out of it. Well this type of comments from this group of people is unproductive.

6) Etc

I put myself in group 4 as seriously I have no stock tips,not good at all in that. In using examples for education and learning purpose, one has to make use of the best examples, of one knows, and Pintaras and London Biscuits are some of the best examples and evergreen ones that I know. They are even good as MBA case studies as a good growth company and a very poor growth company, in my opinion. Well, I know only limited stocks in Bursa which I have to admit it.

As you always searching for stock picks to make money, you are just wasting your time to read my articles as they are not meant for it, and even comment on them. Stay away from these articles for your own sake. I have no such "noble intention" to help you to make money.

But for those who are interested in my articles, I think there must be some as I have read many encouraging comments such as one below, I am happy about that especially if you can give some constructive comments. These people may learn some good fishing skill, and I may learn from them too.


Posted by Dong Yer > Mar 2, 2015 11:43 AM | Report Abuse

Thanks very much for your article, I learn a lot from it.