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.

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.

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.

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%

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.

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

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