Opportunities of the week

 4 Sept 2020

Dear Fellow Investor,

To me controlling risk depends upon sorting through an array of stocks available and pulling out a rare opportunity: a high performing, profit generating well positioned company that is suffering a short term mispricing. The goal is to not overpay.

This week will review 2 opportunities we hold which meet these criteria.   

The first is Wellcall Holdings: From a recent analyst report from Interpac Securities:  

Wellcall investment merits are: 1) lean/efficient management that translates into higher margins, 2) sustainable growth in the hose replacement market, 3) attractive dividend yield of 5.8%, and 4) 3) JV with Trelleborg to distribute composite hoses. Risks to our call are: 1) raw material commodity price/exchange rate volatility, and 2) slower than expected economic recovery.

 

Recent company visit to Wellcall Holdings in Ipoh with the CEO and Interpac analysts.

The other share that offers good value at current price is SATS a Singapore listed airline caterer. It has been beaten down by the Covid hysteria but is finding support and heavy insider buying at current levels. SATS is Asia’s largest food and gateway services network. They have a fortress balance sheet and they are leveraging on growth in Asia. They have a large presence in China whose domestic air traffic is recovering. Their Asian cargo handling business is also  recovering.  

SATS is a play on Covid and  progress on  treatments and vaccines. Insiders including large institutions and Alex Hungate the CEO  have been supporting this share at the current price seem to think there is progress on the virus. Following the smart money is always a good strategy.

Warren Buffet recently made a multi billion purchase of  Japanese shares for his Berkshire fund and sold some of his overvalued US shares including Apple. The Japanese market has been ignored for many years by most investors and suffers from gloom and pessimism. Value is there and that is why Buffet bought.   We hold in Japan Nidec the world’s largest maker of micro electric motors. They have performed reasonably well.  Perhaps Buffet bought Nidec ? I will check with their investor relations.

He also bought a large stake in Barrack Gold Mines as he has turned  bullish on precious metals.

Take care

Bill

This dog travelled more than 10000 km to join its owner in Australia after being separated from its owner who had taken a holiday in the US   . It suffered through cancelled flights, quarantines, loneliness, delays .  It immediately recognized the owner after 3 months of separation after being reunited. Reported by CNN.