Trade: Magnum & Tanjong

Yesterday, I made a major move by selling all my 13000 units of Magnum share at RM3.30 and the remaining 1000 units of Tanjong at RM15.90. The main reason that I did the sell-off was I am getting worried with the U.S. economy development and I believe the whole global market will be dragged down by it, regardless it will be a soft or hard landing. The fact that many Americans are spending way beyond than what they made and tougher credit facilities to fuel the consumer purchase which triggered by softening of housing market is undebatable. Besides, many local analysts although did upward revise their target KLCI index from 1300 to 1400 by year end, but to me it is not a big margin from what we are today and the risk of going down has out striped the potential of thin gain anticipated.

If I look at the earning of Magnum which is about 16 sen per share, at RM3.30, PE is ~20.5. Compare to BJTOTO with 36 sen per share earning, PE at RM4.40 is only ~12.2. This is way too high for Magnum. Even if we factor in a potential capital return of RM1.00, PE of Magnum at RM2.30 is still ~14.4. I have long never did such a PE calculation on Magnum and was surprised with the figure. Hence, I reckon it is now a good time for me to sell off the share, and keep a close eye on it. Hopefully I can pick it up later when it drops below RM2.80.

Below is my latest share portfolio after yesterday trading.

Portfolio 10-Mar-2007

With the recent rebound of KLSE, my overall portfolio value also goes up by ~1.8% or RM 1630 compare to last week.

Along the week, I made a contra trade on Genting-ca. I bought 10 lots of Genting-ca on Monday with price 70 sen and sold it on Thursday at an average price RM1.16. It was never intended to be traded in such a short time, and the idea of contra play did not ever strike across my mind when I picked up Genting-ca. All just happened spontaneously, following the strong rebound of market. To me, at 70 sen, I strongly feel Genting-ca is a very good bet (there was no big fundamental change at that time and only some negative speculation on spread) and at ~RM1.20, I also think it's value is near saturation. To me, it was a psychological battle against the majority who drives the KLSE trend. Buying the call warrant is my strategy to leverage the amount of my bet. Besides, I really do not think that Genting will drop the ball of Sentosa casino business that was already in its hands. It will be such a hard slap on its face if that happens.

Moving forward, I foresee that KLSE will be very volatile. Genting-ca was my first trade in my "hit n run" portfolio. At this point of time, I do not intend to share and maintain a second portfolio here as I have no time to update it frequently. The amount allocated for this other portfolio is around RM 10k, which is the money that I am willing to lose. It will be a high risk investment as my strategy is generally to go against the big market trend. I will pick up over sold, good value, high liquidity counter that has strong market correlation and sell it out when market stabilized. I am not sure how many more cycle of correction will the market be undergoing before it reaches the peak and / or it starts melting. As of now, I think the market is still in uptrend and it will be quite safe to bet if there is another round of correction to come. In view of the limited fund size, I will also likely to concentrate more on warrant or call warrant. Currently, stocks on my radar are such as Bursa-cb, TA-wb, Megan and of course Genting-ca.

Tanjong has slowly regained its lost over the last few trading days. Again, I am looking forward to sell out the remaining 1,000 units if it reaches RM15.50. I am actually quite regret that I did not sell all when it was ~RM16.00, not very long ago. While for the others, especially on Magnum (but exclude all REITs), I will hold on until the very last days of first half of the year, in hope for the market peak.

Portfolio 3-Mar-2007

Have been more than a month I did not update my blog. Here's how my latest portfolio looks like...

KLSE has taken a sharp correction since last week and as a result, at least RM13k of my portfolio value being wiped off within just a few days. I called this as a correction because I still believe the bullish trend is intact and such a retreat is expected in a bull run. The fundamentals of our economy has not changed much, at least not to a point that is justifiable for a major market melt down. Although I still believe in my earlier prediction that in future ~6 months or so a real bad economy (both global and local) will start to surface, I am quite optimistic on near term market. As such, I really hope that this correction will be very short and market can rebound and pick up its earlier strength as fast as possible. In short, I believe we have not yet reached the peak of the bull. However, if the poor sentiment keep on circulating KLSE for any longer than 1-2 months from now, I will have no choice but to start dispose all my equity holding. I foresee people will start feel the pinch of the slowing growth of US economy when entering 2nd half of the year.

In last month, I indeed disposed majority of Tanjong share. The average selling price of Tanjong was done at RM15.20. It was not the highest price that I managed to sell, but I am quite relieved that I still made about 12% of profit from the investment excluding dividend. Part of the proceeding was used to purchase 1000 units Tenaga at RM12.30. The decision to purchase Tenaga was driven by its outstanding quarterly result announced recently. Nonetheless, right after my purchase of Tenaga, its rise of share price came to a halt. It seems that probably some funds were starting to dispose it to cope for profits.

Another purchase made last week was 2000 units Tawin at RM1.50. I picked up Tawin in view of its undemanding P/E of 3.8 compare to its peers e.g. Metrod. I bet only a small amount of Tawin as I view it as a speculative move in hope for rising copper price and rumour of potential takeover.

In coming a week or so of market "correction", I am eyeing to buy in more Magnum at price below RM2.80. I still believe Magnum has a lot values in it and those big guns buying at price higher than RM2.80 will not be such an idiot to see their investment eroding away. It is just a timing problem for them to "unlock" its value and take profit of it. Just hold on and perhaps enjoy a few sticks of "Magnum" ice-cream while waiting for the show to put on stage.... hahaa

Despite the recent retreat of stock market, my investment in Public Mutual PBOND and PIBOND are continuing register a steady return. Both have grown ~5.5% and ~4.2% respectively in exactly 6 months. My unit trust agent has been pushing me to switch to equity fund about a month ago and I am relieved that I did not do that. Otherwise, I would have suffered great lost as many of the equity funds are dropping sharply following the market. Although many has said (and practiced) that when investing in stock market or mutual fund, we ought to follow the big market trend. However, I believe strongly in the theory of contrarian, which tell me why majority of peoples loose big time in investing while only a handful of them make huge profits!

Portfolio 27-Jan-2007

Despite KLCI continues to inch up 1.93% to 1169.89 points this week, my portfolio has grown 9.3% (or RM10,480), beating KLCI by a huge margin! In my memory, this is my most impressive gain in a week.

REIT has risen a lot since last week. AXREIT jumped from the lowest RM1.62 to now all time high of RM1.85, gaining ~14% in just one week. Similarly, STAREIT also managed to chunk out a weekly gain of ~12%. The sharp increase in REIT price in my opinion is driven by active foreign participation, as can been seen by the supported trading volume. As predicted, with the strengthening trend of RM, all the MREIT prices are due to be revised by market.

However, my view for its coming few weeks is most MREITs will rise to a saturated point and maintain until there are further good news from the government. Also, even though the government said they are comfortable with current RM exchange rate, I doubt they will let it continue to rise beyond RM3.40. If both AXREIT and STAREIT managed to hit near RM2.00 and RM1.00 respectively, I am willing to let go all my stake of it. They are no longer appeal to me from the yielding perspective and to lock-in the profit now is a much wiser move.

Another strong mover in my portfolio this week is Magnum. My stance on Magnum has not changed, I will hold on Magnum until the end of this bull market or until the much anticipated capital return being announced. Since my entry price of Magnum is relatively low, I am willing to take this bet.

Along the week, I have also added 1000 units Tenaga @ RM12.30 into my portfolio. For me, this is purely a speculative move. According to OSK, the PER for FY07 at current price is ~20.5, with estimated EPS of 59 sen. To me, this is ridiculously high and from fundamental point of view, I rather dump my money into Tanjong than Tenaga. However, Tenaga is a much more active counter than Tanjong and given the latest impressive earning report in such a bullish market, I am quite confident Tenaga will continue to rise in tandem with market. This is sort of my "hit n run" strategy for the time being.

Portfolio 20-Jan-2007

My portfolio underperformed KLCI this week, where KLCI rose 2.54% while my portfolio return dropped from 14.3% to 13.8%. This is mainly due to the lost suffered from AXREIT, which I am aggressively picking up the stock lately.

Along the week, I have also made 2 additional purchases of AXREIT, at 2000 units each time with price RM1.66 and RM1.62 respectively. The purchase at RM1.66 was a mistake, as I have keyed in wrongly the figure. My intended price to purchase was indeed RM1.62. Nonetheless, I was relieved that the cost of my stupid mistake was not huge. This serves as a lesson for me to be more careful when placing an overnight order in future. AXREIT will be announcing its quarterly result together with the half yearly income distribution very soon and I think that is the reason its share price jumped back to RM1.65 at the very last hour of trading on Friday. With expected half yearly income distribution of ~6 sen, the yield at RM1.62 is an impressive 7.4% p.a. I am confident that the stock will gain more attention from foreign investors as its liquidity being improved by public placing of 50 millions new shares in near future and along with the strengthening trend of RM.

As I am exiting the "bull" market slowly by shifting my holding in equity to more secured and stable instrument like REIT and bond fund, I am also considering setting up a small amount of "hit n run" speculative portfolio, say RM5,000 to RM10,000 and buy into volatile counters such as warrant or call warrant to take profit of the current bullish trend. It will be a very risky portfolio and fundamental of these stocks are not among the important selection criteria. I will be likely picking up counters that are very linked to the KLCI index and play with the fluctuation. As of current, I am still considering it and fighting with myself as how much money to set aside and willing to lose.

Will it be too late to enter market now? What is your say?