Some Postings from Shareowl.com

Prof on Large Cap investing
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provocateur
Site Admin

Joined: 20 Jul 2005
Posts: 631

Posted: Tue Jun 13, 2006 1:35 pm Post subject:
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Too many Singaporeans prefer small cap than large and mid cap stocks. Never put more than 20% of portfolio in stocks with mkt cap of below $500m. Put at least 50% in stocks with above $3b market cap (and preferably half of that in giants with mkt cap of over $50b). Balance can be put in stocks with mkt cap between 500m and $5b.

That's why half of my money is in stocks like HSBC, Stanchart, Citigroup, Toyota. The other half are mostly in stocks like SIA Engg, Jardine C&C. Less than 10% are in small caps. Less than 2% are in covered warrants. But that's because I'm 58 years old. But even younger investors should not put over 30% in stocks with market cap under $500m.
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Prof on Dividend Investing
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provocateur
Site Admin

Joined: 20 Jul 2005
Posts: 631

Posted: Sun May 21, 2006 9:39 pm Post subject:
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Well, Vicom is too boring for me. I like Seow's analogy of a big fish in a small pond. (In a way, SPH is also a big fish in a small pond but it is trying very hard to look for opportunities outside Singapore but so far no big deals yet.)

The fact that the dividend yield is over 8% the PE is 9.6 is because the earnings growth rate is around 10% a year. It is as safe as SMRT and SingPost. If I'm safety conscious, I'd rather go for these 2 stocks because they are big cap and they also have the muscles and the brandname to regionalise.

Vicom's mkt cap is only $82.9m and it has been listed for many years and been around for at least 2 decades. Imagine, DMX is only about 4 years old and its mkt cap is already $431m.

My concept is this. If you go for small and mid cap, they go for high growth. If you are going for good dividend, then go for bigger cap stocks like SingPost and SMRT because they are safer and moreover there is also more potential for growth because they have the "infrastructure" to innovate and add new sources of revenue within Singapore and to search for opportunities to regionalise.

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Prof on Margin of Safety
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provocateur
Site Admin

Joined: 20 Jul 2005
Posts: 631

Posted: Fri May 12, 2006 2:09 pm Post subject:
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One indication of margin of safety is the the net tangible assets (NTA) per share. If share price is 45 cts and NTA is 40 cts, there is more margin of safety than if the NTA is only 20 cts. Raffles Edu trades at $2.60 but NTA is 7 cts. The margin of safety is extremely low if a crisis develops.

But NTA is always historical even if it is audited at end of last qtr. No one really knew the true NTA of CAO until it blew up publicly because the info was suppressed for many weeks. If CAO has announced to SGX after it lost $50m on oil futures, then investors knew that $50m of shareholders funds and the firm's NTA had been wiped out. But the announcement was made only after $550m of futures trading losses had been made and the shareholders equity became a big negative.

But margin of safety is more than just having an NTA that is not too far below the share price (or better still higher than share price like Hotel Grand Central). The degree of margin of safety is inversely related to the severity of the loss likely to be suffered by the investor in the short term if things go wrong and forecasts go down the drain.

For SMRT, margin of safety is very high but for volatile industries like Creative Tech, MediaRing and PacNet and even Pearl Energy and small bio-research companies that burn cash but have little revenues, margin of safety is not so good. For me, cut-loss is a great tool when investing in such companies. But sometimes, you can't even use the cut-loss tool -- like in the case of CAO. The suspension was immediate and you have no chance to sell.

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