Happy New Year 2018

31 December 2017

 

Dear Fellow Investors,

 

It looks like 2018 will be a good year for us just like 2017.

 

If we focus on companies with strong underlying fundamentals that trade below intrinsic value as we did in 2017 we should enjoy above average returns.

 

While in Langkawi last week, while watching the ocean waves I read a short but very powerful book by Ben Stein.

 

 

Ben is a value investor and a personal friend of Warren Buffet. He has built a fortune over the years by accumulating quality dividend paying companies with solid fundamentals.  

 

Ben is also a financial planner who advises his clients on how  to build wealth. His message is simple and he shows how to leverage on the expertise of great business managers by buying shares of their companies. It is how to leverage on capitalism without the headaches of running a business. 

 

With Trump in power we are seeing a major shift in the US from socialism to capitalism. 

 

With lower taxes across  the board, infrastructure spending, Obama care phase out, welfare and social spending cuts, a 37 % cut in corporate taxes and foreign aid cuts, the average citizen is seeing more money in their pocket. This is money that will stimulate business and boost the world economy.

 

With continued low inflation and low interest rates in most of the world how can you not be an investor ?  

 

Gary Dorsch, of Global Money Trends sums it up:

 

“In 2017, the biggest drawdown for the Dow Industrials was -2.4%. As a result of the nearly $2-trillion of liquidity injected into the world’s money markets by central banks this past year, virtually all of minor market “shocks,” such as North Korea’s detonation of a hydrogen bomb, proved to be fleeting and an invitation for the Buy the Dippers to jump right in, and fill the gap within days if not hours. The typical SPX trajectory around domestic political and geopolitical shocks since World War II has historically been of sharp, short-lived selloffs with relatively quick subsequent rebounds. Here is the average pathway for a Pullback: Down a median -5.7%; Then 3 weeks to find a bottom; Another 3 to recover prior levels; And significantly higher out 3-months (6.5%) and 12 months (13%)”

 

Please have a happy, healthy and prosperous  year of the dog

Bill

 

There has been progress on our puppy adoption drive. 4 have now found homes. There are 8 adorable ones left.

 

From the owner:

 

“They are starting to get active and their Mum finds it hard to feed esp the bigger white ones push the others away. We are supplementing the smaller ones with puppy formula but Mother’s milk is best. She sleeps outside their main box as they are getting larger and active when they see her.”

 

If interested to adopt, please whats ap/ call me 012 685 1207 and I will reply with the name of the   owner and contact number.  The owner lives near the Securities Commission in Damansara.

 

 

Merry Xmas and Happy New Year from us

Dear Fellow Investors,

Dolly and I will be going to Langkawi over Christmas and returning next Thursday. If you need anything regarding your account please call our customer service, Ms Nora or Idza at 03 2783 0300.

You may also call our analyst Angelina Chong @ 012 223 7528 for market information and the specific shares you are holding.

Angelina has spent the last 2 weeks researching the best opportunities in the plantation space. We will allocate to your accounts in due course.  

There will be no report this week but should have one out on the 30th of December. 

Merry Christmas to our Christian clients and lets have a prosperous New Year

Bill

The odds favour the bull in 2018

We buy before the crowd

18 December 2017

Dear Fellow Investors,
Last week I bought for all EPF and private managed accounts Hong Leong Bank Bhd.

I bought during a period of market uncertainty and pessimism. Malaysian banks have been congesting with a downside bias for the last few months but value is emerging.

I sold Nestle which in my opinion is overvalued and over hyped. Nestle PE is over 35 with a dividend yield less than the money market rate. Nestle insiders have been heavily selling near the highs. Revenues and profits have been dropping

In contrast, Hong Leong Bank has a PE of  12.7 and is off the radar screen of most investor.

I also like their focus on fintech.  The Star  noted that Hong Leong Bank is the pioneer in implementing cognitive banking in Malaysia in partnership with IBM Watson. 

“This combines a machine learning interface and big data analytic, and paves the way for more
customised products and faster customer servicing turnaround time.”

It’s official! Hong Leong Bank’s fintech startup programme goes live in Malaysia, 17 Mar 2017

Photo - (From left): Nazrin Hassan, Group Chief Executive Officer of Cradle Fund Sdn Bhd;  Dr. Sivapalan Vivekarajah, President of Malaysian Business Angel Network; and Domenic Fuda, Group Managing Director and Chief Executive Officer of Hong Leong Bank Berhad

Singapore banks including OCBC, DBS and UOB  have had a good run this year and one reason has been their fast adaption to fintech.  Fintech reduces headcount, increases efficiency, and increases profits.

Malaysia is catching up and that is our opportunity. We buy before the crowd.

There are tailwinds: Bank Negara  is on course to raise interest rates perhaps in the 1st quarter of 2018 and that will increase profits for the banks.

Loan growth is gradually picking up and the election is around the corner. Malaysian growth  also has increased to 5.6 %. Oil prices have picked up and this improves  bank balance sheets.

Banks are the foundation of any economy. An economy will not recover unless the banks recover.

Singapore is an example. Singapore has recovered from a grinding multi month bear market as banks and property were hit.  

Sentiment turned and with Trump winning the election  Singapore banks have lead the SGX to multi month highs and property in Singapore is recovering.

Will this happen to Malaysia ?  My bet is Malaysia will recover and buying banks is a low risk way to participate. Caveat: Be selective.

Invest well and grow your wealth,
Bill

Today there are 12 critters: Father resembles a Thai Ridgeback, He has a blue/grey coat. Mum is short haired tan/ light brown with white paws, both intelligent, Born 9 December 2017 Grey 1 female/ 1 male. Black 3 female, 2 male and white 2 female and 3 male.

If interested to adopt, please whats ap me 012 685 1207 and I will reply with the name of the   owner and contact number.  The owner lives near the Securities Commission in Damansara.

2018 should be a positive year for our investments.

11 December 2017

Dear Fellow Investors,

Our focus for 2017 has been mainly on multinational companies with Malaysian subsidiaries.  Examples include Heim, Carlsberg, Nestle, Inari and Uchitech. We also have some glove exposure as well as Gas Malaysia.

Biotechnology products commercializing health care services are examples of the many offerings of Uchitech.

This equity balance has allowed us to profit from  well managed, financially sound

businesses .that pay regular dividends.   

It has allowed us to outperform our KLSE benchmark.

Our 2 tech companies- Inari and Uchtech are leveraging on   the world wide boom in AI, fintech, micro processors and robotics.

Inari just announced their 1^st quarter 2018 results. Profit margins expanded from 14 % to 18 %. ROE increased, earnings advanced and net profit was up.   Although the PE was 26.08 the PEG ratio (Price/ earnings growth) was only 0.4 meaning growth is expanding faster than earnings- a very positive sign.

Our latest addition- Nidec Corp listed in Japan for our PGWA accounts  is unchanged in price despite the 8 % correction in world technology shares. If you think the disruptive technology of electric cars will snow ball,  Nidec is the share for you.

In 2018 we will be seeking similar companies that are disrupting the status quo, are off the radar screen, and meet our very strict criteria for sound management. We will be visiting these companies to get on the ground exposure and feedback from management as we do for all the companies we place in your portfolios.

2018 should be a positive year for our investments.

Below are some comments from  Gary Dorsch of Global Money Trends .

“Nowadays, it’s a waste of time to try to figure out the state of the world economy, or that of a local economy when trying to judge whether to invest in a local stock market, or not. Instead, all that really matters is the rate of inflows of liquidity injected by the central bank into the local money markets.” 

With Trumps new tax reform and near zero interest rates expect money to flow into equities world wide. .As the Malaysian election nears expect more liquidity to flow from our central bank.

As we hold the above shares mentioned please consult me if you wish to buy.

Invest well and grow your wealth

Bill

Today's 'critter' is a lance-tailed manakin which hails from Costa Rica to Northern Venezuela.  It is a small, compact bird about 13 centimetres (5 in) long.  Both sexes have the two central tail feathers elongated to form a spike. 

A disruptive trend which is emerging is Phygital.

2 December 2017

Dear Fellow Investors,
A disruptive trend which is emerging is Phygital.

Businesses which combine the physical presence of a store with a digital platform  can survive and prosper .

Mr Alan Tong in his recent Edge column commented on this topic and why we need as investors to adapt to this technology . He cited examples of Amazon and Alibaba.

I have been following Tong’s value investing column in the Edge for the last 2 years. He publishes a Malaysian portfolio which has performed well despite the KLSE making an 8 month low last week.

Because of the lack of volume and interest in the KLSE , he has been commenting on broad investment topics rather than specific shares.
For the last 4 weeks, he has not made any new KLSE recommendations.

He is keeping a low profile and is keeping a 26.9% cash position.  If he were bullish he would be at least 95 % invested.

His latest comment;

“Despite the ongoing rally in global and regional markets, confidence in the local bourse was weak. The benchmark index appears to be well supported by local institutional funds, but the sell off in smaller cap stocks is clearly evident.”
Tong’s comment makes sense so
we need to be patient and wait for confidence to return before aggressively getting back into the KLSE. I would like to see  banking shares to begin a recovery  before fully committing.

Look for value stocks diverging from the overall trend. There are some bright spots in
 Singapore, Japan, Thailand and Hong Kong due to a banking and property recovery. There is value in these markets

We are well positioned to leverage on this recovery. For those who wish to join me on the Asian recovery story consider to open a Phillip Global Wrap Account. Come and see me in my office and I am happy to share the opportunity with you.

Invest well and grow your wealth
Bill

Today’s critter is the red-crowned crane, also known as the Japanese, or Manchurian crane. Adult red-crowned cranes are named for a patch of red bare skin on the crown, which becomes brighter during mating season.  It is one of the largest of the crane species.  The estimated total population of the species is only 2,750 in the wild, including about 1,000 birds in the resident Japanese population.