Review/Reflections for 2013

It is time of the year to do a review again. Thinking through what to write for this post, I thought readers out there might be bored to read the same old things again. Because there is not much change in what I had been doing in 2013 as compared to 2012, which means there is nothing new to write. Except for adding onto my existing portfolio and also reducing my stake in some old ones, there is not much change in the way I manage my portfolio.

But of course, if I want to write about market "noises", there are plenty of them but I shall leave that to readers to follow the news instead. Just a summary, STI did pretty much the same from the start of the year to near the end. Therefore, it is really a stock picking market this year.

Coming back to my portfolio, I have lost around 17 stocks this year through M&A deals like general offers, delisting etc. A few of my top holdings had been taken out, with familiar names like Viz Branz, Guthrie GTS, UIS and maybe Superbowl. They had not been replaced and I just added onto my existing holdings to "promote" some of them up to my top 30 holdings. I guess this is a good way to re-invest back to the portfolio since I know these stocks pretty well rather than looking for new companies which I might not be comfortable with.

As usual, I have also been participating in rights issues, scrip dividend schemes etc for my existing holdings this year.

For my CPF OA and CPF SA portfolios, they are pretty much the same. For my CPF OA portfolio, I did add onto my existing unit trusts and also make minor changes to the stock portfolio. But since I did not make any contribution to my CPF since mid-2011, it is simple business of just re-investing dividends and also proceeds from M&A deals. My CPF-OA stock portfolio is a subset of my cash stock holdings, therefore, there is no need to generate new ideas just for CPF-OA stock investment. I just need to select stocks that can fill up my capital since there is a stock investment limit involved. For unit trusts, it is just adding onto my existing funds.

As usual, I have not computed my returns for the year so don't ask me about my returns. I have explained the reason for that previously and I shall not repeat here. But I do monitor my portfolio every now and then and I reckon that I did better in the first half than the second half of the year. All in after deducting my monthly expenses, my portfolio value is higher than the end of last year.

I have maintained the count of attending more than 100 company meetings this year which includes AGMs, EGMs, briefings etc. I try to change companies every year so that I will not attend the same ones every now and then. But unfortunately, sometimes I have to follow some companies closely and therefore there will be times that I attended more than one meeting of a company in a year. I have met some old friends and also make some new friends at company meetings this year.

I have continued meeting up with my friends in my investment group this year. I had been invited to other investment groups but I have not prepared to be involved in so many groups currently. As I am a full-time investor for only around 2.5 years, I need to build up my company "database" more before getting more involved in so many groups. Also, there is a time limitation as I need to be committed to the group if I joined them. Since I could not spare the time currently, I shall stick to only one group.

Finally, for my blog, I had continued to maintain my post count of around one review every month this year. Of course, I will post every now and then when I have some interesting ideas or strategy to share. Remember my style is always - no spreadsheet. Not much company specific posting also unless I have some story to tell like the UIS story. Readers who are interested in company specific research should refer to some of the links at my blog. Sorry, but I rather want to focus my blog on discussion on my portfolio and strategy of managing it. Of course, if you have any company specific questions, I will be more than happy to engage you if you ask for my comments.

I guess this is pretty much I wanted to review for 2013, and let us hope that 2014 will be a better year. I certainly hope that my readers had made money in 2013, and I will be looking forward to many more good returns in 2014. I hope you do too!

REITs scrip dividend scheme - Beware of its pitfalls

Dear readers,

I have shared previously at this blog on the scrip dividend scheme or dividend reinvestment plan (i.e. DRP). Readers who missed it previously can review it again at the link below:
http://ghchua.blogspot.sg/2010/11/scrip-dividend-scheme-details.html

Recently, during my conversation with one investor, I have discovered that he had elected to participate in the DRP for a REIT but did not choose the part cash, part share option. He choose Option 1 to let the company decide the number of units that he could be given, based on their computation. Incidentically, this REIT take the whole unit and ignore the decimal places to compute the number of units he is entitled to for each dividend payout. And for REITs, it is even worse because they tend to spilt one dividend into many components when computing the numbers. For example, below is the dividend payout for REIT M on 29 Nov 2013.

1. 1JUL-30SEP,DRP SGD 0.0048 TAX EXEMPT
2. 1JUL-30SEP,DRP SGD 0.00025
3. 1JUL-30SEP,DRP SGD 0.00265
4. 1JUL-30SEP,DRP SGD 0.0105 LESS TAX

The issue price of the DRP is priced at S$1.0545 per unit. Assuming a unit holder holding 1000 units of REIT M, he will be issued:

1. (1000 x 0.0048)/1.0545 = 4.55
2. (1000 x 0.00025)/1.0545 = 0.237
3. (1000 x 0.00265)/1.0545 = 2.513
4. (1000 x 0.0105)/1.0545 = 9.957

Since, each component will be rounded down to the nearest whole unit, we have 4+0+2+9=15 units. Which means, this investor took home 15x$1.0545=$15.82 worth of units. If he had elected for cash dividend, he would have taken $4.80+$0.25+$2.65+$10.50=$18.20. Put it simply, he had lost 13% of his dividends in one quarter by simply opting for Option 1!

Remember, this is only one quarter worth of dividends. Since there are four distributions in one year, I leave readers out there to do your own computation on the amount of dividends he would have lost for letting the company decide on the computation. For this REIT, they have retained the residue amount of dividend so you won't get your remaining cash back as dividend if you opt for Option 1.

You might ask, if one still wants to take the scrip dividend and not cash, what should you do to minimize rounding errors? The answer is to take part cash, part scrip option. This will "force" the REIT to give back some of the remaining part of each component that is not converted into units to cash and return to unitholders.

My Investment Portfolio (November 2013)

STI closed down to 3176 points by the end of November 2013. It was a lacklustre month for the S'pore market despite Dow hitting new highs. Low volume and lack of direction had been the characteristics of the local market this month. The Thai demonstration towards the end of the month had further dampened interest in the market.

For this month, I have attended the following AGMs/EGMs/briefings - Southern Packaging, Jason Marine, F&N, Sunright, Sinopipe, Vicplas, Khong Guan, Mermaid, CSE Global, Xpress and TTJ.

For my top 30 holdings, except for Old Chang Kee, no major movements as it had been a quiet month in terms of corporate actions and news flow.

I have bought the following companies from the market this month - Azeus, BBR Holdings, Chemical Industries, Chip Eng Seng, ComfortDelgro, Dutech, Eastern Holdings, GK Goh, Hanwell, Haw Par, Hwa Hong, Isetan, KSH, Lantrovision, LC Developments, LHT, Lian Beng, NSL, Penguin, PM Data, PNE Industries, SBS Transit, Southern Packaging, Stamford Land, Teck Wah, Union Steel and UOB Kay Hian. There is no sale done this month.

I have accepted the following voluntary delisting/cash offers this month - Synear, ConscienceFood, People's Food and Pertama. I have also participated in the following scrip dividend schemes - Aspial, TEE International and United Overseas Australia.

I have subscribed to the following rights issues - CapitaRChina and GRP. I have also converted the following warrants to shares - Ntegrator.

December 2013 is expected to be another quiet month for me, except for a few EGMs and AGMs. I will reflect on this year in a nutshell and also derive my investment strategy for 2014. Hope to share with all of you out there soon.

My S'pore Stock Portfolio - Top Holdings, cash investment only (correct as at 29 November 2013)

Top 30 Holdings (Sing$ Denominated shares)
1. Bukit Sembawang Estates
2. Sarin Technologies 
3. United Engineers
4. UIS 
5. Jardine C&C
6. Superbowl
7. Haw Par 
8. Old Chang Kee
9. Metro Holdings
10. Aspial 
11. SGX
12. F&N
13. Bonvests 
14. OSIM International
15. Sing Investment & Finance 
16. A-REIT
17. SembCorp Marine
18. Noble Group  
19. CapitaMall Trust 
20. Far East Orchard
21. The Hour Glass
22. Hotel Grand Central
23. Hiap Hoe
24. Hong Fok
25. Low Keng Huat
26. Hong Leong Finance
27. Singapura Finance
28. GK Goh
29. MTQ Corp
30. VICOM

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 Holdings (Aust$ Denominated shares)
1. AV Jennings

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

My Hong Kong Stock Portfolio
1. Peace Mark Holdings - Under Voluntary Liquidation

My Australia Stock Portfolio
1. GPS Alliance Holdings Limited

My Unlisted Company Portfolio
1. Automated Touchstone Machines Ltd
2. Iconic Global Limited
3. Greatronic Limited
4. General Magnetics
5. Fastech Synergy
6. Beauty China- Under Liquidation
7. Memory Devices
8. Jurong Tech - In liquidation - Compulsory winding up (Insolvency)
9. FM Holdings
10. Japan Land - In liquidation - Members' voluntary winding up
11. Zhonghui - In liquidation - Compulsory winding up (Insolvency)
12. FerroChina - Under Liquidation
13. FirstLink Investments
14. NEL Group
15. KXD Digital Entertainment - In liquidation - Compulsory winding up (Insolvency)
16. Shanghai Asia Holdings - In liquidation - Members' voluntary winding up
17. Jets Technics

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