Posted by: donmihaihai | July 18, 2007

Getting excited in an unexciting market.

The stock market is moving too fast for my liking. It is only after being pointed out by one investor that I know Sesdaq produces a year to date return of 111%. At 300, is Sesdaq becoming another China market? I still remember clearly that not too long ago, Sesdaq was trading at around 80, after some kind of rebound from the last bear market. At around the same period, there were articles pointed out that Sesdaq lost much of it value in the 1990(forget the exact date). Someone who bought every single stock in Sesdaq made 5 to 10 X of their money in a few years time. Not so say that one of the stocks is Venture which move to mainboard and continue it raise until 2000. History is repeating itself again. Will the next piece of history, losing more than half of their value, repeat itself?

For the 1st time in my short history of 6 years in stock investing that one of my holdings was being bought out. My 1st experience of selling stock without transaction fees. The feeling of not paying fees is great, more so when I just wait for the whole process to be completed, without the need to log in and sell thru brokerages firm. I can afford to wait since the money went straight into the bank as there is not new idea.

Talking about experience, I haven’t has any experience on rights issue, script dividends and tax section 44. I do not try to avoid them but looking at those kinds of companies that generate my interests, it is likely that I will not encounter many rights issue and script dividends in the future. Let hope it stay in this way and for buyout, it is good to has but not a must.

While searching for new investing opportunity using my slow process, I just can’t find stock at a price that I am willing to buy. Looking left and right, it struck me that besides being comfortable with my current holdings, a number of them are actually trading a valuation relatively cheaper than the other that I don’t own and not to say their qualities is actually somehow better. I am even willing to add on to one of them at it current valuation. Not extremely cheap but cheap enough.

Since the beginning of last year, I actually bought 3 stocks, SP Chems, TPV and Jaya, TPV is an add on while SP Chems and Jaya are new buy. There is nothing significant about these purchases except that I have been following them, reading every news, announcement and reports way before they are trading at a price where I am willing to buy. Adding on to a current holding is nothing new but the 1st and the 2nd purchase is more than 5 yrs apart. That happened after TPV crashed from a high of >$2.00 to <$0.90, right before the release of FY2006 results. Years of reading their annual reports give me the confident to purchase even after knowing that their coming results will be bad. I seldom show this kind of confident on new purchases.

Despite reading Jaya annual reports yearly since 2001, I did not purchase a single share. But while reading their FY2006 annual report, I suddenly realised that Jaya is extremely cheap at a price of below $1.50. No DCF, PTB or even PE ratio is needed, the B/S and cashflow is shouting, that they are trading at a valuation of 3 to 5 X future cashflow plus assets. The only problem is how long the current offshore super upcycle can last. The longer it last, the cheaper is Jaya. Spending 2 to 3 weeks reading back annual reports, filings, news, all kind of stuffs on the offshore vessels, rigs and competitor’s annual reports. I bought a few shares even before finish the available stuffs. I realised that Jaya is not a long term holdings but it is a very good flip and there are as many as 3 to 5 catalysts that can change the public views on Jaya.

I start to appreciate why Warren Buffett is always reading the annual reports of many firms that he been following since dun know when. And many of his successes come not from new idea of firm but those old one. This makes me more willing to dig into companies that I will not be buying today. Thinking of the possibilities of finding SP Chems or Jaya another few years later from current readings make me so keen.

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