Interesting Read - "The Most Important Thing" by Howard Marks of Oaktree Capital

Recently, I had the pleasure of reading an insightful book, "The Most Important Thing" by Howard Marks, co-founder of Oaktree Capital Management. 

I had several learning points after reading this book.

1) Investment is not like playing baseball. You don't get struck out if you don't swing. 
This is about the itch to invest with money on the sideline. Many investors feel the need to deploy their capital into good use only to invest in sub-optimal instruments. (Yours truly is also guilty of this). It is always prudent to pass an opportunity along and protect the portfolio, instead of investing in less than optimal companies that cannot deliver.

2) Where to look for investment bargains?
a) Little known or not fully understood businesses
b) fundamentally questionable on surface
c) controversial and scary sectors
d) not appropriate for certain type of portfolios ( investment grade bonds only. Price not considered)
e) record of poor returns
f) recent subject of disinvestments

3) Investing is a "Loser's Game" - Charles Ellis
a) There are two kinds of tennis players. Winners who hit professional shots and are always on targets. Losers who are average and they win by avoiding bad shots and conceding points through errors
b) Investing is like a losers in tennis, you should avoid bad investments. 

I realised that over the past two years, i have been making mistakes in Point 1). Investing in counters that is less than optimal. For 2017, I will need to revise my investing strategies and avoid making the same mistakes by "swinging" too many shots.

Portfolio - 06 Nov 16

Commentary

This is a bad month for Singapore Equities. STI has retreated to below 2,800. Singapore is going through a crisis at the moment and a lot more headwind is expected to come.

Positions Added/Reduced

Added positions in SIA and Keppel DC REIT.

Cash is ~5 % of my portfolio. 

Counter (Singapore) 
1. RafflesMG

2. CDL HTrust 

3. Capitaland 

4. City Dev

5. Far East HTrust

6. CapitalR China Tr 

7. Capitaland Commercial Trust

8. Keppel Corp 

9. DBS 

10. OCBC 

11. UOB 

12. AIMS AMP REIT

13. Manulife REIT USD

14. SIA

15. Keppel DC REIT

Counter (USA)
1. VNGRD ENERGY 


Realised Gains (Since 2009) 
SGX Counters - S$135,234.93
US Counters - US$1,479.71

Dividends (Since 2009) 
S$56,087.05

Dividends (2016)

S$13,384.38

An investment thesis full of queries and questions

I refer to the post made by Eight percent per annum here.


He made a investment thesis about SIA Engineering which to me, is full of unanswered questions. 

Here are excerpts from his post:

"Aircraft maintenance is a flow business that thrives on more air travel, more aircrafts in the skies and more efficient safety checks. SIAEC is one of the few key players in Asia in the space alongside ST Engineering and HAECO, the maintenance arm for Cathay Pacific and has benefitted from this trend. The maintenance, repair and overhaul (MRO) business as it is formally called has high barriers to entry as it requires a certification process for each and every airline as well as a steady track record in order to win customers. In fact, some airlines view this as fundamental that it doesn't outsource this entirely but conduct some MRO operations in-house. Hence SIAEC had benefited mainly from LCCs in recent years since LCCs do not have the capacity to have full fledge MRO operations in-house. 

SIAEC is a play on the rise of global tourism alongside the influx of Low Cost Carriers or LCCs operating in Asia. It also benefits from more full fledge airlines outsourcing maintenance to established third parties like itself. As a leader in the industry, it enjoys a strong track record, economies of scale, an accumulation of knowhow and efficient processes and a strong branding via its relationship with Singapore being an aerospace hub and its parent SIA. It has generated strong free cashflow in the past and is likely to grow its earnings with the opening of T4 and T5."

-Air Asia and Lion Air are the biggest LCCs growing in the region, they don't outsource to SIAEC

-Which are the full service airlines that outsource to SIAEC?

"However more national carriers are also choosing to outsource maintenance to players like SIA Engineering as they can they reduce their asset footprint, sell hangars and facilities. It is also expensive for airlines to maintain a competent MRO workforce. Hence established players like SIAEC that have know-how and once they get economies of scale, can do MROs much cheaper than established airlines.

With Changi Airport embarking on an ever-expansion to Terminal Four or T4 in 2017 and ten years later to T5, SIAEC will also stand to gain more business simply by being the dominant player in Singapore. Airlines would definitely love to stopover in Singapore, do a quick overhaul and move on. This has always been our advantage. We are efficient, can turn around fast, has the reputation to get the job done well and all these in turn help to suck in more traffic and strengthen our brand name."

- Which are the national carries that are outsourcing their maintenance? 

- Dominant player in Singapore is not meaningful in Aerospace MRO, aircraft can fly to other countries and components can be shipped around the world.

Portfolio - 01 Oct 16

Added positions in SIA

Cash is ~6 % of my portfolio. 

Counter (Singapore) 
1. RafflesMG

2. CDL HTrust 

3. Capitaland 

4. City Dev

5. Far East HTrust

6. CapitalR China Tr 

7. Capitaland Commercial Trust

8. Keppel Corp 

9. DBS 

10. OCBC 

11. UOB 

12. AIMS AMP REIT

13. Manulife REIT USD

14. SIA

Counter (USA)
1. VNGRD ENERGY 


Realised Gains (Since 2009) 
SGX Counters - S$135,234.93
US Counters - US$1,479.71

Dividends (Since 2009) 
S$55,889.18

Dividends (2016)

S$13,186.51

Portfolio - 16 Sep 16

Added Positions in: 
a) CDL HTrust

Sold Positions in:

b) Capitaland Commercial Trust  
c) VNGRD Europe

Cash is ~3% of my portfolio. 

Counter (Singapore) 
1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 CapitalR China Tr 

7 Capitaland Commercial Trust

8 Keppel Corp 

9 DBS 

10 OCBC 

11 UOB 

12 AIMS AMP REIT

13 Manulife REIT USD

Counter (USA)
1 VNGRD ENERGY 


Realised Gains (Since 2009) 
SGX Counters - S$135,234.93
US Counters - US$1,479.71

Dividends (Since 2009) 
S$54,229.77

Portfolio - 07 Aug 16

I am putting the bank counters on close watch. 
Sold Positions in: 
a) City Development 
b) OUE HTrust 
c) STI ETF 

Cash is ~4% of my portfolio. 

Counter (Singapore) 
1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 CapitalR China Tr 

7 Capitaland Commercial Trust

8 Keppel Corp 

9 DBS 

10 OCBC 

11 UOB 

12 AIMS AMP REIT

13 Manulife REIT USD

Counter (USA)
1 VNGRD ENERGY 
2 VNGRD FTSE Europe

Realised Gains (Since 2009) 
SGX Counters - S$134,286.36
US Counters - US$1,117.64

Dividends (Since 2009) 
S$50,430.71

Portfolio - 01 Jul 16

Added Positions in:

a) AIMSAMP CAP REIT 

b) City Development 

c) Capital Retail China Tr

d) Capitaland Commercial Trust

e) Capitaland 

f) VNG FTSE Europe

Cash is ~1% of my portfolio. 

Counter (Singapore) 

1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 CapitalR China Tr 

7 Capitaland Commercial Trust

8 OUE H Trust

9 Keppel Corp 

10 DBS 

11 OCBC 

12 UOB 

13 STI ETF

14 AIMS AMP REIT

15 Manulife REIT USD

Counter (USA)

1 VNGRD ENERGY 
2 VNGRD FTSE Europe

Realised Gains (Since 2009) 

SGX Counters - S$135,778.05

US Counters - US$1,117.64

Dividends (Since 2009) 

S$50,256.31

Concept of Market Cap vs GDP Ratio

Market CAP to GDP ratio is a well known concept to measure under or over valuation of the stock market. Very useful for ETF investor tracing beta. You can see that STI is considered fairly valued in Jun 16.

My Portfolio - 03 Jun 16

Added Positions in:

a) AIMSAMP CAP REIT 

b) Capitaland

c) Manulife US REIT

Cash is ~4% of my portfolio. 

Counter (Singapore) 

1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 CapitalR China Tr 

7 Capitaland Commercial Trust

8 OUE H Trust

9 Keppel Corp 

10 DBS 

11 OCBC 

12 UOB 

13 STI ETF

14 AIMS AMP REIT

15 Manulife REIT USD

Counter (USA)

1 VNGRD ENERGY 



Realised Gains (Since 2009) 

SGX Counters - S$140,605.64

US Counters - US$1,117.64

Dividends (Since 2009) 

S$49,522.66

My Portfolio - 01 May 16

Added Positions in:

a) AIMSAMP CAP REIT 

b) CapitaR China Tr. 

Sold Positions in:a) OUE HTrust stake to weed non-performing REITs.

b) VNGRD REIT to take profit 

c) ST Engineering stake to rebalance my portfolio to property related counters

Cash is ~8% of my portfolio. 

Counter (Singapore) 

1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 CapitalR China Tr 

7 Capitaland Commercial Trust

8 OUE H Trust

9 Keppel Corp 

10 DBS 

11 OCBC 

12 UOB 

13 STI ETF

14 AIMS AMP REIT


Counter (USA)

1 VNGRD ENERGY 



Realised Gains (Since 2009) 

SGX Counters - S$140,605.64

US Counters - US$1,117.64

Dividends (Since 2009) 

S$47,270.71

My Portfolio - 01 Apr 16

I had added positions in City Development, Capitaland and UOB. I see value in properties and some banking counters. I sold Ascendas REIT to rebalance my portfolio to property developers. I sold and took profit for VNGRD Utilities.

Cash is ~7% of my portfolio. 

Counter (Singapore) 

1 RafflesMG

2 CDL HTrust 

3 Capitaland 

4 City Dev

5 Far East HTrust

6 ST Engineering 

7 CapitalR China Tr 

8 Capitaland Commercial Trust

9 OUE H Trust

10 Keppel Corp 

11 DBS 

12 OCBC 

13 UOB 

15 STI ETF


Counter (USA)

1 VNGRD REIT

2 VNGRD ENERGY 



Realised Gains (Since 2009) 

S$141,901.88

Dividends (Since 2009) 

S$46,497.24

My Portfolio - 06 Feb 16

I had added positions in Keppel Corp, VNGRD ENERGY and STI ETF. I had liquidated my positions in KIT and VNGRD REIT

Keppel Corp and VNGRD Energy - The oil and gas sector is being oversold. Most of the oil majors are profitable and still investing in projects. It is possible that Keppel can go bankrupt but the probability is assessed to be low. Oil majors are generally still profitable and some of them are continuing to invest in long term projects.

STI ETF - With the drop in local markets, I bought ETFs to benefit from any rebounds.I had liquidated my positions in KIT and VNGRD REITs. These positions are under performing and will be free up for other opportunities

Cash is ~7% of my portfolio.

Counter (Singapore)

1 RafflesMG

2 Ascendas REIT

3 CDL HTrust

4 Capitaland

5 City Dev

6 Far East HTrust

7 ST Engineering

8 CapitalR China Tr

9 Capitaland Commercial Trust

10 OUE H Trust

11 Keppel Corp

12 DBS

13 OCBC

14 UOB

15 STI ETF


Counter (USA)

1 VNGRD REIT

2 VNGRD ENERGY

3 VNGRD UTILITIES


Realised Gains (Since 2009)

S$141,970.58

Dividends (Since 2009)

S$43,302.94