Posted by kcchongnz > 2013-01-04 07:26 | Report Abuse

Every year at the beginning of the year, investment banks would recommend some stocks which they think would out-perform the market. Maybank, Public Bank, CIMB, TM, Tenaga, Digi, Axiata, Sime, AirAsia etc, the same ones are always on the lists. Nothing wrong with the recommendations as most of them would do well I believe. But the problems of these recommendations are: 1. Almost every investment bank is recommending the same companies, is there any chance that they would earn extra-ordinary return as everyone is chasing the same stocks? 2. Nearly all funds, local or foreign own them because of the liquidity which is good. But if every fund has to own them, won’t the price been chased up long ago to its intrinsic value? 3. Is there any conflict of interest with the investment banks who have funds holding these stocks, or have business dealing with the companies recommending these stocks? 4. Most companies recommended are big capitalized companies. What is the potential of high growth in order to achieve high return in the future? 5. These stocks are well known by everybody in the market, the institutions and retail players. What is the chance that they are selling at bargain price, and hence the chance of high return? Do you have any hidden gem which is tucked in some where undiscovered, unloved and institutional investors have no mandate or interest to buy them for the time being, and selling at bargain price. The chance to earn 50% return a year, a double bagger, five baggers or even ten baggers. An ugly duckling which would turn to a beautiful swan in the near future? Which one and why?