Posted by GG3261 > Sep 2, 2014 10:13 AM | Report Abuse

Mr chong, isn't it earning yield = 1/PE ? please kindly enlighten me


Most people look at it that way. For me a little different. I use Ebit/Enterprise value

There are many people who knows a lot about the Johore property market and the individual companies doing business there than me. I don't know much. My analysis on Plenitude is just based on publicly available information from the Bursa.

What do you mean by Malton is three times cheaper than Plenitude? PE, P/B, P/S, EV/Ebit, P/CFFO, P/FCF?

股海無涯

彼此彼此

Those sentences are in " ". How I wish I could write like that.

"重要的是要警惕自己， 面對報道時必須要有本身的判斷能力。 不要單純的相信任何報道， 而產生了股票錢很好賺的錯覺。

忘了初心， 被別人的好成績沖昏了腦， 忘了自己的步伐，結果股海回頭， 已經找不到來時路。"

This is the right mindset in the "Sea of investment".

Posted by hariharikais > Aug 30, 2014 12:48 PM | Report Abuse

Dearest KC... I can't seem to understand why is there a massive drop in plenitude last friday when quarterly result is ok...any comments?


I also think the results was good. Why a "massive" drop? I really don't know. But isn't share market like that? People buy and the share price went up to about RM3.50 from RM2+ just not long ago, and then drop back a little to RM3.15. That is still pretty good, isn't it.

Anyway, you are invited to read the link here.

http://klse.i3investor.com/blogs/kcchongnz/59102.jsp

Posted by qychong > Aug 21, 2014 02:22 PM | Report Abuse

Hi kcchongnz, thanks a million for all your sharings. I am just wondering if say a share previously bought at a huge discount (years ago) had recently reached or began fluctuating around (and possible above) its intrinsic value.

What would you do, if the company is still profitable with no significant change to the daily business and management?


Isn't my thought in the article?

Valuation is an art. There is insignificant difference between what you get and what i got anyway.

Posted by Chin Jun Hean 俊年 > Aug 14, 2014 09:22 PM | Report Abuse
But TASCO no dividend, buy CENTURY better...


If a company has good investment opportunity which return of 13% over its marginal equity. Isn't good the company reinvest all the earnings?

What do you do with the dividend given to you? Spend it? Put in FD to get 3.5% interest? Or are you so sure that you can get 13% from investing the money on you own?

What is your purpose investing in a company in the first place if you are not happy to "reinvest" with the dividend supposed to be given to you into the same company you were interested to invest in the first place?

Very thorough analysis. The data and assumptions are also well articulated. Good to see that there are people who invest based on facts and figures, rather than rumours, hypes and fads. Well done Intelligent Investors.

Very good feedback for this post too. I agree with cheongcy that theoretically you should use the long-term risk-free rate of MGS. We are investing in Bursa, not the US market.

I also like Noby's very practical comment to use the bank fixed deposit rate as a proxy to the local risk-free rate as the reason of hard to buy long-term MGS for a retail investor. Maybe there is the reason why Jae Jun use the long-term AAA corporate bond. However the present FD rate may be a little low compared to the long term FD rate in the past. It appears that there is higher probability that the long term interest will rise.

However bear in mind that the bigger market players are not be the retail investors, but the institutional investors and fund manager who can invest in long-term corporate or government bonds.

wies,

"We are all players in this casino unless you are the House"

Have you missed the message of this post?

And also have you read this post?

http://intelligentinvestor8.blogspot.co.nz/2014/08/when-should-we-click-buy-button.html

Posted by tonywong8 > Aug 2, 2014 11:05 PM | Report Abuse
KC, thank you. May be I am lucky.

tonywong8,

That statement of yours above will determine the success of your investment in the future. You have great future in your investment.

How many people who have made some money in the stock market say that they are lucky? Most of them will brag about how savvy they are in investing, a classic case of cognitive bias of overconfidence.

I like people read and provide me with feedback on this article below:

http://klse.i3investor.com/blogs/kcchongnz/45226.jsp

tonywong8,

I really don't know what is happening in PMetal. About a year ago when it was trading at about RM2.00, somebody asked me about it and I looked at its performance and financial position, I got scared and I didn't even think of buying it even at RM1.00.

It had low return of capitals, extremely poor cash flow and a terrible balance sheet. Everything is against my principles to invest in such a stock.

There must be something I don't know about its recent or future development. What is so good?

What I don't know i don't touch. That is my strategy.

This is the second time you mentioned about Keck Seng.

I hope I got time to do it one day. Actually I hope one of my students can do it for you.

Yes, a number of them can do it now.

CCs999,

Intrinsic value is the estimated value of a company or its stock. It is not the "minimum" but a fair value.

Please note that this "intrinsic value" is just our estimate and it changes as time goes by depending on the business of the company. It may go up if the business improves more, or down if the business deteriorates.

I will definite sell if the price exceeds the intrinsic value as I can use the proceeds to buy other undervalued stocks.

Posted by solangeAM > Jul 28, 2014 01:46 PM | Report Abuse
I have invested by using the ears and my chances of hitting the same return as you have been more or less the same, meaning your Graham's approach return is more or less the same as my ears' return as such yours and mine returns should be due to excess liquidity in the market and nothing more

Ok, ok, ok, great investing strategy you have; investing using ears. Congratulations.

But have you given us your guidance to my questions above so that we can learn from you? Anyone of them?

Posted by solangeAM > Jul 28, 2014 12:56 AM | Report Abuse
WTF Graham Net Net my foot.
You are talking as if only these few counters selected by you have gone up, take a look at the whole market will yea, can't you see ALL the counters have gone up?

1)Did anyone say that only these few counters have gone up?
2)"All the counters have gone up"? You sure? I don't think I can see it.
3)Which period you are referring to that "All the stocks have gone up"?
4) Give me the period you are referring to and do you want me to show you some stocks have gone down during this period?
5)How is the performance of the broad market for the period you are referring to? Please substantiate.
6)Can you show us your portfolio of stocks which "have all gone up"? Can substantiate if you have posted somewhere before and show evidence that they "have all gone up".
7) Can you compare your "stocks that all have gone up" with the broad market? Surely you need a reference bench mark, don't you?

I am sure you can substantiate your statement above.

Posted by brendonyeap > Jul 25, 2014 11:48 PM | Report Abuse
Kc: how do calculate volatility of a stock? TQ

Posted by kcchongnz > Mar 30, 2014 07:02 PM | Report Abuse X
Horse field,
What I did was I used the weekly price from yahoo finance, obtain the weekly return, and compute the standard deviation of the weekly return. Then I convert that to annual std by multiplying sqrt (52). That is the volatility of bimb.

You could use the daily data too and do the same to get the annual std. There will be some difference in the value obtained. But that is valuation, an art. Anyway, the option pricing is itself not an exact science.

Posted by NOBY > Feb 19, 2014 11:41 PM | Report Abuse
KC, what is your view on MMODE recently announced Q4 results as you mention you are holding some ?
A few things :-
1. One off very high deferred tax charge caused net profit to plunge to only RM490k.
2. Operating margins also plunged to only 10% due to higher operational costs.
3. The only bright spot is its high net cash holding of RM0.25 per share due to its healthy cashflows.

Mmode share price dropped from about 70 sen to less than 50 sen after the release of this quarterly report.


Posted by kcchongnz > Feb 20, 2014 04:53 PM | Report Abuse X
Noby,
You know I am not one who will get all worked out when there is a drop of profit just for a quarter, especially due to higher tax allowable, write-off of non-cash items etc.

The top-line is still growing. PE is single digit, and good cash flow and healthy balance sheet.

To be a value investor,you need to have the following attributes as written in the article here:

You need to have patience, and a lot of it
You must be disciplined
You must mind your behaviour
You must know when to go against the crowd
You must read a lot (annual reports, investing books etc.)

Posted by kcchongnz > Sep 20, 2013 12:40 PM | Report Abuse X
Posted by xingxian > Sep 18, 2013 01:23 PM | Report Abuse
Take a look at MMODE. Similar to FIBON IMO

Posted by kcchongnz > Sep 19, 2013 07:35 PM | Report Abuse X

Is M-Mode good for a long term investment? (19092013)

M-Mode Berhad is engaged in the provision of mobile contents and data application services with platform connected to mobile network operators in Malaysia and China.

M-Mode has a fantastic growth story. From 2006 to 2012, its revenue and net income grows by a CAGR of 37% and 75 to 62.1m and 13.2m respectively as shown in the appended Table 1.

Table: Revenue and net profit for M-Mode
Year 2012 2011 2010 2009 2008 2007 2006
Revenue 62070 75395 29207 22335 16129 13540 9432
Net Income 13232 12867 3425 3026 2096 1189 465
EPS, sen 8.1 8.0 2.2 1.9 1.4 0.9 0.4

M-Mode is one of the rare companies having a gross margin of over 40% and net profit margin above 20%. ROE and ROIC are high at 25% and 51% respectively, much higher than the costs of capitals and my requirement of 15% for a small capitalized company.

Quality of earnings is good with cash flows from operations higher than its net income. Free cash flow is positive every year with FCF above 50% of invested capital and 19% of revenue. MMode has a healthy balance sheet with an excess cash of 33.6m. Hence MMode is great company in every aspect. But is it a good company to invest in?

M-Mode’s share price rose by 4 sen today. At 57 sen a piece now, MMode is trading at a PE ratio of just 7.0. Enterprise value is also low at 4.5 times ebit (<<8 times). The price-to-book ratio is not excessive at 1.8.

Hence in my opinion, M-Mode is a great company good for long-term investment.

Posted by mlg123 > Jul 24, 2014 10:01 AM | Report Abuse

kcchong;

I am thinking to add in more KFima for my long term portfolio. I had purchased at 2,10 and 2.20 level. what is your opinion?


mlg123, I really don't know. I have no predictive power especially in share price movements.

However Kfima is still my top holding. I have this share since 5 years ago. If you notice, I have done a lot of analysis on this company and have written so many articles and valuations on it in i3investor alone.

In my personal opinion, its sound fundamentals have not changed at all. I am surprised while so many stocks have phenomenal rise in their share price the last couple of years, Kfima's share price has not risen much since two years ago.

I always think that share price will converge to its intrinsic value; may not be in the short term, but most of the time in the long term, in my opinion. The long-term for fundamental investors is not one month, one year, and not even two years.

No patience? Then you are not a long term fundamental investor.

No patience? Then one should follow the "advice" of anbz above; punt on MAS, and hope that the outcome will turn out fine, by luck.

The close period, or the time period between the completion of a listed company's financial results and the announcing of these results to the public, normally one month, is intended to prevent trading in a company's shares by its insiders ahead of the public dissemination of its financial results.

So if the insiders, such as the directors, intend to trade in that close period, he has to inform Bursa and the public of their intention.

This is what I think.

Digiuser

1) High return of existing capital meaningless?
a. If a firm’s ROC is very low, where does it get the cash from to distribute better dividends for the purpose of returning cash to shareholders, to make maintenance capital expenses, or to invest in something else new which provides good return of this new capital etc, assuming the marginal return of this new capital cannot earn above average return reinvesting into the business? Issue more shares? Borrow more money?
b. ROC is about operational efficiency, earnings yield, cash flow yield are about how much return to investor for the price he pays. They are two different things.
c. Yes, the return to equity investors are earnings yield, cash flow yield etc. Of course the lower the price you pay, the higher the yields you get. However, the numerators of those metrics are still dependent on what is the return of capital, aren’t they?
d. Don’t you think a higher efficient company deserves a higher market valuation?

2) Agree with your second point. I treat EBITDA as the firm’s earnings after all the bad stuff. Bad stuff is a real cost to the business, and how can we ignore this stuff?

I like this book. It is more of a fiction, an interesting story book. It is very interesting to read about corporation’s behavior and what you should avoid in investing.

Conspiracy of Fools: A true story of Enron, Kurt Eichenwald

Posted by arv18 > Jul 6, 2014 01:40 AM | Report Abuse
@kcchongnz just ignore the trolls
1. In Internet slang, a troll is a person who sows discord on the Internet by starting arguments or upsetting people, by posting inflammatory, extraneous, or off-topic ...
at the end of the day, your stock picks speak for themselves, no?

Hi arv18,
Long time no read, how are you? No, I don't like to quarrel with troll. However I like to engage with them in constructive manner, for example discussing about their investment strategies so that I may benefit from them too. But that guy as you said is a troll. He must be someone who has changed his e-identity and trying to pick on me again. Frankly what have I done wrong writing in i3investors? But it is ok, I still can engage with him in an educated manner.

Actually my picks yield fantastic results, almost all of them. But I must say there are a lot of luck factors involved too. I don't get too overblown in short-term good results.

However, I think the more important thing is not how much one makes and then goes around shouting how good he is in investing. It is the process which is more important. You can get lucky once a while, but if you don't have a good investing process, and a proper mind set, the good time won't last. Agree?

Posted by kcchongnz > Jul 5, 2014 10:39 AM | Report Abuse X

No, I am not pissed off. I am delighted because I can boast around answering your questions.

First of all how did you selectively choose the 5 stocks? Cenbond was done long ago, more than a year? There are other stocks I have analyzed, written and shared in i3investors before. The table below summarized what stocks I have shared in i3 recently.

Stock Ref Price Dividend Price now Total return
Kuchai 1.20 0.00 1.45 20.8%
Prestariang 2.50 0.05 4.32 74.8%
Perak corp 2.69 0.085 2.61 0.2%
Magni 2.63 0.05 3.2 23.6%
Latitude 2.57 0.00 3.03 17.9%
MFCB 2.24 0.045 2.28 3.8%
Padini 1.75 0.03 1.97 14.3%
Pintaras 2.95 0.05 4.38 50.2%

Average Return xxxx xxxx xxxx 25.7%
KLSE 1829 xxxx 1885 3.1%


The total return of my portfolio is 25.7% in less than 8 months (?) compared to 3.1% of KLSE.

So I must compare with others and show you? Did I say I was competing with others? Tan KW may able to confirm this.

So I lose far behind the participants of the contest? How far behind? Can show us or not? By the way, do you know how to compute or not?

I really hope you can compute and show us. As I have no time for this. Do you know that I am so busy to teach others online finance and investment now? Don't you think I should spend my time for my students, rather than compute who is the winner of apa itu contest?

No, I am not pissed off. I am delighted because I can boast around answering your questions.

First of all how did you selectively choose the 5 stocks? Cenbond was done long ago, more than a year? There are other stocks I have analyzed, written and shared in i3investors before. The table below summarized what stocks I have shared in i3 recently.

Stock Ref Price Dividend Price now Total return
Kuchai 1.20 0.00 1.45 20.8%
Prestariang 2.50 0.05 4.32 74.8%
Perak corp 2.69 0.085 2.61 0.2%
Magni 2.63 0.05 3.2 23.6%
Latitude 2.57 0.00 3.03 17.9%
MFCB 2.24 0.045 2.28 3.8%
Padini 1.75 0.03 1.97 14.3%
Pintaras 2.95 0.05 4.38 50.2%

Average Return xxxx xxxx xxxx 25.7%
KLSE 1829 xxxx 1885 3.1%


The total return of my portfolio is 25.7% in less than 8 months (?) compared to 3.1% of KLSE.

So I must compare with others and show you? Did I say I was competing with others? Tan KW may able to confirm this.

So I lose far behind the participants of the contest? How far behind? Can show us or not? By the way, do you know how to compute or not?

I really hope you can compute and show us. As I have no time for this. Do you know that I am so busy to teach others online finance and investment now? Don't you think I should spend my time for my students, rather than compute who is the winner of apa itu contest?

Posted by danny1 > Jun 10, 2014 01:43 PM | Report Abuse
someone wrote theory after theory how good this stock...

Posted by danny1 > Jul 4, 2014 10:06 PM | Report Abuse
wait until neck long!must salute kcchong come up with theory but in real life....bye bye!


I like this fellow's comments everywhere trying to ridicule me. Why? It is because I can boast around about my stock pickings while responding to his comments. Otherwise I have no chance to do so. but i actually I have no such mood to do so. Ok here it is.

I first wrote about MFCB on August 2013, less than a year ago in i3investor here:

http://klse.i3investor.com/blogs/stock_pick_challenge_2013_2h/34201.jsp

Its share price was RM1.70 then. Actually when i write about any stock, I seldom talk about share price except to compare the price with value. I never tell people that this share of that share will go up to what price.

Now it RM2.28. Together with the dividends, the total return would be 66 sen, or about 40%, yes 40% in less than a year. This is more than twice than the return of the broad index.

"Wait until neck long"? So how bad is my "Theory after theory"?

Why you never talk about my picks in Datasonic, Prestariang, Pintaras, Jobstreest, CBIP, Willow, Homeritz, NTPM etc?

Posted by danny1 > Jun 10, 2014 01:40 PM | Report Abuse
holland stock from kcchongnz

Posted by danny1 > Jun 10, 2014 01:55 PM | Report Abuse
someone wrote "buying the best thing in the industry"

Posted by danny1 > Jun 10, 2014 01:57 PM | Report Abuse
better keep quiet..someone is seething with anger


Yeah, I did write about Cenbond appeared to be the best buy among the packaging companies. Did I say it price must also rises very high?

At the time i wrote about it, it was 1.56, and now it closed at 1.44. With the dividend, one probably loses a bout 8 sen, or about 5%. Does that deserve your name calling of "holland stock"?

Are you respecting me so much that all my stock picks must return high double digits like the rest of my picks?

Posted by danny1 > Jul 4, 2014 10:09 PM | Report Abuse
ask kcchong lo!the man who knows many theory but kaput!

This appears in Padini thread. So what is wrong with my write up about Padini saying it is a good investment?

It was 1.75 when I wrote it on 21 January 2014, and now it is 1.97. With the 3 sen total dividend, the return is 14.3%, in less than 6 months? KLSE only rose 4.3% during the same period.

So what is wrong with my pick on Padini at 1.75 on 21 January 2014, danny cai????

Posted by danny1 > Jun 10, 2014 01:46 PM | Report Abuse
did someone forgot all his holland stock......

Posted by danny1 > Jul 4, 2014 10:12 PM | Report Abuse
kcchong!please review ur 2014 stockpick against others!


These two postings are undoubtedly related. Someone wants to put me down, but he is not smart, he does it in this Pintaras thread.

Just recall about two years ago someone with funny name kept on accusing me of copy and paste, bullshit, pusing, cheat and all sorts of demeaning terms when i wrote about how good Pintaras as a company was when its price was about RM2+, before the one for one bonus.

Now even after the one for one bonus, Pintaras is at RM4.37, or RM8.74 before bonus. This is 300% to 400% up from just a couple of years ago. So he never has the chance to accusing me any more.

This danny chai is trying to do the same thing, trying to put me down. But why?

OK, if you want to review my stock picks against others, which I have no interest to do so, please go ahead and don't run away.

After my initial two portfolio, one earns 90% after 18 months from January 2013, and the other set up in August 2013, 50%+ after 10 months, i did write articles on a few more stocks which I thought are good companies. I don't remember exactly all of them, but below are some of them and the approximate prices then:

Prestaring: 2.50 before dividends and the one for one bonus
Kuchai: 1.20 Now 1.45
Perak Corp 3.69 now 3.61
Magni-tech: 2.63 now 3.20
Latitude: 2.57 now 3.03
MFCB 2.24 before dividend of 4.5 sen now 2.28
Padini 1.75 before dividends (5 sen?) now 1.97
Any others?

These are all mostly done in the last 6-8 months.

So danny chai, please review, be my guest. You should also compare with the broad market. Hope you know how to do it, or at least know what i mean.

danny chai, i bet you to review and tabulate here and compare with the market. May be more people will join my course.

Posted by danny1 > Jun 10, 2014 01:41 PM | Report Abuse
wonder someone so quiet....

Posted by danny1 > Jul 4, 2014 10:03 PM | Report Abuse
holland stock from kcchong...all theory kaput!


Long time nobody criticize me already. The last time was only one, someone with funny name like apa itu i fax or something. This one the name is new but the language looks very familiar.

OK let's talk about my stock pick Kuchai. I wrote about it as it is a negative enterprise value stock here in i3investors:

http://klse.i3investor.com/blogs/stock_pick_2014_kcchongnz/43763.jsp

It was on 23rd December 2013, or about 6 moths ago. Its price was RM1.20 then. Now after 6 months, its share price closes at RM1.45 today on 4th July 2014, an auspicious day.

What is the increase in price? 25 sen, or 20.8%, just about 6 months, or annualized of 41%! In the same period, KLSE rose from 1833 to 1885, or just 2.8%.

So Danny chai, what is wrong with my pick on Kuchai on 23rd December 2013? Please elaborate.

A lot of people was saying why Pintaras horde so much cash in equity investment and why not return to shareholders, although Pintaras have been paying good dividends all these years.

The recent procurement of some big projects and the withdrawal of cash from investment confirm my doubts, I think. They already intend to grow its business and using the money for purchasing new plants and equipment for the forthcoming big projects.

I would consider this as a very good capital allocation of the part of the management as it would enhance future earnings. Bored piling and diaphragm wall plant and equipment are expensive stuff.

Posted by Pak Lah > Jun 30, 2014 05:56 AM | Report Abuse

KC, thanks for the reply. One more question, I’m interested to know how to spread your portfolio? Say your fund is RM1mil and you are buying into 10 stocks. Do you put 100k into each stock?

Clearly your investment strategy is able to consistently yield the impressive return. That cannot be due to luck or coincidences.

After “trips” to your postings, many would naturally be feeling inspired to learn more, and I think this is just scratching the surface. Be that as it may, it really changes the way we are doing things now.

I’m determined to make sure that all the pieces are there and all the engines are firing in the right direction. I look forward to participating your investment course this July.


Pak Lah,
Try Kelly's Formula for your portfolio allocation which I have talked about in i3. Or you can easily goggle it.

Posted by Intelligent Investor > Jun 30, 2014 12:06 AM | Report Abuse
Hi Mr Chong,
Thanks for your reply.
How about PTARAS? In view of the stock price risen so much on pass year, the EY is now < 15%. I am using 10-Jun-14 data (stock price 4.09) on my excel - http://intelligentinvestor8.blogspot.com/2014/06/magic-formula-on-financial-statement.html and the EY should be much lower based on latest closing price of 4.39.

Should a hunter move on from this stock and perform hunting on another context?

If you think the stock prices has risen too much above its fundamentals, yes move on to other stocks.

But remember EY or ROIC do not take into consideration of growth potential. I normally do not pay for growth expectation because it is just an expectation. But in Pintaras case, I think the growth potential is visible.

Posted by Pak Lah > Jun 29, 2014 11:15 PM | Report Abuse

KC, like others, I read the above with interest. I have a few questions.

(1) The magic formula suggests that a portfolio should exclude utility and financial stocks. Can you please share with us the reasons why the magic formula is not applicable to these stocks?

I GUESS UTILITY IS A HEAVY ASSET KIND OF BUSINESS AND HENCE LOW ROIC. FINANCIAL INSTITUTIONS HAVE VERY DIFFERENT BALANCE SHEET STRUCTURE WITH ASSETS AND LIABILITIES DIFFICULT TO SEPARATE AND IDENTIFY. VERY ARGUABLE IN COMPUTATION OF METRICS SUCH AS INVESTED CAPITAL, ENTERPRISE VALUE ETC.

(2) The performance of your portfolio is indeed impressive – Congrats! Do you follow the “Greenblatt’s ritual” in investing, i.e. accumulate 2-3 positions per month over a 12-month period, re-balance your portfolio once per year, selling losers one week before the year-mark and winners one week after the year mark, etc.?

THOSE ARE QUANTITATIVE APPROACH IN INVESTING. I ONLY MAKE USE THE PRINCIPLES OF MAGIC FORMULA SUCH AS HOW TO IDENTIFY GOOD COMPANIES WITH ROIC, AND CHEAP STOCKS WITH EARNINGS YIELD. SO I AM NOT FOLLOWING GREENBLLATT'S QUANTITATIVE APPROACH IN THE STRICT SENSE.

(3) What is the maximum level of debt in the balance sheet that is considered comfortable to investors?

DEBTS SHOULD NOT BE MORE THAN EQUITY.

(4) As per your description, the Earnings Yield = EBIT / Enterprise Value. Is the EY equivalent to the inverse of the P/E ratio? Please advise.

YES, EARNINGS YIELD IS THE INVERSE OF PE IF YOU ARE TALKING ABOUT JUST FOR EQUITY SHAREHOLDERS. GREENBLATT USES THE WHOLE FIRM, SO HE USES EBIT/EV AS EARNINGS YIELD WHICH WILL TAKE INTO CONSIDERATION OF DEBT HOLDERS TOO.

Posted by Intelligent Investor > Jun 29, 2014 05:01 PM | Report Abuse
Hi Mr Chong,
Do you plan to rebalance your portfolio now?
Will you plan to take some profit from the multi-baggers like Datasonic, Prestariang and Pintaras Jaya; and buy more on the laggard like Tien Wah and Haio?

I actually make use of the principles of Greenblatt magic formula to buy good companies at cheap price rather than following his quantitative approach in investing. I am a hunter rather than a farmer. I sell off those stocks which have risen fast in price and no longer having large margin of safety and buy new stocks which I think meeting my hunting criteria.

So I don't actually do the rebalancing required in Greenblatt's quantitative approach.

I have taken taken for Datasonic and Prestariang, both have risen in price too fast too soon way ahead of their fundamentals, in my opinion.

Haio is an interesting stock to look at now at the present price.

This type of article on Maemode or others attracts no interest here, and not in Bursa too. This type of thing comes with negative energy, no good . So they always say.

But this type of article in fact should be read by everyone aspired to be successful in investing, especially those newbies and those who do not know much about investing. Sorry and sad to say most punters in Bursa are.

Forget about reading from investment analysis how good a stock is for the time being. Forget about all those articles here shouting which stock to buy (including mine). Concentrate on reading these type of articles from M. A. Wind, from Ze Moolah etc. Learn a bit about financial statement analysis and interpretations. You will avoid most of these type of pitfalls, like Maemode, Transmile, and many existing hot stocks now. Seriously.

What can you see the "normal" thingy here?
1) Very high growth is number one, in revenue as well as earnings too.
2) Extreme low margin at 3%
3) Growing debts
4) Growing receivables
5) No cash flows, not even in cash flow from operations, don't talk about free cash flow, which is not highlight here.
6) Extreme low return of equity, and return of invested capitals.
7) Etc

The red flags were everywhere. Why few people see them? Most can't even read simple financial statements, and don't even care about financial statements. Stock "investing" is just a piece of paper with $ sign, up or down.

Avoiding investment pitfalls is prerequisite for any success in Bursa.

Sorry ah, a bit "looso".

Posted by Pak Lah > Jun 23, 2014 06:58 AM | Report Abuse
Hi kcchongnz,
I totally agree with you that what is prescribed in the text book is not practical in real life, i.e. seeing/making a trip to the companies we want to invest in would not come to fruition. Even if the management is willing to meet up, they may just talk the things we want to listen, growth stories may be fabricated to entice us, which is very dangerous. We may have already put in a small amount of money into the company. After the meeting, we may decide to buy the story and put in a larger amount of money. As an analogy, we were trapped in a small pit, we jumped out from this small pit, and ended in a deeper pit.

Relying on annual reports is one of the realistic ways to make an investment decision. Declaration of dividends is an endorsement that they actually make money. Good management would only do things that they are good at. I prefer to companies that are growing organically. Any acquisition (in organic growth) should be at least 60% similar to the businesses they are now running. Recent news on water company Salcon venturing into Broadband, citing the needs for diversifications. Broadband and water works have zero similarity. If I have owned Salcon shares, I would have run away upon hearing this news.

My personal experience in corporate world taught me many things. A crook will always remain as a crook. They are not going to repent even you have given them another 10 years to do so. Yes, we can only trust those with good track record!


ME: Every sentence above makes plenty of sense. With this type of mindset in investing, you would avoid most of the pitfalls in investing.

After avoiding these pitfalls, your investing battle is already half won. You don't need to be a genius to be successful in investing.

Posted by Pak Lah > Jun 23, 2014 05:47 AM | Report Abuse
Hi kcchongnz. You have rightly pointed out that many retailers are ignorant of investing – that include myself. I have started to appreciate “value investing”, and the trading experiences you have been sharing with us in the i3investor have benefitted many immensely – thank you. Learning this isn’t easy, and, for me, that is a long way from here. I’m determined to pick up the knowledge at my own pace.

"I have started to appreciate “value investing”"

That to me is the great mindset you have for building wealth for retirement.

In a paper titled “The Super Investors of Graham and Doddsville”, Warren Buffet showed the track records of each of nine disciples of Benjamin Graham showing that they all generated annual compounded returns of between 18% and 29% over track records lasting between 14 to 30 years. Please read here:

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

All of us know that Ben Graham and his most famous disciple, Warren Buffet, and the other nine disciples are all value investors who have earned extra-ordinary return from the market over a long period of time.

Can someone name me some other investors who have the same achievement or even close to those people above following other strategies besides value investing?

Posted by stockraider > Jun 22, 2014 07:51 PM | Report Abuse

Definitely CO B is has the best value loh.........!!
In fact it offer the greatest margin of safety this time.........!!
CO A more expensive.....but still investable compare with the industry norm loh.........!!

The measurement given by KC..........raider think is good......but i notice......something is lacking.....!! DIVIDEND YIELD ??

Raider will bet big on B.......if get dividend yield above 4% pa.!!
But raider will be cautious.............if B no dividend loh...!!


Stockraider is well respected as a value investor here. I respect him too. However, I wish Stockraider can have a second thorough read of my article above and provide his opinion.

Ragarding if company pays dividend or not I think it is immaterial. If you read my article thoroughly, you may understand why I say so.

Posted by Pak Lah > Jun 23, 2014 11:20 AM | Report Abuse

Thanks kcchongnz, please provide your email address. I'll be in contact with you. Thanks.

ckc14invest@gmail.com

Posted by vnewee > Jun 22, 2014 12:17 AM | Report Abuse

Hi kcchongnz, please email me details of your course. thank you.


How to email you? No email address also.

Posted by Pak Lah > Jun 23, 2014 05:47 AM | Report Abuse

Like many forumers, I read your above posting with interest. Can you further describe the metrics of price-earnings growth, price-to-sales and price-to-CFFO? How to derive these metrics? What are their purpose/significance?

PEG was popularized by Peter Lynch. Basically a growth company should be accorded a higher PE. So he divide PE by the expected growth rate:

PEG = PE/Growth. for example a stock with PE ratio 10 and grow at 10%, its PEG is 10/10 or 1. Any PEG below 1.0 as you can see should be a good buy.

Some companies have no sales, so how to value? So some people come out with P/Sales ratio. So a P/S below 1.0 may have potential when the business turn around.

Net income is just an accounting earnings, not hard cash. CFFO is the net cash in less cash out in the financial year, hard cash. Some companies always make money every year, but every year no cash and have to get it from shareholders or banks. Many investors prefer CFFO than net income. So Price-to-CFFO is used. CFFO can get from the cash flow from operating activities from the cash flow statement.

Pak Lah, are you interested in my online investment course? You will learn all these stuffs plus a lot more, for a very meager amount of money, like peanut.

Posted by stockoperator > Jun 23, 2014 01:10 AM | Report Abuse

EY of 13% coupled with DY of 5% is definitely very very attractive. This is the Only metric that we should use If we like the Business.



I would give high marks for this comment.

Posted by sunztzhe > Jun 22, 2014 09:31 PM | Report Abuse

Kcchong,
Preservation of Capital is of paramount importance to me. I am willing to lose only 6.5% loss on my invested capital. With this objective, I always limit by loss to invest another time that will deliver the capital gains in future.

Now coming back to your two companies, I would take note of the two financial performance info but would rather focus on trying to understand the mindset of the driver of the two companies.

I will invest in any of the two companies on this important criteria:

Does the Driver of the company possess a strategic business mindset, manages by objectives, possess the people management skills that can drive up the value of the company business. Does he/she empowers the people and has the organizational skills to take the business to a much higher level? What is the current biz strategy, current biz model, future biz strategy, future biz model.

Too often, we rely on published accounts info but little do we know much about how the organization is being driven.

Sunztzhe,
thank you very much again on your valuable comments. I hope more others can give comments similar like that.

Now your stop loss is even more precise now, 6.5%, with a decimal point. Just curious of how often do you get in and out of a trade.

Yes of course, how an organization is being driven is one of important considerations to invest or not in a company. Sorry that we are now steering away from your stop loss and price movement thingy. Buffet and before that Philip Fisher, places a lot of emphasize on the credibility of the management. Fisher spent most of his time analyzing the management. My question is how you personally approach this? Do you mean meeting them, drink with them and find out their plans etc?

For me I am no Fisher nor Buffet. I have no such luxury. Management of the company won't talk to me before I invest in their companies, even if I kneel down and beg to see them. But seriously I also don't have the time to do that if they invite me. What I do is to look through the past performance and see the actions of the management through the company's performance, their capital allocation, what they said and reported in their annual reports. Yeah I know I know, these are published old reports. But that is what the most I can do as I have explained.

If you look through all the analysis I made on company B above, to me I am very sure I can see through the management and I don't need to meet them. I got all my answers to your questions below:

Quote {Does the Driver of the company possess a strategic business mindset, manages by objectives, possess the people management skills that can drive up the value of the company business. Does he/she empowers the people and has the organizational skills to take the business to a much higher level? What is the current biz strategy, current biz model, future biz strategy, future biz model.} Unquote

Meeting them will be more of listening to bullshits, seriously. Sorry to try to get you to read in details what I said about the companies past performance.

Once again appreciate your above feedback very much.

Interesting comments from stockraider. How I wish if there are more people contribute their thoughts here.

sunztzhe,

Thanks for your comments. Yes I can see that your investment strategy is completely different from what I have written.

You see stocks as a piece of paper with Ringgit signs. RM up you hold or let your RM runs; RM down by 5% you cut half and down some more by 8% cut all. Good strategy!

But why 5% cut half, and 8% cut all. Ah never mind, I respect your investment strategy.

ksng0307,
I hope someone can tell us about the industry average from Bursa. I use the Reuters Financials which is more for US stocks.

emperor, recent years are on the left side. You are looking the other way

Posted by MrTigerShark > Jun 22, 2014 11:24 AM | Report Abuse

KCCHONGNZ, HAVE YOU PURPOSELY FORGET THAT YOU SAID CALVIN IS TRUSTWORTHY AND I AM WRONG????APOLOGISE TO ME NOW!!!!DO NOT BECOME A CHICKEN!!!!!!WAKAKAKAKAKAKA!!!!

Suddenly see this interesting posting.

Me apologize? To you? For what?

Let me be frank here. Calvin is a trustworthy person, I still think he is. He has contributed a lot more than a lot of people here. That includes you, no doubt. He was misled by the previous director from PMCorp I think. He over promote PMCorp, that I agree. I also think PMCorp has some credibility issues.

Calvin has certain investing philosophies, which I think i s much better than many, who has not a single clue about investing, except speculating. His philosophy is also proven, not just talking cock.

"You will be surprised many “investors” think B is much cheaper than A because it is trading at 83 sen compared with RM4.85 of A, no kidding."

This was what I said in the article here. How true is it?

Sorry although you are my good friend, I didn't give you positive response when you asked me about EAH last time. I was just being frank. You better listened to the famous finance blogger who has been promoting his stock since years ago.

But yes, if EAH goes up by one sen, magic as you said. But what if it goes down by 3 sen? Also magic?

As whether you should buy company B or not, I also never made any recommendations. You have to judge yourself. If you are interested to know my opinion, please read my article again.

As how much to bet, use the famous Kelly formula. What do you think the probability of winning, and how much is the winning. Then bet your money according to the Kelly Formula.