Positive movement on investment

23 May 2020

Dear Fellow Investor,

There has been some positive movement on our investments lately.  Dialog has finally broken out after congesting for the last few months. Dialog has one of the strongest balance sheets compared to other oil shares in the KLSE and benefits from residual income from their oil storage facilities.  Even with the crude oil price collapse they were only marginally effected . Should oil demand continue to recover, Dialog is well positioned for further upside.   

United Plantations has been a long term hold for us and has moved higher.  They have the strongest financials compared to the other KLSE plantation companies and have survived almost 100 years of cyclical ups and downs.  Their handsome dividend is well covered and gives comfort during periods of volatility. The recent spat with India has been sorted out and now India has agreed to buy our palm oil. This has boosted CPO and the plantation sector. India is the second largest buyer after China.     

Maybank, which we bought after the 9 May 2018 general election has not performed well.  I bought Maybank after the election as I was positive on the new government.  I was wrong . We bought at the RM 10 level and it has dropped to RM 7.41 but because of RM 1.78 of dividends received our loss is less than 10 %.   In the last 2 weeks there has been massive institutional buying of Maybank which has provided support in the weekly time frame. Perhaps they know something the public does not. Next week, I will review some of our other holdings. 

On the medical front, as reported by Newsmax health, there has been a breakthrough drug: Intermectin, which shows  results against Corona virus. There have been several simultaneous trials in several countries including Australia and the US  and physicians who participated in the studies say this drug is salvaging people from their death beds.  It has not yet won FDA approval or use as a Covid 19 medication but is being fast tracked.

Malaysia is slowly getting back to normal. Traffic is  gradually returning. The parking lot at my office is ¾ full  A few customers in my complex are returning to the restaurants.   It will take time for sentiment to improve. It is like the stock market after a collapse. It takes time to heal.  

As investors we need to look for signs of improvement . Perhaps it could be less persons wearing masks. If we wait until no one is wearing a mask it is too late because the market has recovered.

My hunch is that it is not as bad as the media reports. More than 2 times as many people die every year in auto accidents than with Covid but the media does not focus on auto deaths.  The media spends 24/7 on Covid and whips up the public fear. Statistically the risk is double for dying in an auto accident but you do not see auto drivers wearing crash helmets or fire proof suits.   The virus will pass but people will still die in auto accidents.  

Keep safe
Bill

Critter of the week is a rescued bald eagle who was shot by a hunter in Missouri. Luckily the eagle survived .  The bald eagle is the national bird of the US and is highly protected. If the hunter is caught the fine could be USD 100,000 and a heavy jail term.