1st Qtr 2018 : Dividend and Portfolio Update
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Is time to calculate our dividend income for 1st
Qtr 2018 as the financial result for most of the company should have been announced
by this time. The market has gone through like a “roller coaster “ ride in 1st
Qtr 2008 where it was down by almost 10% at one point and rebounded subsequently.
As I mentioned in my early blog post (here
), even with correction of 10-20% from the current high in the US market, I would
consider it still as “ expensive or rich in valuation “ and normal correction
in any market cycles.
Investor
Warren Buffett says good deals tough to find ( from
NewsDay.com)
Buffett is sitting on $116
billion of cash and bonds because he's struggled to find acquisitions at
sensible prices. And Buffett is unwilling to load up on debt to finance deals
at current prices.
In his annual letter to Berkshire shareholders on last Saturday,
Buffett lamented his inability to find big companies to buy and said his goal
is to make “one or more huge acquisitions” of non-insurance businesses to
bolster results at Berkshire. Buffett said his goal is to make 'one or more
huge acquisitions' of non-insurance businesses to bolster results at Berkshire.
Buffett also said finding things to buy at a “sensible
purchase price” has become a challenge and is a major reason Berkshire is awash
with US$116 billion of low-yielding cash and government bonds, whose average
maturity was 88 days as of the end of 2017.
With $116 Billions of cash & short term bonds/ treasuries
bill in hand which is about 22.4% of the total BERK’s market cap, I think it
makes sense for us to increase our war-chest to take advantage of any major market correction ( which is unpredictable of course ). I hope to increase my war
chest to 20% if possible from the current level of around 16%.
Total Dividend to be collected in 1st Qtr 2018 = $34,339.
*this is a bit lower than last year same period of $36,593
as I have divested more REITs and moving towards blue chips and some other
value stocks to diversify more from REITs.
** I have also mentioned in last year that I would like to
reduce my exposure to REITs/ Biz Trust from around 69% of my total portfolio in the end
2016 to maybe around 50% ( now is at 54 %).
*** I would expect to get more dividend in 2nd
and 3rd quarters as most of the blue chips are paying their dividend in
these 2 quarters.
Portfolio update :
Total holding in my portfolio reduced 1 to 44.
Keppel Corp and First REIT remain my top 2 holding same as
last quarter but Accordia GT ( 5.9% -> 1.9%) and Capital Comm( 4.4%->
3.2% ) has reduced substantially due to its own reason. For Accordia GT, it is
mainly due to in-consistency of dividend pay-out and membership withdrawal
issues ( guess this is also many investors concern as well, the most important
thing is that I wanted to sleep well at night ). As for the Capital Comm the decision to sell was due to high valuation when it hit $2 level, as I have
mentioned in my blog post (here
) with regards to valuation and reversion to mean.
We knew that REIT’s income is more or less fix and predictable not like any other growth business where we
may expect double digit profit increase in years ahead, but for REIT, below
5% yield may not be compelling for me as the rental may need to increase much
to push up the yield or either way, the price would have to adjust downward. Nevertheless
, Cap Comm still is one of the best blue-chip REITs in term of asset quality
and management capability, I may add more to my position when the price is
right.
I have increased my holding of SIN TEL to 5.5% ( 3rd
place ) and same time disposed of STAR HUB with a loss of -$2407 (including
dividend). For me, I think the sources of revenue and FCF from SIN TEL is more diversified
as compared to the other two tel-co.
I have also get rid of another blue-chip which gave -12.6%
XIRR where I think I have caught a falling knife as digital disruption to their
media business was much severe that my initial thought. It's going to be tough for
such business transformation to take place and continue to be a challenging one,
it may take time to rebuild the business model. Venturing into healthcare
sectors may yet to see the result and as what others investors think SPH= Singapore
Property Holding, but how far their property sector can grow and expand is also
a big question mark for me….
Starhill Global was one of my holdings since GFC 2009 and it
paid off to buy during the crisis , with XIRR of 14.2% since 2009. With more and
more luxury shopping street coming up in Asia, especially cities in China, I
think the growth for such high-end shopping street may not be that prominent.
I have started a small position in FU YU in mid of 2017 and
decided to let it go in early this month with a “tiny” profit of $733. FU YU is
just another “asset play” counter with the potential of going private, but sometime
it may take much longer time to unlock the value where I have decided to swap
with other stocks. No doubt, the balance sheet remains strong but the
profitability seems challenging in past two years.
Obviously, not all investment turns out to be profitable and
sometimes we made a wrong judgment in term of RISK or severity of factors which
affecting their underlying business.
As usual, in investment, you win some and lose some ….
Added 4 new counters into my portfolio, I will not elaborate
the reason why I add these counters here as we only have 1 reason to buy into
any stocks, which is to make $$.
Cheers !!
Quote Of The Day :
"There is simply no telling how
far stocks can fall in a short period. Even if your borrowings are small and
your positions aren't immediately threatened by the plunging market, your mind
may well become rattled by scary headlines and breathless commentary. And an
unsettled mind will not make good decisions." Warren Buffett's
annual letter to Berkshire Hathaway shareholders 2018
Wow what a massive portfolio there. Have a lot to learn from you! Looking forward to your future analysis.
ReplyDeleteCheers,
Cupcake
Hi CupcakedCrusader,
DeleteThanks for the comment, yah,,, it need " time " in the market to slowly accumulate such amount of portfolio value....bit by bit , but with persistency and perseverance, you will make it one day! Wow! Sin Tel is your top holding :-) at least we have 2 same counters in your portfolio!
Cheers! 😃😃
Hi you know by when we need to buy a stock to get its dividend?
ReplyDeleteWill the price drop usually after paying the dividends
Hi Alucard,
DeleteTo get the dividend , you will need to buy before ex-d , yes , theoretically the price shall drop same as dividend you get after the ex-d , but sometimes it may not due to market sentiment , or worse ( dropped more than dividend you will get ) when market suddenly have huge correction on that day...
Hope this clarify
Cheers !!
Thanks for the update.
ReplyDeleteThanks for placing the quarterly portfolio side by side. Easy to comprehend. I saw you the % for Design Studio has increased, what do you think of their declining performance?
Kep corp has increased in %, is it because of share price went up?
Starhub was once a darling stock.....hope this reminds me not to fall in love with darlings!
Regards,
WY
Hi WY ,
DeleteThanks for the comments , yes, I added more Design Studio when it dropped recent , I think the overall balance sheet still fine and yes , as you pointed out , their business is declining but I am hopping it may recover in next 2 years , I intend to hold this for much more longer period while waiting it to recover , from some sources , it seems that their revenue will start to pick up by end of this year... let's put our finger crossed.
Yes, for Keppel Corp , is mainly due to price increased, I didn't add Kepp Corp for quite some time..
Yah,, like HPH Biz Trust ... yield may not be a good judgement or indicators to buy , their underlying business is important to determine if their cash flow or div is sustainable ..
Cheers !!
Hi STE,
ReplyDeleteI have chance upon your blog and is very impressed with your journey. Could you share, when you invested in 2008/9 , the price of your share would have dropped and you could have dollar average down. How do you manage your emotion then? When price keep dropping what went through your mind? Doubts/conviction? If you have invested $1million, 5%dropped is paper loss of $50k. Hope to learn more about your thoughts then and the psychology behind.
Hope to hear from you.
Thank you.
JB
Hi JB.
DeleteThanks for visiting my blog , yes , the psychology part of looking at the huge " paper loss " is painful , but as long as you know that the market is always moving in cycles , the will recovery sooner or later , sometimes it may just take longer time to recover, with 18 years of investment , I have gone through few market cycles , of the the 2008/09 was the most severe and our portfolio was in red of almost -200K , at that time , I have also used up all my war chest , whenever our salary or bonus came in , we just buy again ( that time , me and my wife still working).
Yes , it really need very big courage and conviction to belief that market will recover some days in future... also the most important thing is to have diversify portfolio and know what you are buying ,, not those speculative counter.
Hope this clarify ,
Cheers !!
Thank you for your reply and sharing. :)
DeleteI also noticed that you do cut losers. What are the possible scenarios that you will do that? As sometimes recovery can be slow and patience needed. Hope to hear from you.
Thank you. :)
JB
Hi JB,
DeleteYes , I do cut the loser from time to time like HPH Biz Trust/ SPH and Star Hub , each will hv their own reason and story, for HPH , mainly due to diminishing profit margin which affect their dividend pay out , the business is facing fierce competition from surrounding ports and also continuous slumps in container shipping business which is their pay master, if shipping don't recover , one will not expect their port tariff to improve ...as for Star hub,,, the competition from 4th telco will be severe which they have started the price war even b4 the 4th telco started to operate.... and SPH mainly on the diggital disruption , where i feel the business reengineering will be tough.
You may notice that I have increased my holding in SIN Tel , which I think their revenue source are more diversify ...
All in all , the cutting off of any counter will have their own reason , but mainly due to the decline of underlying business ...
Hope this clarify..
Cheers :)
Hi STE,
ReplyDeleteThank you for your sharing! :)
JB
Thanks for sharing! 👍🏻✋🏻 It’ll be useful in building my own portfolio. By the way I think you mean SingTel
ReplyDeleteHi Mr Unity,
DeleteYup ,,, is Sing Tel...thanks for the correction.
:)