Just a bit of stuff I have been reading for leisure to todate. Opps, nothing related to finance!
WHEN it emerged that two experiments at CERN, the world's leading particle-physics laboratory on the outskirts of Geneva, are sending their most senior scientists to present the latest lowdown from the search for the Higgs particle on December 13th, speculations swirled. Will they at last confirm the existence of the boson, famously implicated in endowing other elementary particles with mass, which has eluded physicists for over 40 years? Might they say for sure that it does not exist, consigning the Standard Model, a framework which has governed particle physics for nearly as long on the assumption that it does, to the dustbin of dislodged theories—and sending their theoretically inclined colleagues back to the drawing board?
In the event, Fabiola Gianotti and Guido Tonelli, who lead ATLAS and CMS collaborations respectively, tried to sound a cautionary note. But the excitement during and after their presentations was palpable. For the two experiments have provided the most tantalising, though inconclusive, evidence to date for the existence of the sought-after particle, which Peter Higgs, a British physicist, plucked from mathematical formulae he had been working on in 1964 while trying to spruce up the Standard Model.
The model postulates the existence of 17 particles. Of these, 12 are fermions, like quarks (which coalesce into neutrons and protons in atomic nuclei), electrons (which whiz around these nuclei) and neutrinos (the ubiquitous, diaphanous beasts which have themselves been grabbing headlines of late by seemingly travelling faster than light). These make up ordinary matter. (All have corresponding anti-fermions which, logically, constitute antimatter.)
A further four particles, known as bosons, transmit three fundamental forces of nature. Familiar photons, particles of light, convey the electromagnetic force which holds electrons in orbit around atoms. Gluing quarks into protons and neutrons are appositely named gluons. Finally, W and Z bosons carry the weak nuclear force responsible for certain types of radioactive decay, as well as the hydrogen fusion which fuels stars. (How the fourth force, gravity, fits into all this remains arguably the greatest unsolved puzzle in physics.)
Physicists need the Higgs to make sense of the properties of these other 16 subatomic species. Without it, or something like it, they have no way to explain how fermions and some bosons get their mass. That, though, is not its main virtue. As far as the Standard Model is concerned, one could simply assume that mass is a fundamental property of particles with no need for further explanation. The rub is that a Higgs-less Standard Model predicts that all bosons should have no mass. Photons and gluons abide by this rule. The W and Z, by contrast, flout it, weighing almost as much as 100 protons.
Dr Higgs figured out (as did five other physicists around the same time) that this could be explained by postulating the existence of a field, later dubbed the Higgs field, which pervades all space. To understand how it works consider a ferromagnet which is heated up and then chilled. Each atom inside it acts as a minature magnet. At high temperatures, they wiggle around willy-nilly, not preferring any one direction to any other. The system is, in a sense, symmetrical: the milling atoms look the same whatever the observer’s vantage point. On reaching a particular temperature, though, they suddenly pick a preferred direction, creating a uniform magnetic field. They no longer look the same to different observers.
Something similar is believed to have happened with the Higgs field. At the scorching temparatures instants after the Big Bang it was in disarray and all elementary particles were oblivious to it. They were, in other words, massless. Moreover, photons, Ws and Zs all looked the same. There was no distinction between electromagnetism and the weak interaction. Instead, the three bosons conveyed the same “electroweak” force.
As the universe cooled, however, the pleasing uniformity suddenly collapsed: the Higgs field picked a direction. The W and Z feel the resulting field but the photon does not, just as some metals feel the pull of a ferromagnet and others don’t. Physicists say that on reaching a critical temperature, the symmetry between electromagnetic and weak force was spontaneously broken. The upshot may not look at all symmetrical, but it nonetheless reflects a deeper symmetry which just happens to be hidden from view in the low-temperature world. The Higgs boson emerges from the mathematical wizardry used to flesh out this symmetry-breaking mechanism.
Playing hard to get
Rolf-Dieter Heuer, the head of CERN, once quipped that physicists know everything about the Higgs apart from whether it exists. There are several reasons why the particle has proved so elusive. For a start, as Dr Heuer knows full well, his assertion is not strictly speaking true: theory is irritatingly noncommital about the particle’s mass. That means that searching for it involves looking across a wide range of possible masses. Past experiments at CERN's old accelerator, the Large Electron-Positron Collider (LEP), ruled out masses below 114 gigaelectron-volts (GeV), the esoteric unit particle physicists like to use. Anything higher, though, has been fair game.
Both ATLAS and CMS draw their subatomic cannon fodder from the LEP’s snazzier successor, the Large Hadron Collider (LHC), CERN’s (and the world’s) biggest particle accelerator. The LHC, housed in a 27km circular tunnel beneath the Franco-Swiss border, collides protons whizzing around it in opposite directions at a smidgen below the speed of light. The colliding protons’ kinetic energy is converted into other particles (since, as Einstein showed, energy and mass are one and the same). More precisely, each proton-proton collision involves a handful of quarks and gluons. It is only two of these that actually collide. The remaining lot cannot exist by themselves and decay to produce obfuscating detritus.
Moreover, the Higgs, should it emerge from such a collision, is unstable and immediately decays into less fleeting bits. ATLAS and CMS are honed to detect particular patterns of the less chimerical particles that the Higgs is believed to morph into. Unfortunately, the same patterns are not specific to the Higgs; other subatomic processes produce an abundance of identical telltales. So the experiments are not after a signature signal but a excess of such signals—a fraction of a percent or less—over what would be expected were the Higgs not real. Each having analysed some 380 trillion collisions recorded since the LHC got cracking in earnest in 2010, both have now seen just such an excess, around 125GeV.
At between one chance in 2,000 to one in 20 of being a fluke—depending on what statistical method is used—the findings fall short of the exacting one-in-3.5m target particle physicists have set themselves to claim discovery with confidence. But the fact that independent measurements of different possible decay patterns (especially extremely rare ones involving the production of two photons) from two separate experiments point to a mass of the putative Higgs within a few GeV of each other has led some physicists to claim that discovery is afoot.
Other see this as premature. Earlier this year both CMS and ATLAS presented alluring bumps around 130-140GeV but these evaporated on closer inspection. However, at the time they also observed smaller spikes around 125GeV which now appear to have grown into something statistically sturdier.
Importantly, ATLAS and CMS have also ruled out pretty much the entire range below 115GeV and between 130-600GeV, beyond which the LHC currently lacks the oomph to whip up anything of interest. This means that they can now focus their efforts on probing the interesting 15GeV-wide band. Dr Tonelli and Aleandro Nisati, who helps co-ordinate ATLAS’s research efforts, are wary of committing to a date by which a definitive answer to the Higgs question will be known. If all goes well, though, it could be as early as a few months from now.
Should the latest findings be confirmed, the next step will be to ascertain that the bump in question really is the sort of Higgs its eponymous conjurer envisaged. That will mean making precise measurements not just of its mass, but also of other properties like its assorted charges. If this ends in success, the Standard Model will finally be complete, and Dr Higgs will no doubt have earned his Nobel Prize, together with two other of the six physicists who came up with the same idea. (The Nobel committee’s rules prevent the prize being split more than three ways.)
A Higgs with a mass of 125GeV is also, in the words of John Ellis, a former head of theory at CERN, “just dandy” for a theory called supersymmetry which many see as the most viable successor to the Standard Model. It postulates the existence of heavier partners to all the known particles, and by doing so neatly explains many aspects of the physical reality the Standard Model has no purchase on. If a Higgs exists and weighs around 125GeV, then, the LHC ought, in principle, to be powerful enough to create the lighest supersymmetric particles.
Tuesday, December 13, 2011
Wednesday, September 14, 2011
Interpreting Analysts' Reports
I find the comments given below quite useful for a reference:-
Ritholtz culled the research on stock analysts from outside parties like McKinsey and Bianco Research and came to a few meaningful conclusions:
1. Analysts are almost always too optimistic. "Looking a year out, their earnings expectations are about twice the growth rate we've averaged," he says. So far pretty much in line with what we thought, but it gets better from here.
2. Analysts are "especially wrong at turning points as you head into a recession."
3. The "only time they weren't too bullish," Ritholtz notes, "was right in the middle of a recession."
Ritholtz culled the research on stock analysts from outside parties like McKinsey and Bianco Research and came to a few meaningful conclusions:
1. Analysts are almost always too optimistic. "Looking a year out, their earnings expectations are about twice the growth rate we've averaged," he says. So far pretty much in line with what we thought, but it gets better from here.
2. Analysts are "especially wrong at turning points as you head into a recession."
3. The "only time they weren't too bullish," Ritholtz notes, "was right in the middle of a recession."
Tuesday, September 13, 2011
Eurozone Crisis
I did some analysis. Currently the French CAX 40 is trading at around 2800+, which is around the level of March 18th 2009. At the lowest during the last 2008/2009 Financial Crisis, it was trading at 2519 in March 10th 2009. The only other time in the last ten years it is trading at such level was during the 2003 Sars crisis.
Also, I read a report that says that currently the three big French Banks (BNP, SocGen and Credit Agricole) are trading at valuations that will assume 100% percent writeoff of their Greek, Irish and Portuguese debts. For SocGen, it is also discounting their Spanish and Italian debts. However, I do not know if their holding on commercial papers for these countries are discounted too. It would be logical that in the event of a Greek default, a lot of companies are going to bankrupt and will affect the French banks holding private sector debts.
I would think the event of a Greek default is currently priced in for the French Banks and I suspect the German Banks too. However, the effect of a contagion effect is hard to estimate as the EU todate has not demonstrated the ability to act with a single-mindedness like the Fed and US Treasury during a crisis.
Also, I read a report that says that currently the three big French Banks (BNP, SocGen and Credit Agricole) are trading at valuations that will assume 100% percent writeoff of their Greek, Irish and Portuguese debts. For SocGen, it is also discounting their Spanish and Italian debts. However, I do not know if their holding on commercial papers for these countries are discounted too. It would be logical that in the event of a Greek default, a lot of companies are going to bankrupt and will affect the French banks holding private sector debts.
I would think the event of a Greek default is currently priced in for the French Banks and I suspect the German Banks too. However, the effect of a contagion effect is hard to estimate as the EU todate has not demonstrated the ability to act with a single-mindedness like the Fed and US Treasury during a crisis.
Tuesday, September 6, 2011
Looking for Signs of an Impending Recession
There are two key problems facing the global economy right now that is generating a lot of uncertainty and fear in the market. One is the prospect of a impending recession in the US and second is the crisis in the eurozone.
Will there be a recession in the US? I am looking for signs of financial stress, slump in consumer spending, spike in unemployment and deacceleration in business activities. I do not yet find any signs of these as yet though signs of a slowdown to a grinding halt is pretty clear. A major jolt may bring things down to negative but is not a definite.
Will there be a recession in the US? I am looking for signs of financial stress, slump in consumer spending, spike in unemployment and deacceleration in business activities. I do not yet find any signs of these as yet though signs of a slowdown to a grinding halt is pretty clear. A major jolt may bring things down to negative but is not a definite.
Tuesday, August 30, 2011
August Summary
This is a hyperbolic month. It can be painful to see how your portfolio shrink rapidly in size just over a couple of days. However, I did not sell anything but did a bit of trading which I typically seldom do. Leverage on the downtrend to make some small investments into SembCorp and Capitaland.
However, on the plus side, the dividends I got for this month is pretty good. I had dividends for the following counters this month:-
KeppelCorp
SIA
SATS
K-Green
SingTel
SuntecReit
FirstReit
StarHill
LMIR
SBSTransit
CitySpring
SingPost
However, on the plus side, the dividends I got for this month is pretty good. I had dividends for the following counters this month:-
KeppelCorp
SIA
SATS
K-Green
SingTel
SuntecReit
FirstReit
StarHill
LMIR
SBSTransit
CitySpring
SingPost
Buffet'S Advantage
This is a good article that remind us that you may read as much as you want about financial guru like Buffet but ultimately you just cannot imitate him blindly. With GIC backing, Tony Tan tried but without similar success though.
Warren Buffett is renowned as America's best investor. He's a grandfatherly guy who lives in a modest house in Omaha, Neb. and only invests in everyday companies that he can understand. He is friends with Bill Gates, but never invested in Microsoft or any other Internet company.
Buffett's technique is simple. He finds a good company, invests at a bargain price, and then rides the company to greater success. He's made millions in Coca Cola, American Express, Wells Fargo, and the Washington Post. And he makes it look so easy that anyone could do it. But it's extremely unlikely that you will be able to match Buffett's level of success, even if you pick the same investments he does.
Back in 2008, during the height of the financial crisis, Warren Buffet made a highly publicized investment in the Wall Street firm Goldman Sachs. Buffett was buying when everyone else was panicking, and as a result many experts thought he was getting into a top company at a discount price.
You, too, could have invested in Goldman Sachs in 2008. But here's the difference between you and Buffett. If you had an extra $12,000, you could have purchased 100 shares of Goldman common stock at $120 a share. Considering that Goldman had been worth over $200 a share the year before, you might have thought you were getting a pretty good discount. You also would be receiving the Goldman dividend of $1.40 a share, a rate of just over 1 percent.
But Buffett had more than $12,000 to invest. He had $5 billion. So he negotiated a much better deal. He bought preferred stock that came with a special dividend. Instead of 1 percent, he negotiated a 10 percent dividend. So now every year he receives a check for $500 million. Then, only after he gets paid, do common stockholders get their paltry 1 percent.
So now, three years later, how have we done? Goldman is selling at roughly $110 a share, slightly below its 2008 price. If you had invested with Buffett, you would have lost about $1,000. Buffett's lost some capital too, but he's collected $500 million a year in his special dividend.
Buffett made a similar deal with General Electric. In 2008 he bought $3 billion in preferred shares with a 10 percent dividend. But you wouldn't have done well to follow him. The stock was selling at around $21 a share in the fall of 2008. Now it's running between $15 and $16, a loss of over 20 percent. But remember, unlike regular investors, Buffett's been collecting that 10 percent dividend. He's still ahead of the game.
Now Buffett is investing in beleaguered Bank of America. He invested $5 billion in a special preferred stock and will be getting a 6 percent dividend, while the regular stock you can buy pays less than 1 percent. Now I don't know whether Bank of America is a good deal at current prices. Maybe it is. But the point is, if you buy now, you're not getting the same terms as Buffett. You're just pumping money into his dividend payment and hoping for the best.
Warren Buffett is renowned as America's best investor. He's a grandfatherly guy who lives in a modest house in Omaha, Neb. and only invests in everyday companies that he can understand. He is friends with Bill Gates, but never invested in Microsoft or any other Internet company.
Buffett's technique is simple. He finds a good company, invests at a bargain price, and then rides the company to greater success. He's made millions in Coca Cola, American Express, Wells Fargo, and the Washington Post. And he makes it look so easy that anyone could do it. But it's extremely unlikely that you will be able to match Buffett's level of success, even if you pick the same investments he does.
Back in 2008, during the height of the financial crisis, Warren Buffet made a highly publicized investment in the Wall Street firm Goldman Sachs. Buffett was buying when everyone else was panicking, and as a result many experts thought he was getting into a top company at a discount price.
You, too, could have invested in Goldman Sachs in 2008. But here's the difference between you and Buffett. If you had an extra $12,000, you could have purchased 100 shares of Goldman common stock at $120 a share. Considering that Goldman had been worth over $200 a share the year before, you might have thought you were getting a pretty good discount. You also would be receiving the Goldman dividend of $1.40 a share, a rate of just over 1 percent.
But Buffett had more than $12,000 to invest. He had $5 billion. So he negotiated a much better deal. He bought preferred stock that came with a special dividend. Instead of 1 percent, he negotiated a 10 percent dividend. So now every year he receives a check for $500 million. Then, only after he gets paid, do common stockholders get their paltry 1 percent.
So now, three years later, how have we done? Goldman is selling at roughly $110 a share, slightly below its 2008 price. If you had invested with Buffett, you would have lost about $1,000. Buffett's lost some capital too, but he's collected $500 million a year in his special dividend.
Buffett made a similar deal with General Electric. In 2008 he bought $3 billion in preferred shares with a 10 percent dividend. But you wouldn't have done well to follow him. The stock was selling at around $21 a share in the fall of 2008. Now it's running between $15 and $16, a loss of over 20 percent. But remember, unlike regular investors, Buffett's been collecting that 10 percent dividend. He's still ahead of the game.
Now Buffett is investing in beleaguered Bank of America. He invested $5 billion in a special preferred stock and will be getting a 6 percent dividend, while the regular stock you can buy pays less than 1 percent. Now I don't know whether Bank of America is a good deal at current prices. Maybe it is. But the point is, if you buy now, you're not getting the same terms as Buffett. You're just pumping money into his dividend payment and hoping for the best.
Monday, August 15, 2011
Buffet's Suggestion
Just come across an article from Buffet which I totally agree. We, in Singapore should do the same to foster a sense of social cohesion and prevent us from turning into a tax refuge for the super-rich else where.
Here is a segment extract:-
"For those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate. "
Here is a segment extract:-
"For those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate. "
Thursday, August 4, 2011
Panic???
The Dow, S&P, Dax, FTSE, CAX all sank yesterday. This morning, the Asian indexes are all in the red.
I am not going to do anything for this period. No buy or sell. I made some bad calls with SIA and SAT recently but other than that most of my portfolio are profitable todate. These are the times I start to appreciate the defensive stocks in my portfolio.
US stocks plunged because they investors think that a recession may be looming. There is no liquidity nor credit crisis at this stage. I have no exposure to stocks doing a lot of businesses in US or US denominated dollar stock. So, I am not particular worried. A slowdown in US ultimately will affect Asia but the percentage consumption of US relative to the rest of the world are going down year by year.
Ten years from now, it will be a really different world, I believe. If there are no major unforseen events, the shift of economic center of gravity towards will be even more evident.
For Europe, the major fear is that the banks in Germany, France and peripheral region may be hit with the bad loans given to the high risk countries. This is largely an european issue though some American banks may get hit is spain or italy get dragged in. Again, I do not think the local banks are exposed to the bad loans but may take some indirect hit. In any case, I do not think the impact will be that large compare to what see in 2008/2009 where nobody really know what going on. What is going on is that the uneconomic parts of europe have to adjust their standards of living relative to the rest of the world, albeit painful.
Yess, these are times that people get nervous (including me) but I am going to stay on the sidelines. For most of my portfolio, I did not do any buy/sell since 2009. It is only the 10% of my portfolio that I trade sometimes.
I am not going to do anything for this period. No buy or sell. I made some bad calls with SIA and SAT recently but other than that most of my portfolio are profitable todate. These are the times I start to appreciate the defensive stocks in my portfolio.
US stocks plunged because they investors think that a recession may be looming. There is no liquidity nor credit crisis at this stage. I have no exposure to stocks doing a lot of businesses in US or US denominated dollar stock. So, I am not particular worried. A slowdown in US ultimately will affect Asia but the percentage consumption of US relative to the rest of the world are going down year by year.
Ten years from now, it will be a really different world, I believe. If there are no major unforseen events, the shift of economic center of gravity towards will be even more evident.
For Europe, the major fear is that the banks in Germany, France and peripheral region may be hit with the bad loans given to the high risk countries. This is largely an european issue though some American banks may get hit is spain or italy get dragged in. Again, I do not think the local banks are exposed to the bad loans but may take some indirect hit. In any case, I do not think the impact will be that large compare to what see in 2008/2009 where nobody really know what going on. What is going on is that the uneconomic parts of europe have to adjust their standards of living relative to the rest of the world, albeit painful.
Yess, these are times that people get nervous (including me) but I am going to stay on the sidelines. For most of my portfolio, I did not do any buy/sell since 2009. It is only the 10% of my portfolio that I trade sometimes.
Tuesday, July 19, 2011
K-Green Q2FY2011
Key Figures
EPS (1H FY2011) = 1.26 cents
DPU - 3.13 cents
NAV (as at 30th June 2011) =$1.13
Net Assets = $708,798,000
Nbr of Shares = 629M (approx)
The key metric I monitor for K-Green is really NAV besides the DPU.If NAV deteriorates excessively, it signal trouble.
EPS (1H FY2011) = 1.26 cents
DPU - 3.13 cents
NAV (as at 30th June 2011) =$1.13
Net Assets = $708,798,000
Nbr of Shares = 629M (approx)
The key metric I monitor for K-Green is really NAV besides the DPU.If NAV deteriorates excessively, it signal trouble.
SMRT & SBS - Excessive Profits??
Recently, an application for a fare hike of up to 2.8% has been submitted jointly by SMRT and SBS to the PTC for consideration and approval. Not unexpectedly, there is a widespread outcry especially in the online world against such a move. It smacks of excessive profiteering on the part of the operators at the expense of the commuters. The WP, though Gerard Giam has launched a much lauded criticism against the move and reiterate his call for a nationalised transport operator operating solely based on cost recovery and certain efficiency KPI metrics. A key cornerstone of his argument is the currently excessive profits made by SMRT and SBS which could be used to improve services and reduce fares.The question really is his argument logical and implementable??
Currently, SMRT and SBS made a net profit of $162M and $54M repectively in 2010. If you look at the profit per trip, i did a rough calculation and it came up to around 0.18 cents and 0.054 cents respectively. A closer examination of SMRT balance sheet reveal that they actually made a loss on their bus and LRT operation. Additionally, a large segment of the profit actually came though renting and advertising. If you strip these elements away, the profit per trip for SMRT is actually around 0.12cents. I suspect the same logic apply for SBS, albeit at a smaller scale. So, we have the following:-
SMRT (profit per trip, 2010 est) = 0.12 cents
SBS (profit per trip, 2010 est) = 0.05 cents
Firstly just by looking at the numbers, I do not think these are excessive figures to look at, especially when the operators need to reserve a certain of the profit dor future maintainence and upgrade works. For SMRT crucially, if they had not gone into renting and advertising agressively, the profit per trip may even be flat or negative in view of the much higher margin derive from renting and advertising.
If we go by the WP suggestion of a nationalised transport operator with the current efficiency and cost structure, I am not convinced we can do better on cost per trip basis. More likely, a nationalised transport operator without a profit driven motivator will not likely to pursue alternative revenue streams to subsize the commuters.
Currently, SMRT and SBS made a net profit of $162M and $54M repectively in 2010. If you look at the profit per trip, i did a rough calculation and it came up to around 0.18 cents and 0.054 cents respectively. A closer examination of SMRT balance sheet reveal that they actually made a loss on their bus and LRT operation. Additionally, a large segment of the profit actually came though renting and advertising. If you strip these elements away, the profit per trip for SMRT is actually around 0.12cents. I suspect the same logic apply for SBS, albeit at a smaller scale. So, we have the following:-
SMRT (profit per trip, 2010 est) = 0.12 cents
SBS (profit per trip, 2010 est) = 0.05 cents
Firstly just by looking at the numbers, I do not think these are excessive figures to look at, especially when the operators need to reserve a certain of the profit dor future maintainence and upgrade works. For SMRT crucially, if they had not gone into renting and advertising agressively, the profit per trip may even be flat or negative in view of the much higher margin derive from renting and advertising.
If we go by the WP suggestion of a nationalised transport operator with the current efficiency and cost structure, I am not convinced we can do better on cost per trip basis. More likely, a nationalised transport operator without a profit driven motivator will not likely to pursue alternative revenue streams to subsize the commuters.
Thursday, July 14, 2011
Eurozone Crisis
Lately, I have been doing some active reading into the Eurozone Crisis. Why should I be interested as I am barely exposed to the economic and monetary activities that happen over there. The short answer is that it will have significant impact with some violent swing on my portfolio valuation if the crisis escalate. I am not new to the unfolding of the unravelling of the economies on the southern peripheral of Europe having seen how it erupted in last June. I like to speculate on two key questions:-
1) Will Greece default? I think Greece will ultimately default as the debt relative to GDP is too large, the economy is contracting aggravated by austerity measures and a basically uncompetitive economy. The Greeks had too much of a good time for the most part of the earlier decade upon their entry in the Eurozone and now they are paying the price. I hope the EU will be able to engineer an orderly default to contain the spread of the crisis. Is this bad for us? Yes, it will shake confidence in the short run but I do not think the local banks are exposed to Euro bonds ie specifically Greek bonds. I still have the scenario of the Dubai default firmly imprinted on my mind. DBS was affected but not too a large extent. The Greek, French and German banks will have to borne the bulk of the haircut.
2) Will it spread to Italy and Spain? If these two are hit, I think there will be a big crisis on hand. For Spain, I really do not yet have a feeling on how things will turn out. But for Italy, I have a strong conviction they will get through. Italy deficit is relative small (about 4%), the debt to GDP still manageable though large, the banks have not gotten into the property bubble and more than half the debt are held by the Italian themselves. With some demonstrated will, Italy should be able to bring down the deficit, it should be able to scrap through. Italy for the record has been grinding on unspectacularly for decades plaqued by uneven growth rates between the North and South.
As a side note, the debt limit negotitation is basically a game of political brinkmanship play mainly by the Republicans. You get to see how stupid and ridiculous Americans can be!!!Maybe,you can say the same thing about us too.
1) Will Greece default? I think Greece will ultimately default as the debt relative to GDP is too large, the economy is contracting aggravated by austerity measures and a basically uncompetitive economy. The Greeks had too much of a good time for the most part of the earlier decade upon their entry in the Eurozone and now they are paying the price. I hope the EU will be able to engineer an orderly default to contain the spread of the crisis. Is this bad for us? Yes, it will shake confidence in the short run but I do not think the local banks are exposed to Euro bonds ie specifically Greek bonds. I still have the scenario of the Dubai default firmly imprinted on my mind. DBS was affected but not too a large extent. The Greek, French and German banks will have to borne the bulk of the haircut.
2) Will it spread to Italy and Spain? If these two are hit, I think there will be a big crisis on hand. For Spain, I really do not yet have a feeling on how things will turn out. But for Italy, I have a strong conviction they will get through. Italy deficit is relative small (about 4%), the debt to GDP still manageable though large, the banks have not gotten into the property bubble and more than half the debt are held by the Italian themselves. With some demonstrated will, Italy should be able to bring down the deficit, it should be able to scrap through. Italy for the record has been grinding on unspectacularly for decades plaqued by uneven growth rates between the North and South.
As a side note, the debt limit negotitation is basically a game of political brinkmanship play mainly by the Republicans. You get to see how stupid and ridiculous Americans can be!!!Maybe,you can say the same thing about us too.
Tuesday, July 12, 2011
SPH 3Q2011
Some numbers that I keep track:-
EPS = 7cents
NPAT = 115M
NAV = $1.33
EPS(YTD) = 18 cents
Total Liabilitiess = 1.761B
Remarks:-
1) Print Classified decreased by $3.2M (1.6%) mainly due to lower classified ads. Circulation revenue steady at $53.8M
2) Rental rev from Clementi Mall for 3Q2011 is $6.0M
EPS = 7cents
NPAT = 115M
NAV = $1.33
EPS(YTD) = 18 cents
Total Liabilitiess = 1.761B
Remarks:-
1) Print Classified decreased by $3.2M (1.6%) mainly due to lower classified ads. Circulation revenue steady at $53.8M
2) Rental rev from Clementi Mall for 3Q2011 is $6.0M
Tuesday, July 5, 2011
DBS Script Dividend
Based on the recent announcement on the SGX, a total of 33,634,860 shares were issued for the recent script dividend. I did a quick calculation and derive that the take up rate for the script dividend is above 70% at a price of$13.83cts.
I did not opt for script dividend this time.
I did not opt for script dividend this time.
Monday, July 4, 2011
Cityspring
Cityspring has recently announced a renounceable 11 for 20 rights issues at a discounted price of 39cts. This is the second rights issue within 2 years upon IPO. As I am vested into Cityspring mainly after the first rights issue, I like to sketch up the overall financial health of Cityspring while contemplating whether I should take up the proposed rights.
Cityspring IPO in Feb 2007 at a price of 89cents with a total of 450 million shares. Temasek inital stake is about 28.5%. A sum of $286M was raised at IPO. At that stage Cityspring will have a $128M term loan at SingSpring level and a $370M term loan at Cityspring level.
In July 2007, it acquired Basslink for a sum of $A1,175M (SG$1500M approx). It was financed 75% with debt raising three bonds, a A$486 floating rate bond due 2015 and two A$190 fixed rate capital indexed bonds due 2017 and 2019 respectively. The equity portion amount to $375M.
In Nov 2009, it issued a 1 for 1 rights price at 48cts. The proceeds went mainly to partially repay the Cityspring loan down to $142M. Net proceeds from rights is $227.5M with a total number of 489,965,504 rights issued. TERP was at 63cents
With the current rights call this July 2011, it is raising gross proceeds of $210M of which A$145M (SG$190 approx) will be utilised to reduce the A$ denominated bonds over time. The total number of shares after the rights issue will be 1,520m shares. TERP will be at 48cents
Assuming the rights go through, the total amount of cash raised from shareholders upon IPO is about
$286M + $227.5M + $210M = $723.5M. The total number of shares will be
As at May 2011, net asset is at $357M. Net asset after ongoing rights will be at $567M. Total borrowing after paring down the A$ denominated debt is $1.2B. Total asset as at May 2011 is $2.15B. Currently, assets are split evenly between Singapore and Australia.
Asssuming I get the dps for the quarter ended June 2011, I will have gotten 8 * 1.05 = 84 cents in total counting after the first right issue with an average purchased price/shr at 58.7 cents including commissions. My net cost will about 50cents off accumulated dps which is close to expected TERP of 48 cents.
I conclude that I will probably make a small overall gain on cityspring if I take up the rights but definitely NOT the 7% dividend I was expecting from it. From a positive note, Cityspring will significantly pare down its borrowing from a unsustainable position after the two rights issues.
The problem with CitySpring to date is that it overpaid for Basslink even though non-recourse financing arrangements are in place to protect the trust in case of Basslink failing. The group of investors who suffer the most are those that went in at 89 cents at IPO and higher. For those who went in after the first right issues, they probably break even, eke out a small gain or sustain a small loss. I am actually optimistic for those who are coming in now or planning to come in just after the second rights issue as the initial investors have largely borned the overpayment at Basslink.
I know a lot of investors are disappointed with CitySpring especially the ones that went in at IPO. I am also disappointed that I did not get my expected 7% dps to date. That is life. But I think I going to be emotionally detached and not divest hastily at the current price at 50.5 cents but to go for for the rights instead as I see significant improvement in its borrowing situation compare to what is immediately after the Basslink purchase. It is good news that the former CEO has left (maybe ask to leave if I may speculate) since he is largely responsible for Cityspring initially excesssive leverage model.
Also the trust management hefty initial performance bonus is given in terms of shares which may have been diluted by now to something more reasonable.
Cityspring IPO in Feb 2007 at a price of 89cents with a total of 450 million shares. Temasek inital stake is about 28.5%. A sum of $286M was raised at IPO. At that stage Cityspring will have a $128M term loan at SingSpring level and a $370M term loan at Cityspring level.
In July 2007, it acquired Basslink for a sum of $A1,175M (SG$1500M approx). It was financed 75% with debt raising three bonds, a A$486 floating rate bond due 2015 and two A$190 fixed rate capital indexed bonds due 2017 and 2019 respectively. The equity portion amount to $375M.
In Nov 2009, it issued a 1 for 1 rights price at 48cts. The proceeds went mainly to partially repay the Cityspring loan down to $142M. Net proceeds from rights is $227.5M with a total number of 489,965,504 rights issued. TERP was at 63cents
With the current rights call this July 2011, it is raising gross proceeds of $210M of which A$145M (SG$190 approx) will be utilised to reduce the A$ denominated bonds over time. The total number of shares after the rights issue will be 1,520m shares. TERP will be at 48cents
Assuming the rights go through, the total amount of cash raised from shareholders upon IPO is about
$286M + $227.5M + $210M = $723.5M. The total number of shares will be
As at May 2011, net asset is at $357M. Net asset after ongoing rights will be at $567M. Total borrowing after paring down the A$ denominated debt is $1.2B. Total asset as at May 2011 is $2.15B. Currently, assets are split evenly between Singapore and Australia.
Asssuming I get the dps for the quarter ended June 2011, I will have gotten 8 * 1.05 = 84 cents in total counting after the first right issue with an average purchased price/shr at 58.7 cents including commissions. My net cost will about 50cents off accumulated dps which is close to expected TERP of 48 cents.
I conclude that I will probably make a small overall gain on cityspring if I take up the rights but definitely NOT the 7% dividend I was expecting from it. From a positive note, Cityspring will significantly pare down its borrowing from a unsustainable position after the two rights issues.
The problem with CitySpring to date is that it overpaid for Basslink even though non-recourse financing arrangements are in place to protect the trust in case of Basslink failing. The group of investors who suffer the most are those that went in at 89 cents at IPO and higher. For those who went in after the first right issues, they probably break even, eke out a small gain or sustain a small loss. I am actually optimistic for those who are coming in now or planning to come in just after the second rights issue as the initial investors have largely borned the overpayment at Basslink.
I know a lot of investors are disappointed with CitySpring especially the ones that went in at IPO. I am also disappointed that I did not get my expected 7% dps to date. That is life. But I think I going to be emotionally detached and not divest hastily at the current price at 50.5 cents but to go for for the rights instead as I see significant improvement in its borrowing situation compare to what is immediately after the Basslink purchase. It is good news that the former CEO has left (maybe ask to leave if I may speculate) since he is largely responsible for Cityspring initially excesssive leverage model.
Also the trust management hefty initial performance bonus is given in terms of shares which may have been diluted by now to something more reasonable.
Friday, June 3, 2011
Internet Boom 2.0
Nowadays, you hear about the IPO plans of online social sites like Linkedin, Groupon, Facebook, Twitter ... and Chinese copycat versions like RenRen, Tudou..
Now do you remember names like Ariba, CommerceOne, Broadvision, Vignette ... during the dotcom era in the late nineties ?
I am of the opinion that most of the social networking sites are ultimately not going to be able to make any significant amount of money to justify their lofty valuations. The story to tell in dotcom v1 is that as long as you get the eyeballs, you are ok, never mind about profits. The story for dotcom v2 seems to be about membership, as long as you can get a large number of active users, you are ok, never mind about how to generate income from these members.
My advice, the game is currently being played by the private bankers who try to get slice of the lucrative iPO business. By the time it get to the retail investors, holding those shares are the equivalent of holding live grenades on your hands. They are going to blow up in your faces.
Now do you remember names like Ariba, CommerceOne, Broadvision, Vignette ... during the dotcom era in the late nineties ?
I am of the opinion that most of the social networking sites are ultimately not going to be able to make any significant amount of money to justify their lofty valuations. The story to tell in dotcom v1 is that as long as you get the eyeballs, you are ok, never mind about profits. The story for dotcom v2 seems to be about membership, as long as you can get a large number of active users, you are ok, never mind about how to generate income from these members.
My advice, the game is currently being played by the private bankers who try to get slice of the lucrative iPO business. By the time it get to the retail investors, holding those shares are the equivalent of holding live grenades on your hands. They are going to blow up in your faces.
Thursday, June 2, 2011
Board Director Quality
I read with interest online comments about Yeo Guat Kwang, a ex-Chinese language teacher who is currently an MP in AMK GRC. Whilst I am not so much into politics and have no wish to comment on his exhaustive list of affiliations, I do notice that he is currently an independent director in 6 companies of which 5 of them are listed. One of them is United Enviro Tech, I company which I previously was scrutinizing for possible investment value (I did not invest ultimately as I tend to avoid companies that derives its revenue mostly in China with some exceptions).
Recently, because of the YGK saga, I take a closer look at the composition of the board. Besides YGK, there is a medical doctor Chong Weng Chiew who is a one-term MP in Tanjong Pagar who was left out rather abruptly in the 2006 elections.
Now I have nothing against these two men but I do have serious reservations in their ability to discharge their responsibilities and duties effectively to protect minority shareholders. Both unfortunately do not possess the requisite corporate background in the commercial arena to be independent directors, in my view.
I think they are just being hauled into the board to give some local texture to a largely PRC board. As such, I will avoid investing in these type of companies as I strongly believe credible independent directors are the minority shareholders first-line of defence against a corrupt management.
Recently, because of the YGK saga, I take a closer look at the composition of the board. Besides YGK, there is a medical doctor Chong Weng Chiew who is a one-term MP in Tanjong Pagar who was left out rather abruptly in the 2006 elections.
Now I have nothing against these two men but I do have serious reservations in their ability to discharge their responsibilities and duties effectively to protect minority shareholders. Both unfortunately do not possess the requisite corporate background in the commercial arena to be independent directors, in my view.
I think they are just being hauled into the board to give some local texture to a largely PRC board. As such, I will avoid investing in these type of companies as I strongly believe credible independent directors are the minority shareholders first-line of defence against a corrupt management.
Tuesday, May 31, 2011
Mehwah, Olam etc
I divested Mehwah and Olam recently making an average of more than 10% gains. May re-enter if there is a good opportunity. I had force myself to read the annual reports of both companies and to have some idea of their businesses.
Expecting dividends from the below in June
CMPH
StarHub
CitySpring
SP Ausnet
I am still deliberating whether to take up the script dividend for DBS for an offered price of $13.84.
Expecting dividends from the below in June
CMPH
StarHub
CitySpring
SP Ausnet
I am still deliberating whether to take up the script dividend for DBS for an offered price of $13.84.
Sunday, May 15, 2011
SATS
Some numbers based the the latest financials
EPS (FY2010/2011) - 17.4 cents
EPS (Q4 FY2010/2011) - 4.6 cents
NAV - $1.37
Debt/Equity Ratio - 0.12
Final Dividend - 6 cents
Special Dividend - 6 cents
Payout Ratio - 98.4%
EPS (FY2010/2011) - 17.4 cents
EPS (Q4 FY2010/2011) - 4.6 cents
NAV - $1.37
Debt/Equity Ratio - 0.12
Final Dividend - 6 cents
Special Dividend - 6 cents
Payout Ratio - 98.4%
Tuesday, May 10, 2011
NOL
I just read recently that Ng Yat Chung is slated to take over from Ron Widdows as CEO of NOL later part of the year. Mr Ng is from Temasek but I believe he has spent the most part of his working life in the SAF. In fact he was CDF and left SAF in 2007. I remember he gave a press interview soon after he joined Temsasek as MD for Portfolio Management during the Global Financial Crisis. Then, he defended the the investment by Temasek into Merrill Lynch by saying that the "jury is still out" when the value of the orginal investment plunged. Temasek subsequently divested all the holding in BOA (when Merrill Lynch was acquired by BOA) in the early part of 2009 at a substantial loss.
Without a deep understanding of the container business and the necessary commercial background, I find it a very awkward appointment. The shipping container business is highly cyclical and he may be just lucky to catch a "good" wind. Other than that, I do not forsee how he can bring NOL to the next stage.
Luckily, I have divested all my NOL shares months ago.
Without a deep understanding of the container business and the necessary commercial background, I find it a very awkward appointment. The shipping container business is highly cyclical and he may be just lucky to catch a "good" wind. Other than that, I do not forsee how he can bring NOL to the next stage.
Luckily, I have divested all my NOL shares months ago.
Monday, May 9, 2011
May 2011
The last two to three weeks have been hectic and exciting. Attended a few rallies to get a feel of the atmosphere. Now, it is back to business. Expect the following dividends in May 2011. I did not invest or divest after the recovery from massive earthquake in Japan
StarHub
KeppelCorp
SBSTransit
SPH
FirstReit
SuntecReit
AscendasIndia
StarHill Global
LMIR
SriTrang
Wilmar
StarHub
KeppelCorp
SBSTransit
SPH
FirstReit
SuntecReit
AscendasIndia
StarHill Global
LMIR
SriTrang
Wilmar
Wednesday, March 23, 2011
Seven Immutable Laws of Investing
I came across this in an article. Although I have came across this many times before, I still thought that it will be a good idea to put it in here so that I can constantly remind myself especially when my fingers get itchy.
I have loaded SIA, SriTrang and Mewah last week during the Fukushima nuclear scare. Also unloaded my SGS Bonds ssince I got the interest payment and the yield shot up recently. I will consider going in again if the yield drop to reasonable level.
The Seven Immutable Laws of Investing.
1. Always insist on a margin of safety
2. This time is never different
3. Be patient and wait for the fat pitch
4. Be contrarian
5. Risk is the permanent loss of capital, never a number
6. Be leery of leverage
7. Never invest in something you don’t understand
I have loaded SIA, SriTrang and Mewah last week during the Fukushima nuclear scare. Also unloaded my SGS Bonds ssince I got the interest payment and the yield shot up recently. I will consider going in again if the yield drop to reasonable level.
The Seven Immutable Laws of Investing.
1. Always insist on a margin of safety
2. This time is never different
3. Be patient and wait for the fat pitch
4. Be contrarian
5. Risk is the permanent loss of capital, never a number
6. Be leery of leverage
7. Never invest in something you don’t understand
Tuesday, March 1, 2011
Rearranging my Portfolio
Over the last eight weeks, I have taken the initiative to divest my investments in Capitaland and reinvest the returns into Wilmar, Olam and Oceanus.
I have come to view investment in property counters to be difficult in view of the fact that earnings are typically masked by large sum of revaluation gain. With the spectre of property price controls locally and in China, I decided to get out of this counter completely.
My investment in Wilmar has been less than timely as I currently suffering from a small paper loss but I firmly believe that I should be able to reap some benefits when the prices of oil seeds stablized at a profitable level for the manufacturer. I am starting to understand Wilmar business and I believe scale is of utmost importance in such an industry albeit a bit similar to OEM contract manufacturing where Foxconn emerges the clear winner. Wilmar do dabble recently in property development in China,but I believe this a side issue and will not be its major focus.
As for Olam, I basically took the opportunity of a bad analyst report that drive down prices to acquire it at a more reasonable. My timing is not perfect though. I particularly like Olam for what they are providing eg soft commodities against the spectre of increasing world population and rising comsumption patterns.
I made small investment in Oceanus (a counter which I investigated and reject previously) as I believe the price is now reasonable and the business model of
shifting to processed abalones make more sense to me. In any case, I am still hedging my bet on this one by making only a small investment at this stage.
All in all, I have built a portfolio of commodities related companies over the last 2 months by divesting away my property counter (Capitaland)
I am looking forward to receive dividends from the following this month:-
SGSBonds
UOB Pref Share
OCBC Pref Share
K-Green
LMIR
CitySpring
I have come to view investment in property counters to be difficult in view of the fact that earnings are typically masked by large sum of revaluation gain. With the spectre of property price controls locally and in China, I decided to get out of this counter completely.
My investment in Wilmar has been less than timely as I currently suffering from a small paper loss but I firmly believe that I should be able to reap some benefits when the prices of oil seeds stablized at a profitable level for the manufacturer. I am starting to understand Wilmar business and I believe scale is of utmost importance in such an industry albeit a bit similar to OEM contract manufacturing where Foxconn emerges the clear winner. Wilmar do dabble recently in property development in China,but I believe this a side issue and will not be its major focus.
As for Olam, I basically took the opportunity of a bad analyst report that drive down prices to acquire it at a more reasonable. My timing is not perfect though. I particularly like Olam for what they are providing eg soft commodities against the spectre of increasing world population and rising comsumption patterns.
I made small investment in Oceanus (a counter which I investigated and reject previously) as I believe the price is now reasonable and the business model of
shifting to processed abalones make more sense to me. In any case, I am still hedging my bet on this one by making only a small investment at this stage.
All in all, I have built a portfolio of commodities related companies over the last 2 months by divesting away my property counter (Capitaland)
I am looking forward to receive dividends from the following this month:-
SGSBonds
UOB Pref Share
OCBC Pref Share
K-Green
LMIR
CitySpring
Tuesday, January 18, 2011
K-Green
Key Statistics for FY2010
Profit After Tax (from date of listing to 31 Dec 2010) - $8.7million
EPU - 1.39cts
NAV - $1.16
DPU - 4.31cts
Annualized Distribution Yield - 7.9% (based on share price $1.07)
Adjusted NAV - $1.11 (excluding new units issued for Trust-Manager Fees and distribution payable)
Total Liability - $35.892 million
Trust Manager's Fees - $2.305 million (from date of listing to 31 Dec 2010)
Currently half of the Trust Manager Fees is paid in terms of issuing new units
Profit After Tax (from date of listing to 31 Dec 2010) - $8.7million
EPU - 1.39cts
NAV - $1.16
DPU - 4.31cts
Annualized Distribution Yield - 7.9% (based on share price $1.07)
Adjusted NAV - $1.11 (excluding new units issued for Trust-Manager Fees and distribution payable)
Total Liability - $35.892 million
Trust Manager's Fees - $2.305 million (from date of listing to 31 Dec 2010)
Currently half of the Trust Manager Fees is paid in terms of issuing new units
Friday, January 14, 2011
Property Cooling Measures
The government unveiled a spate of proprty cooling measures yesterday. It hit the Banks and Property counters. As I owned both DBS and Capitalland in my portfolio, I have also taken a hit.
But I am happy with the measures. With significant exposure to DBS, the last thing I want to see in SIngapore is a property bubble eventually wrecking the banks. If you look at Ireland or Spain, you see how bad that can be.
But I am happy with the measures. With significant exposure to DBS, the last thing I want to see in SIngapore is a property bubble eventually wrecking the banks. If you look at Ireland or Spain, you see how bad that can be.
SPH
SPH just released their Q1FY11 results. Net profit attributable to shareholders was at $102M (about 29.3% less than the corresponding period last year). This is expected because there is no more contribution from SKY@eleven.
However, I made some quick calculation that noticed that Net profit attributable to shareholders in Q4FY10 was only 75M. ( I believe there is no contribution from SKY@eleven for this period also).
So, things are not so bad as it may seems.
Net earnings per diluted share is 6 cents. Doing a linear projection for the whole year, it would be 24 cents per diluted share per year.
With rental income from Clementi Mall coming in at the later stage of the year, this may trend up a little. SPH probably have overpaid for Clementi Mall, but with interest rate at a record low and will stay low for a while, it will mitigate some of the mistakes.
However, I made some quick calculation that noticed that Net profit attributable to shareholders in Q4FY10 was only 75M. ( I believe there is no contribution from SKY@eleven for this period also).
So, things are not so bad as it may seems.
Net earnings per diluted share is 6 cents. Doing a linear projection for the whole year, it would be 24 cents per diluted share per year.
With rental income from Clementi Mall coming in at the later stage of the year, this may trend up a little. SPH probably have overpaid for Clementi Mall, but with interest rate at a record low and will stay low for a while, it will mitigate some of the mistakes.
Dividends
We all know that the mood of the typical investor can swing violently between extreme bullishness and despair. When one has magically (typically by accident rather than by deliberate choice) hit on a investment that return mutiple times on the original vested sum over a short period of time (eg buying OSIM when the price is low), there is a tendency to be carried away with how easy money can be made. Vice-versa, we often turn into despair when we see our invested counters plunging in value day after day. One of the way to smoothen over such period is really to devote a substantial portion of your investment into good quality stocks that give a decent dividend regularly. From example,
Berkshire Hathaway pays no dividend. However, yield-bearing companies still represent a major chunk of Buffett's portfolio. Aside from being leaders in their respective fields, Buffett positions including Coca-Cola, Proctor & Gamble and Johnson & Johnson are also notable dividend payers.
As we saw last year, distributions have become essential to navigating today's volatile economic climate. The constant reminders of economic turmoil facing both the U.S. and abroad can lead to unexpected shake ups and gut wrenching dips.
Consistent dividends can help alleviate some of this volatility, providing conservative investors with some comfort and confidence.
Having a large number of quality companies sharing the fruits of the success regularly with their investors also lead to a healthier and functional market, In China, despite the booming economy, the market is still at its doldrums because very few (less than 5%) of the companies pay any dividends at all. There is really no point in investing in such companies because whatever fruits of the success of these companies will eventually be swindled away or gambled on some foolish business expansions, if management consciously overlook investor interest over a long period of time.
My dividends for Jan 2011
Suntec Reit
Singtel
Berkshire Hathaway pays no dividend. However, yield-bearing companies still represent a major chunk of Buffett's portfolio. Aside from being leaders in their respective fields, Buffett positions including Coca-Cola
As we saw last year, distributions have become essential to navigating today's volatile economic climate. The constant reminders of economic turmoil facing both the U.S. and abroad can lead to unexpected shake ups and gut wrenching dips.
Consistent dividends can help alleviate some of this volatility, providing conservative investors with some comfort and confidence.
Having a large number of quality companies sharing the fruits of the success regularly with their investors also lead to a healthier and functional market, In China, despite the booming economy, the market is still at its doldrums because very few (less than 5%) of the companies pay any dividends at all. There is really no point in investing in such companies because whatever fruits of the success of these companies will eventually be swindled away or gambled on some foolish business expansions, if management consciously overlook investor interest over a long period of time.
My dividends for Jan 2011
Suntec Reit
Singtel
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