My Investment Portfolio (November 2010)

STI is weak this month and that is to be expected as it had ran up quite a bit for the past few months. Tensions between North and South Korea, problems in Ireland financial system etc are among the worries that investors have to grapple with. Positioning my portfolio defensively seem to be the way going forward as the year draws to a close and I would try as far as possible to avoid buying high beta stocks and IPOs.

For my top 30 stock holdings, there are not much changes this month except for a new entry - Thomson Medical Centre. The stock rallied on news of a cash offer from Peter Lim. I will continue to hold onto my shares in TMC unless Mr Lim decides to take the company private.

For this month, I have accepted the delisting offers for Eastern Asia Tech, MCL Land and Soilbuild Group. My remaining stake in Parkway Holdings had also been compulsory acquired, since the offeror have decided to delist the company. I have also participated in the following scrip dividend scheme - OCBC Bank.

I have bought the following companies from the open market this month - BBR Holdings, CH Offshore, Colex Holdings, Elite KSB, Food Junction, Forland Fabrictech, Guthrie GTS, Hiap Hoe, Hong Fok, Hotel Royal, IFS, Innotek, Intraco, Isetan, LHT Holdings, Lian Beng, PSC Corp, San Teh, Singapore Reinsurance Corp, Superbowl, Tuan Sing, Tye Soon and Zagro Asia. I have also subscribed to the following rights issues - Allied Tech, Guocoland and HMI.

I have converted the following company warrants to shares - A-Sonic, Metro Holdings, Serial System and Technics Oil & Gas.

As the year draws to a close, it will be good to look back and reflect on my investment portfolio this year. Also, I would like to look ahead to 2011 and draft out my investment portfolio management strategy. A lot of things had been on my mind as I pen out this post, and I will need another post in my blog to do this.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 30 November 2010)

Top 30 Holdings (Sing$ Denominated shares)
1. Noble Group
2. SGX
3. Jardine C&C
4. F&N
5. SembCorp Marine
6. KepLand
7. A-REIT
8. CapitaMall Trust
9. Bukit Sembawang Estates
10. Cosco Corp
11. OSIM International
12. Hersing
13. K-REIT Asia
14. CapitaCommercial Trust
15. Thomson Medical Centre
16. CapitaLand
17. Transpac Industrial Holdings
18. Wheelock Properties
19. CDL H-Trust
20. OCBC Bank
21. Pacific Andes
22. CitySpring Infrastructure Trust
23. Keppel Corp
24. Raffles Education Corp
25. Low Keng Huat
26. Hong Leong Finance
27. ComfortDelgro
28. Ascott REIT
29. Genting Singapore PLC
30. Ascendas India Trust

Top 5 Holdings (US$ Denominated shares)
1. Jardine Strategic
2. Dairy Farm
3. Hong Kong Land
4. Jardine Matheson
5. Mandarin Oriental

Top Holdings (HK$ Denominated shares)
1. Fortune REIT
2. Tan Chong International

Top Holding (Aust$ Denominated shares)
1. AV Jennings
2. AustLand PG

Top 5 Holdings (CPF OA investment)
1. Keppel Corp
2. Streettracks STI ETF
3. CapitaMall Trust
4. A-REIT
5. SingTel

My Hong Kong Stock Portfolio (listed on SEHK)
1. Peace Mark Holdings

My Unlisted Company Portfolio
1. Automated Touchstone Machines Ltd
2. Iconic Global Limited
3. Greatronic Limited
4. China Printing & Dyeing Holdings
5. General Magnetics
6. Fastech Synergy
7. Beauty China
8. Memory Devices
9. Jurong Tech
10. FM Holdings

My Unit Trust Portfolio:
http://www.fundsupermart.com/main/community/Portfolio_View.svdo?id=P199

Company Warrants Expiring in 2010 - Actions Needed

I need to remind myself all the outstanding company warrants that are expiring in 2010 in my portfolio which I will need to take action. I will update this list accordingly as I go along so that I won't forget about them.

LINAIR W100118, Expiry Date: 18 Jan 2010, Exercise price = $0.09, Conversion ratio 1:1 - Warrants expired worthless.
CHALLENG W100408, Expiry Date: 8 Apr 2010, Exercise price = $0.10, Conversion ratio 1:1 - Warrants exercised and converted to shares.
ETIKA W100408, Expiry Date: 8 Apr 2010, Exercise price = $0.095 , Conversion ratio 1:1 - Warrants exercised and converted to shares.
JAPANLANW100416, Expiry Date: 16 Apr 2010, Exercise price = $0.75, Conversion ratio 1:1 - Warrants expired worthless.
TIH W100511, Expiry Date: 11 May 2010, Exercise price = $1, Conversion ratio 1:1 - Warrants exercised and converted to shares.
HOSEN W100625, Expiry Date: 25 Jun 2010,Exercise price = $0.03, Conversion ratio 1:1 - Warrants exercised and converted to shares.
AZTECH W100716, Expiry Date: 16 July 2010,Exercise price = $0.47, Conversion ratio 1:1 - Warrants expired worthless.
ADV SCT W100819, Expiry Date: 19 Aug 2010, Exercise price = $0.87, Conversion ratio 1:1 - Warrants expired worthless.
ASIATIC W100902, Expiry Date: 2 Sep 2010, Exercise price = $0.03, Conversion ratio 1:1 - Warrants exercised and converted to shares.
LEEMETAL W100910, Expiry Date: 10 Sep 2010, Exercise price = $0.05, Conversion ratio 1:1 - Warrants exercised and converted to shares.
QIANHU W100919, Expiry Date: 19 Sep 2010, Exercise price = $0.035, Conversion ratio 1:1 - Warrants exercised and converted to shares.
JIUTIANC W101015, Expiry Date: 15 Oct 2010, Exercise price = $0.80, Conversion ratio 1:1 - Warrants expired worthless.
VIKING W101116, Expiry Date: 16 Nov 2010, Exercise price = $0.08, Conversion ratio 1:1 - Warrants exercised and converted to shares.
Asia Water W101118, Expiry Date: 18 Nov 2010, Exercise price = $0.02, Conversion ratio 1:1 - Warrants exercised and converted to shares.
ECOWISE W101121, Expiry Date: 21 Nov 2010, Exercise price = $0.035, Conversion ratio 1:1 - Warrants exercised and converted to shares.
PACIFICHCW101126, Expiry Date: 26 Nov 2010, Exercise price = $0.39, Conversion ratio 1:1 - Warrants expired worthless.
TECHNICOEW101126, Expiry Date: 26 Nov 2010, Exercise price = $0.40, Conversion ratio 1:1 - Warrants exercised and converted to shares.
SERIAL W101220, Expiry Date: 20 Dec 2010, Exercise price = $0.09, Conversion ratio 1:1 - Warrants exercised and converted to shares.
A-Sonic W101230, Expiry Date: 30 Dec 2010, Exercise price = $0.0325, Conversion ratio 1:1 - Warrants exercised and converted to shares.

Scrip Dividend Scheme - The Details

Dear all,

I am sure for long term investors like me, one will encounter the scrip dividend scheme from time to time. Basically, scrip dividend scheme is intended to give shareholders a choice to convert their entitled dividend payout to more shares in the company. The subscription price of the scrip dividend scheme is normally given at a slight discount from the market price, in order to make it more attractive for shareholders to subscribe to the scheme and for the company to retain cash for its usage. One do not need to pay any brokerage/transaction charges in order to convert the dividend into shares. There are basically four common options for shareholders when it comes to this scheme:

1. Election to participate in the scheme for this dividend payout only. All dividend entitled will be used to participate in this scheme.
2. Permanent election to participate in the scheme, whenever it is applicable.
3. Election to participate in the scheme for this dividend payout only. Part cash, part share option.
4. Do nothing. That is, one choose not to participate in this scheme at all and dividend will be paid fully in cash.

Option 2 to me is a "blank cheque" issued to the company. Basically, one is confident of the company and decides to participate in any scrip dividend scheme that comes along, regardless of its subscription price. It actually meant that one has no control as to whether they think that the subscription price is overvalued or not. Once a shareholder selects this option, he will automatically be given shares for each dividend payout declared. He can, however, opt out of this option in writing anytime if he wishes to.

Option 1 is a more common option and most investors that I encountered tends to prefer this option. It gives them the flexibility to decide whether to subscribe for the scheme every time it comes along. However, flexibility comes at a price. Some investors tend to be forgetful and might not have submitted the form before the deadline, thereby missing out on that particular scrip dividend subscription. Also, option 1 is not foolproof. It gives the company a leeway to decide how much shares they wish to allocate to you on your full entitled dividend payout based on a given formula. Normally, the computation will result in decimal places and your number of shares allocated might be:

i. Rounded to the next whole number. Which means, even 2.01 is rounded to 3 shares. This is of course to your advantage at all times.
ii. Rounded up or down to the nearest whole number. This is of course can be to your advantage or disadvantage (depending on whether you are rounded up or down), but at least it is mathematically reasonable.
iii. Take the whole number, ignore the decimal places, even if it is 0.99. For example, 2.99 is considered only 2 shares in this case. This is not to your advantage in almost all cases, unless of course the computation results in a nice whole number.

The residue sum after the above computation (for ii and iii only) might be given out as dividend payout or simply ignored for some companies. Which means, a shareholder can "lugi" a few dollars or even up to more than $10, if the residue amount are not paid out as dividend after computation.

Option 3 is a good option and this is my preferred option. What this means is that you decide how much cash you want to receive and how many shares that you wish to convert for every scrip dividend payout. It also avoid the computation formula problem that I had stated earlier as I decide how many shares that I want to use for computation and the rest I take as cash. I would not have a problem of having to "lugi" the residue sum after computation for companies who do not payout those residue amount. Common mistakes I see investors committing in this option:

i. Putting decimal places in the boxes for part cash and/or part share.
ii. The total number for part cash and part share doesn't tally with the total number of shares one is holding at book close date. For example, you hold 100 shares and you put 50 shares for part cash for 49 shares for part cash. What happened to the remaining 1 share? Doesn't make sense.
iii. Putting in the number of scrips that you are entitled to for the scrip dividend scheme in the part share box. Remember that you need to fill in the number of shares that you are holding at book close date that you wish to convert into scrip, and not the scrip that you will be given.

All the above will result in your application for scrip dividend scheme to be rejected so please check carefully before you submit.

Option 4 is of course self-explanatory. Doing nothing meant that you don't get any scrip and you get to keep the dividend. Your stake in the company will be diluted by the new shares being issued under the scrip dividend scheme for the other shareholders.

As they said, "the devil is in the details". But once you understood all the options available and select the correct one, scrip dividend scheme can be a fruitful exercise for long term shareholders like me who prefer to be almost fully invested at all times.