"All man's miseries derive from not being able to sit quietly in a room alone.” Pascal, Blaise
Patience is a great asset, and I believe, a major differentiator of performance between fund managers. Every one of us are blessed (or cursed, depending on your viewpoint) with different abilities. It is a simple logical inference that the more actions we take, the more mistakes we are likely to make. This is an undeniable fact in the highly probabilistic world of business and investing.
Once again, patience is a simple concept in theory, but very difficult in practice. As some pundits say, even inaction is an action by itself. Stock prices can meander for years before a sudden spurt brings prices back to fair value. The time period for such spurts varies between 2% to 9% of the total holding period. So in a holding period of say 5 years, the share price performance comes in a period lasting only 1.2 to 5.4 months. In the meantime, glamour stocks are flying, and other opportunities appears to be zipping by while your own stocks do nothing. A similar situation arises when we attempt to resist the temptation to sell stocks which have increased in price. Let your winners run, they say. It is not an easy task to maintain equanimity and objectivity in such situations.
Needless to say, this week has been quite trying on my patience.
22 October 2012
Listening to TGA presentation. TEF aiming for $50m critical mass, funded by debt. Both TEF and Cashfirst to start major contributions in 2014 and 2015. One person kiosks reminds me of Bank Rakyat. Pretty significant competitive advantage once fully rolled out. NCML getting some major exposure to QBE, CBA and SDRO. Rentals maintaining excellent performance and spitting back cash to fund other lines. I can easily envisage a situation within 3 to 5 years when TEF, Cashfirst and NCML collectively contributes as much as Rentals, and a doubling of EPS.
23 October 2012
Rereading Competition Demystified by Greenwald.
UOA DEV Q3 results out. Total assets increased by 13.5% to MYR$2430m. Total liabilities increased by 21% to MYR$357m. Total equity increased by 12.3% to MYR$2072m. MYR$88m NPAT for quarter. 4 quarters=MYR$300m-$360m. UOS 66% share is MYR$200-$240m=AUD$60m to $80m. On a lowly PE 8 range, UOS should have a valuation range of AUD$480m to AUD$640m, and this ignores rental from investment properties held at parent level. A second way to value is taking UOADB’s market cap of MYR$2.1b, of which 66% is MYR$1.4b=AUD$460m, which ignores UOA REIT and also all assets held at parent company level. Every which way I cut it, there is a significant undervaluation. A slap in the face type of undervaluation.
Assessing CAB- bearing in mind that the market usually overdiscounts near term uncertainties. AGM on Wednesday 28 November 2012.
26 October 2012
IPP still headed the right way. http://blog.iproperty.com.my/ceo-blog/the-iproperty-group-is-gaining-weight/ Cannot wait for this baby to turn cashflow positive.
IPP extended leadership in HK- arguably the most important of all its markets. Waiting for news that the other 3 property developers have joined the party, and it will all be game over for the competitors. HK will make more money than Malaysia, Indonesia and Singapore combined. IPP revenue running at AUD$15m per annum now. Compared to REA in 2003 with AUD$9m revenue. In 2004 REA revenue jumped to AUD$19m, and it started making a profit. REA revenue is AUD$280m in 2012 with penetration of 60% of RE spend. IPP currently at 5% penetration of RE spend. A six-fold increase to 30% RE spend will online will see revenue at AUD$90m. Current market cap for IPP is AUD$160m.
27 October 2012
CSL- profit guidance up 20% despite currency headwinds. This is a sad miss for an entry price below $30 in February 2012. The opportunity cost is a whopping 66% gain forgone, not counting dividends.
AMA- CEO address. Appears to be squeezing out growth and good performance from all divisions, especially FluidDrive with quarterly EBIT up a stunning 200% pcp.
Disclosure: The author owns shares in AMA, IPP, UOS and TGA.
Disclaimer: the content of this post is not to be relied on as financial advice. It contains my personal opinion only, plus facts that I cannot verify to be accurate. Do your own research and seek financial advice where appropriate. I have made many mistakes in the past, and will continue to do so in the future.