This is my second month doing portfolio review. There’re some additions into the portfolio table to make this review more meaningful.
First addition is the year of establishment & company age. As mentioned in the previous post, one way to check whether company’s business is sustainable is by looking at how long it has been operating. Generally speaking, companies with long history of operations (such as Shell and Teva) tend to be more stable as they have gone thru the ups and downs of the industry. Keppel is also considered having long history knowing that it was established back in 1968 – just three years after Singapore was founded.
Second addition is the portfolio gain/loss. It is incomplete to analyze without knowing how well our portfolio performs. Overall, it is a mixed bags of gains & losses across the various counters. Recent spike-up in Hotung share price has made its weightage swell to 14% of entire portfolio. Partially, this is due to new coverage and analysis published by few brokerages. One broker is even putting $3.38 as the target price. Market is so bullish!
Looking at the portfolio table above, there are three significant changes I made:
- Divested most of Lippo Malls Trust (LMIRT) – after recent share price run-up, I decided to divest most of it at $45 cents and recognized 28% return (or 14% annualized return, excl-distribution) over period of two years. Including distribution, annualized return would be in the north of 20%. I think this is a good selling price, considering the NAV of LMIRT as per 31 March 2017 is $37cents. With current P/B of 1.2, there’s not enough margin of safety left. There’s more downside than upside at this point. This is in spite the trust giving high yield of close to 10% based on my entry price.
- Chipped in New Toyo – as the counter experienced slight pull-back. The company has tremendous exposure to growing market in Indonesia after its acquisition last year of PT Bintang Pesona Jagat (Bentoel Group’s packaging manufacturing arm). Bentoel itself is part of British American Tobacco plc (BAT)
- Increased the cash portion – to 18% after the LMIRT divestment. This is in line with my objective to “keep the power dry and keep some bullets ready”. There is no specific cash level that I prefer. However based on past experience, it would be a pity to just stand on the sidelines when suddenly there’s a market action just because you have no more bullets left.
In summary, there are more opportunities to do portfolio rebalancing in the upcoming months – by looking at the current winners and losers. Psychologically, letting your winners run is equally as difficult as cutting your losers. This is where having the right trading strategy plays a part by taking the feeling out of the equation & let the mechanics take full control.