AMDG
While posting comments on the online PSE forum site www.financemanila.net, a terribly embarrassing mistake of mine was brought to my attention. In my previous blog entry here, I wrote like a gushing schoolgirl with a big crush, extolling NRCP and its “one third book value and four times earnings when trading at P2.85 per share”. Little did I know that my failure to double check-my figures would lead me to some awkward posts in financemanila and maybe even the wrong decision to buy NRCP.
You see, to determine the number of outstanding shares of a company, I usually just look at the second page of its SEC Form 17-Q that I download from the PSE website (www.pse.org.ph), where the number of outstanding shares is written. Somehow, with the Form 17-Q of NRCP, it says on the second page it has 741,902,600 common shares but indicates that it has 2,181,954,600 common shares in its balance sheet. Unfortunately, I overlooked this, even when the company’s 9-month period EPS was just P0.22 in the f/s and P0.56 in my Excel spreadsheet (which automatically computes EPS, among others).
So there I was in financemanila, aggressively placing my bet on NRCP as a strong buy at 2.85. Fortunately, the good posters of financemanila were kind enough to point out my mistake: with 2,181,954,600 shares, NRCP is actually just a couple of centavos below book value at P2.85 per share, and a little over ten times this year’s earnings. While it was very embarrassing to make such an elementary error, I also could not help but feel grateful to the people who got out of their way to correct me (many thanks to you, guys).
Going back to NRCP, I’m sure there’s a reason why the second page of their SEC Form 17-Q puts the number of shares at more than one billion less than that in their balance sheet (stock split, stock dividend, typographical error, error split, typographical dividend – I don’t know). I double-checked the Form 17-Q’s of the companies I’ve bought into and the companies in my watchlist (seventeen of them so far), and I have yet to find a difference with the number of shares listed in the second page and in the balance sheet (the good news here is, while I made some wrong computations with NRCP, all my other computations for the other companies seem correct). Well, you live, you learn…sometimes the hard, embarrassing way.
As for NRCP though, I had bought this stock primarily because I thought it was really, really cheap – like a three-for-one-peso banana-cue…on midnight sale…during banana season. With this recent development though, that’s not quite the case any longer. Of course, it still has a monopoly on the reinsurance business here in the Philippines. Moreover, even if it’s not trading at a very attractive “just a third of book value”, as I earlier thought, it is still doing so at just around its exact book value, which isn’t that bad. But then again, even with its monopoly on the reinsurance business, its growth prospects do not seem quite as bright. It has a generous dividend yield (around 7% – at least for now), but it’s this exact same dividend yield that could possibly inhibit growth in the long term.
All in all, NRCP still has its monopoly on the country’s reinsurance going for it. Aside from that, everything else doesn’t seem to look as attractive as it used to. Will do some more research here, but I’ll probably have to let it go at low- to mid- P3’s per share level, if it does get there. Well, not unless it does become a $3B company come 2011, as the company’s management claims it will (too much midnight sale, banana season banana-cue for them, perhaps?). At current exchange rates, that would put its book value at P55 per share. And this time, that’s based on the correct number of shares:-)
Peace out!
Sunday, March 30, 2008
Thursday, March 27, 2008
Silver lining
AMDG
Congratulations to CHIB and to NRCP! The last time I checked market prices was several days ago (I’ve been rather busy lately). Since then, CHIB hiked up from P600 to P620, while NRCP shot from P2.40 to P2.85.
CHIB recently got a ratings upgrade from “Stable” to “Positive”, but I can’t help but feel disappointed with its 2007 net income. CHIB is a very, very solid company, and this is one stock the I bought for the really long haul. Now, though, I’m tempted to move my funds therein to some other company with stronger growth prospects, like COAT, AP or I. Or maybe even AGI.
Will write more after weighing the pros and cons about that issue.
Congratulations also to NRCP for more than doubling its 2007 net income to P609M from P275M in 2006. The increase came about from successful underwriting investments and well-managed operating expenses. The “successful underwriting investments and well-managed expenses” bit is pretty general, but I still don’t have a copy of the full year 2007 f/s. With nothing to pore over, I’ll just have to content myself with the broad overview that I got from the newspaper.
The P609M net income translates to a P0.37 earnings per share, a little more than half of which (P0.20) will be given out as cash dividends for stockholders on record on April 10, 2008. I can’t say I’m not happy I’ll be getting a rather sizable check again, but I’m also concerned about NRCP giving out half of earnings as dividends. Of course, capex isn’t much of an issue for a reinsurance company (please correct me if I’m mistaken about this). However, giving out such a big amount seems to contradict the company’s goal of being a THREE BILLION DOLLAR-company in just three years. As if this goal isn’t ambitious enough WITHOUT giving dividends considering the company’s total assets now is just P10B (note, that’s ten billion PESOS - $250M under current exchange rates).
Lofty ambitions aside, NRCP is still undeniably a good buy. At current prices of P2.85 per share, that’s just a third of book value and just under four times earnings. Had anybody bought it a few days ago at P2.40 (as I would have if I had extra cash), it would have been an even better bargain. Although, on the down side, ROE’s just a meager 6.45% (as of annualized 3q07 earnings, which is just shy of the actual, newly-released 2007 figure), and growth prospects don’t seem to look as bright (unless they really do manage to become a $3B company in just three years) as companies the likes of AP, COAT, EDC or other mining companies that, right now, would classify as speculative investments.
Does it look like I’m writing one run-on sentence after another? Well, can’t help it.
I guess what I’m trying to say is that overall, NRCP seems to be proving itself as a good investment (especially more so if they become a $3B company in just three years…yes, I’m saying it over and over again because I’m rooting for it!). For this, I have to thank my good friend compounder888 for introducing this stock to me. It wasn’t until he told me about NRCP that I did research on it and saw its potential. So, many thanks Chief, even though I have yet to break even with this stock (I’m assuming the same for you too). Best of luck to us both. I’d also like to point out that I’ve already taken two advices you’ve given me (SMDC and NRCP). About time you bought AGI, pre, or COAT.
And to top the morning off, I just got another bit of really good news from my other good friend, spyfrat: PX is initiating a buyback program that involves 10%!!! YAHOO!!! Still no hard details though aside from the percentage that’s going to be bought back, but this is definitely good icing to the cake.
Congratulations to CHIB and to NRCP! The last time I checked market prices was several days ago (I’ve been rather busy lately). Since then, CHIB hiked up from P600 to P620, while NRCP shot from P2.40 to P2.85.
CHIB recently got a ratings upgrade from “Stable” to “Positive”, but I can’t help but feel disappointed with its 2007 net income. CHIB is a very, very solid company, and this is one stock the I bought for the really long haul. Now, though, I’m tempted to move my funds therein to some other company with stronger growth prospects, like COAT, AP or I. Or maybe even AGI.
Will write more after weighing the pros and cons about that issue.
Congratulations also to NRCP for more than doubling its 2007 net income to P609M from P275M in 2006. The increase came about from successful underwriting investments and well-managed operating expenses. The “successful underwriting investments and well-managed expenses” bit is pretty general, but I still don’t have a copy of the full year 2007 f/s. With nothing to pore over, I’ll just have to content myself with the broad overview that I got from the newspaper.
The P609M net income translates to a P0.37 earnings per share, a little more than half of which (P0.20) will be given out as cash dividends for stockholders on record on April 10, 2008. I can’t say I’m not happy I’ll be getting a rather sizable check again, but I’m also concerned about NRCP giving out half of earnings as dividends. Of course, capex isn’t much of an issue for a reinsurance company (please correct me if I’m mistaken about this). However, giving out such a big amount seems to contradict the company’s goal of being a THREE BILLION DOLLAR-company in just three years. As if this goal isn’t ambitious enough WITHOUT giving dividends considering the company’s total assets now is just P10B (note, that’s ten billion PESOS - $250M under current exchange rates).
Lofty ambitions aside, NRCP is still undeniably a good buy. At current prices of P2.85 per share, that’s just a third of book value and just under four times earnings. Had anybody bought it a few days ago at P2.40 (as I would have if I had extra cash), it would have been an even better bargain. Although, on the down side, ROE’s just a meager 6.45% (as of annualized 3q07 earnings, which is just shy of the actual, newly-released 2007 figure), and growth prospects don’t seem to look as bright (unless they really do manage to become a $3B company in just three years) as companies the likes of AP, COAT, EDC or other mining companies that, right now, would classify as speculative investments.
Does it look like I’m writing one run-on sentence after another? Well, can’t help it.
I guess what I’m trying to say is that overall, NRCP seems to be proving itself as a good investment (especially more so if they become a $3B company in just three years…yes, I’m saying it over and over again because I’m rooting for it!). For this, I have to thank my good friend compounder888 for introducing this stock to me. It wasn’t until he told me about NRCP that I did research on it and saw its potential. So, many thanks Chief, even though I have yet to break even with this stock (I’m assuming the same for you too). Best of luck to us both. I’d also like to point out that I’ve already taken two advices you’ve given me (SMDC and NRCP). About time you bought AGI, pre, or COAT.
And to top the morning off, I just got another bit of really good news from my other good friend, spyfrat: PX is initiating a buyback program that involves 10%!!! YAHOO!!! Still no hard details though aside from the percentage that’s going to be bought back, but this is definitely good icing to the cake.
Monday, March 24, 2008
daydream
AMDG
If you’re just daydreaming, so you might as well dream big.
PX right now makes up for 20% of my portfolio – relatively sizable. And since my average purchase price for PX is just P4.03 per share…Well, it’s seen better days but I suppose you could say it’s still pretty profitable (PX now is now doing P6.30 after the following: nose-diving from a recent 52-week high of P11.75, its 30% stock dividend several weeks ago, its special cash dividend late last year, and a whole bunch of other cash dividends early to mid last year).
That’s the good news. Well, good enough for the optimist in me, at least. The bad news is that every other stock I have is doing so dismally that all the gains I got from PX have been totally wiped out. Even the extraordinary gains of PX could not do anything to mitigate the losses from the other 80% of my portfolio and – to since June of 2007 – I’m 15% down overall.
One of my biggest losers comes from the biggest component in my portfolio: AGI. Boss Andrew Tan’s holding company accounts for 24% of my portfolio and contributes a hefty and bitter 32.51% loss thereto. I initially bought this stock at P6.10 (just a tad bit above book value). I bought again at P4.20 when the subprime fiasco blew up to lower my average. Now, AGI is doing 3.50 and seems to be showing no signs of slowing its downward slide.
“SELL, YOU SORRY EXCUSE OF A SON OF A GUN!” many might say. “It ain’t yella to save your own skin boy, and you ain’t gonna be any less of a man! SELL!!!” Indeed, many a technical trader might have sold out long ago. Me, I just pull up the crotch of my pants, spit to the side, and say in my lowest, most fearless, macho, cowboy-like voice: “Ain’t my style.” Of course, I’d be standing with my legs apart when I do this – yeah, for the macho stance, but also to hide how my knees would be shaking so badly at the prospect of AGI falling to P2.00 per share.
But it’s not all bad for AGI. First up, it’s a really cheap way of buying into MEG, probably the fastest growing real estate company in the Philippines. Secondly, the way Andrew Tan and co have managed their businesses, I have strong faith that AGI will run up and challenge the big boys AC and SMIC (but probably not anytime soon). At almost half its book value just about seven times its earnings (annualized from 3q07), AGI at P3.50 is a steal, with its P29B cash hoard, P19.4B in revenues, P3.4B net income for 3q07, well-managed debt (half of equity) and – its strong suit, according to some analysts – very strong ties to the resilient (I hope!!!) Filipino consumer market via MEG, GADC and EDI, etc.
It does have its weaknesses, I concede. For one, I can’t find any solid numbers for EDI, which claims to have the best selling brandy worldwide (Emperador Brandy). Until I see some audited financial statements or hear from a highly reputable source that yes, Emperador is the best-selling brandy worldwide, I don’t think I’ll be 100% as far as this is concerned (especially since I’ve never seen anyone actually drinking the stuff).
Also, I mentioned how I hope the Filipino consumer market is more resilient than expected. Everyone now is expecting consumption to go down, especially in a country whose number one trading partner and whose number one source of OFW remittances is the United States. Not to mention the strengthening peso and the weakening dollar. But I’m willing to go out on a limb here and say no, the Filipino consumer will keep on buying. After all, we’re exporting almost a million warm bodies every year (almost enough to melt the ice caps with their urine if we sent them all to the North and South Poles), and they keep sending back more and more money. Exports-wise, alternatives are more available now than ever. Well, maybe the alternatives won’t be enough to compensate for a U.S. slowdown, but at least we don’t end up with nothing.
Another weakness: AGI’s meager ROE. At just 7.88%, it may be at par with its peers in the Holdings sector, but it’s not as high as I’d like it to be (like I said, I’m willing to compromise, which was what led me to buy this stock).
But I’m getting lost here. After all, I’m writing to talk about a daydream. And the daydream is this: with AGI’s aforementioned P29B cash hoard, it just about able to buy any one of half of the companies listed in the PSE, plus their kitchen sinks. In my portfolio alone, COAT (market cap: P4.1B), NRCP (market cap: P1.7B) and SMDC (market cap: P9.3B) fit this bill. Heck, AGI could even buy all of these three COMBINED!
Hey, there’s a thought…
But what I originally had in mind was this: with it’s P29B cash hoard, AGI could very easily buy a majority controlling stake in one very good company (imo, at least) – Philex Mining.
At just P6.20 per share (as of yesterday’s close) PX only has a P23.9B market cap. Half of this would be easy pickings for AGI. IT WON’T EVEN HAVE TO TAKE OUT A LOAN! It won’t get PX’s kitchen sink though…
Anyway, think about it: with it’s P5B net income for 2007, AGI could break even with PX in just around five years. PX also has some very strategic “jackpot” investments in oil exploration and other mines. PX is also a very good way to diversify out of the “volatile” consumer market of the Philippines (although, volatility-wise, investing into a mining company may be a from-the-frying-pan-into-the-fire move for AGI – but it’s diversification nonetheless). Most importantly of all, AGI buying into PX would put some spice into the two biggest boys in my portfolio.
Of course, you could very well say PX has its weaknesses too (who or what doesn’t). Padcal’s getting old (though it did get a new lease on life last year when its mine life was extended up to 2014), you never know when gold and copper prices would slide and if that slide would be as spectacular as its rise, the Boyongan project doesn’t seem to be moving and PX doesn’t seem to have any other ace up its sleeve as far as other mines is concerned, the stock price is still too expensive, there’s a rumor about management screwing up somewhere, and PX’s oil exploration investments – huh?
Refuting all those would probably take too long and would be best suited for another day.
As for the volatility in the mining industry, I could say that the fundamentals behind high metal prices (weak American economy, sagging dollar, surging demand from emerging economies, high oil prices) are still pretty much in play, despite gold’s recent fall from above the $1,000 mark to the low $900’s. But if you ask me whether or not metal prices will still be where they are now in five years, or whether they will be higher or lower by that time, I’m afraid I cannot give an answer. No one can, I believe, and that is probably the greatest weakness of PX as a major, long-term investment for a company like AGI.
The silver lining to that issue though is this: in the medium term, even if gold falls to the mid-$800 levels, that price is still much higher than the average realized gold price for the first three quarters of 07, which was $663 (the same thing could be said for copper, whose current price is around $3.90 per pound and whose average realized price for the same period was $3.58). Given that, I wouldn’t be surprised if 2008 ends up as another banner year for PX. 2009? 2010? 2011? 2015? 2020? Can’t say. But as far as 2008 is concerned, I’m willing to bet 20% of my portfolio that it’ll be good.
All in all, in my opinion, I do believe having PX under it’s wing would not be all that bad for AGI at all. It would be a good thing, I believe. And not just for AGI, but for my portfolio as well.
Hey, if you’re just daydreaming, you might as well dream big :-)
Belated Happy Easter to all! :-)
If you’re just daydreaming, so you might as well dream big.
PX right now makes up for 20% of my portfolio – relatively sizable. And since my average purchase price for PX is just P4.03 per share…Well, it’s seen better days but I suppose you could say it’s still pretty profitable (PX now is now doing P6.30 after the following: nose-diving from a recent 52-week high of P11.75, its 30% stock dividend several weeks ago, its special cash dividend late last year, and a whole bunch of other cash dividends early to mid last year).
That’s the good news. Well, good enough for the optimist in me, at least. The bad news is that every other stock I have is doing so dismally that all the gains I got from PX have been totally wiped out. Even the extraordinary gains of PX could not do anything to mitigate the losses from the other 80% of my portfolio and – to since June of 2007 – I’m 15% down overall.
One of my biggest losers comes from the biggest component in my portfolio: AGI. Boss Andrew Tan’s holding company accounts for 24% of my portfolio and contributes a hefty and bitter 32.51% loss thereto. I initially bought this stock at P6.10 (just a tad bit above book value). I bought again at P4.20 when the subprime fiasco blew up to lower my average. Now, AGI is doing 3.50 and seems to be showing no signs of slowing its downward slide.
“SELL, YOU SORRY EXCUSE OF A SON OF A GUN!” many might say. “It ain’t yella to save your own skin boy, and you ain’t gonna be any less of a man! SELL!!!” Indeed, many a technical trader might have sold out long ago. Me, I just pull up the crotch of my pants, spit to the side, and say in my lowest, most fearless, macho, cowboy-like voice: “Ain’t my style.” Of course, I’d be standing with my legs apart when I do this – yeah, for the macho stance, but also to hide how my knees would be shaking so badly at the prospect of AGI falling to P2.00 per share.
But it’s not all bad for AGI. First up, it’s a really cheap way of buying into MEG, probably the fastest growing real estate company in the Philippines. Secondly, the way Andrew Tan and co have managed their businesses, I have strong faith that AGI will run up and challenge the big boys AC and SMIC (but probably not anytime soon). At almost half its book value just about seven times its earnings (annualized from 3q07), AGI at P3.50 is a steal, with its P29B cash hoard, P19.4B in revenues, P3.4B net income for 3q07, well-managed debt (half of equity) and – its strong suit, according to some analysts – very strong ties to the resilient (I hope!!!) Filipino consumer market via MEG, GADC and EDI, etc.
It does have its weaknesses, I concede. For one, I can’t find any solid numbers for EDI, which claims to have the best selling brandy worldwide (Emperador Brandy). Until I see some audited financial statements or hear from a highly reputable source that yes, Emperador is the best-selling brandy worldwide, I don’t think I’ll be 100% as far as this is concerned (especially since I’ve never seen anyone actually drinking the stuff).
Also, I mentioned how I hope the Filipino consumer market is more resilient than expected. Everyone now is expecting consumption to go down, especially in a country whose number one trading partner and whose number one source of OFW remittances is the United States. Not to mention the strengthening peso and the weakening dollar. But I’m willing to go out on a limb here and say no, the Filipino consumer will keep on buying. After all, we’re exporting almost a million warm bodies every year (almost enough to melt the ice caps with their urine if we sent them all to the North and South Poles), and they keep sending back more and more money. Exports-wise, alternatives are more available now than ever. Well, maybe the alternatives won’t be enough to compensate for a U.S. slowdown, but at least we don’t end up with nothing.
Another weakness: AGI’s meager ROE. At just 7.88%, it may be at par with its peers in the Holdings sector, but it’s not as high as I’d like it to be (like I said, I’m willing to compromise, which was what led me to buy this stock).
But I’m getting lost here. After all, I’m writing to talk about a daydream. And the daydream is this: with AGI’s aforementioned P29B cash hoard, it just about able to buy any one of half of the companies listed in the PSE, plus their kitchen sinks. In my portfolio alone, COAT (market cap: P4.1B), NRCP (market cap: P1.7B) and SMDC (market cap: P9.3B) fit this bill. Heck, AGI could even buy all of these three COMBINED!
Hey, there’s a thought…
But what I originally had in mind was this: with it’s P29B cash hoard, AGI could very easily buy a majority controlling stake in one very good company (imo, at least) – Philex Mining.
At just P6.20 per share (as of yesterday’s close) PX only has a P23.9B market cap. Half of this would be easy pickings for AGI. IT WON’T EVEN HAVE TO TAKE OUT A LOAN! It won’t get PX’s kitchen sink though…
Anyway, think about it: with it’s P5B net income for 2007, AGI could break even with PX in just around five years. PX also has some very strategic “jackpot” investments in oil exploration and other mines. PX is also a very good way to diversify out of the “volatile” consumer market of the Philippines (although, volatility-wise, investing into a mining company may be a from-the-frying-pan-into-the-fire move for AGI – but it’s diversification nonetheless). Most importantly of all, AGI buying into PX would put some spice into the two biggest boys in my portfolio.
Of course, you could very well say PX has its weaknesses too (who or what doesn’t). Padcal’s getting old (though it did get a new lease on life last year when its mine life was extended up to 2014), you never know when gold and copper prices would slide and if that slide would be as spectacular as its rise, the Boyongan project doesn’t seem to be moving and PX doesn’t seem to have any other ace up its sleeve as far as other mines is concerned, the stock price is still too expensive, there’s a rumor about management screwing up somewhere, and PX’s oil exploration investments – huh?
Refuting all those would probably take too long and would be best suited for another day.
As for the volatility in the mining industry, I could say that the fundamentals behind high metal prices (weak American economy, sagging dollar, surging demand from emerging economies, high oil prices) are still pretty much in play, despite gold’s recent fall from above the $1,000 mark to the low $900’s. But if you ask me whether or not metal prices will still be where they are now in five years, or whether they will be higher or lower by that time, I’m afraid I cannot give an answer. No one can, I believe, and that is probably the greatest weakness of PX as a major, long-term investment for a company like AGI.
The silver lining to that issue though is this: in the medium term, even if gold falls to the mid-$800 levels, that price is still much higher than the average realized gold price for the first three quarters of 07, which was $663 (the same thing could be said for copper, whose current price is around $3.90 per pound and whose average realized price for the same period was $3.58). Given that, I wouldn’t be surprised if 2008 ends up as another banner year for PX. 2009? 2010? 2011? 2015? 2020? Can’t say. But as far as 2008 is concerned, I’m willing to bet 20% of my portfolio that it’ll be good.
All in all, in my opinion, I do believe having PX under it’s wing would not be all that bad for AGI at all. It would be a good thing, I believe. And not just for AGI, but for my portfolio as well.
Hey, if you’re just daydreaming, you might as well dream big :-)
Belated Happy Easter to all! :-)
Wednesday, March 19, 2008
Introduction
AMDG
About this blog:
Hi! Warmest greetings to anyone who may have stumbled into this blog and decided against his/her better judgment to read on. Welcome to rpstockblogger.com, my personal logbook about the Philippine Stock Market – a montage of thoughts, opinions, statistics, rumors, personal conspiracy theories, facts and what-else-not that I believe is worth writing down.
Seeing as this blog might go in all directions all at once, let me just set a few parameters and disclaimers:
1. All you see and read here are personal – i.e., they are not to be taken as professional advice or anything like that. I am as far from being a professional stock investor as from being a professional anything. So anything you see here, take it with a grain of salt.
2. My primary objective for doing this is to have a venue for remembering whatever thoughts, strategies, eureka moments and sudden, gut-wrenching realizations of a wrong investment that I may have made that pops into my head. It only happens to often with me: I’m sterilizing my daughter’s milk bottles or changing her diaper when I realize I should’ve looked into this or invested in that, only to forget it the next day when I go to the office. Though I have a spreadsheet for qualitative and quantitative data and opinions, I find that writing my thoughts in prose gives it more structure.
3. My secondary objective is to share – and, in the same process, to learn. There are many other stock market investors out there who may be looking for insights and who may want to read my cockamamie opinions. Also, there may be a lot of stock market enthusiasts out there who may want to CORRECT my cockamamie opinions. Both reasons, I believe, will make this endeavor worthwhile.
About the latter reason, though – the part where others may want to correct me – this is something I would highly appreciate. All stock investors are in it to make money, so feel free to be as frank as possible when commenting on any of my thoughts or opinions. I’d rather be corrected than realize too late that I’m stuck with a bad stock. Additionally, for those times when I believe I am correct, a more lengthy exchange of ideas would be a good thing to have J
4. The scope of my blog is largely limited to the Philippine Stock Market, i.e., the Philippine Stock Exchange. Expect to find also tidbits about the Philippine economy, specific Philippine industries, rumors from business clubs, etc. Of course, we can’t exactly pull ourselves away from the web of the global economy, so cause-and-effect relations from abroad will play a huge role here too.
About me and my trading style:
I consider myself a fundamental investor. I buy a stock based on financial soundness, operational efficiency, growth prospects and price attractiveness. To judge according to these criteria, I look mainly at news reports, PSE disclosures, annual reports and financial statements. Of course, I also get in touch with my broker and other friends who also invest for rumors, news, etc. From there, I come up with a quantitative and qualitative database per company that I pore over when deciding whether or not to buy.
As a fundamental investor, I usually hold stocks until I find them too expensive (that is, when the price becomes much greater than the book value, the price per share returns and the qualitative premium over that I place over these two, as dictated by my comfort level and appetite for risk). That usually takes anywhere between several months to several years, depending on the stock and the condition of the market. The shortest stock I ever held that I can remember (i.e., that I have a record of) is EIB, which I bought at P0.49 on March of 2007 and sold at P0.54 of the same year. The longest stock which I’ve held (and still holding onto to date) is PX, which I started buying at August of 2006 at an average price of P4.03 a share.
As for the buying, I prefer stocks with healthy balance sheets, good management strong growth potential and low per and p/bv ratios. Too much to ask under normal circumstances, yes, but that’s just the ideal. I’m pretty open to compromise as far as these criteria are concerned, otherwise I would have never been able to buy a single stock.
I have been investing in the stock market for over five years now. For the first two or three years, I just bought whatever stock I felt like buying; I was the coin-toss investor. After and 8%-15% gain, I’d usually sell, toss the coin again, buy again, and repeat the process. Luckily enough, I made 50% in my first year of investing in PSE!
The second year, I lost around 15% in the BDO IPO. The IPO price was P18.00, and it went down to the P15-P16 level in a few months. I cut my losses (a mistake, considering BDO is trading now at around 80 bucks a pop – but that’s why I’d like to learn and be constructively criticized) and went back to my darling at the time (and incidentally, a bank that was gobbled by BDO just last year): EPCI. I gained back what I lost and got out barely breaking even.
I stopped trading for a year or so after that, stung by the fact that I jeopardized my life savings (oh how youth is wasted on the young!). Then a good friend of mine (let’s call him compounder888) asked me about the stock market and how to invest therein. I gladly took him to my broker and introduced him to another friend (let’s call this other guy spyfrat – yes, he’s the same spyfrat whose name is among the most respected technical analysts in the PSE forums). From there, compounder888’s portfolio really took off. I was particularly challenged when he tripled his money in URC. His success made me take a long, hard look at how I was investing; I mean, whatever he was doing, I’m sure it was better than tossing coins.
So it was at this point that I decided to have a little discipline in how I invested. I still made some mistakes along the way (SMCB, PCOR). By and large though, I began to find my rhythm, and things started to fall into place. Overall, in the eighteen months spanning November 2005 to May 2007, my portfolio jumped 104.55% - can’t say I wasn’t happy with that.
But despite the satisfactory returns I got that year, there are still things I now realize in hindsight. There were stocks where I got lucky, stocks which I bought for the wrong reasons. There were the recommendations that I took at face value without any research on my part, and there were tons of research on my part that I did not act on because of the recommendations I took just at face value (JGS at P3.50++, ASIA at P5.00++ and RCB at P8.00++).
I suppose you could also say that I, along with many others, just got lucky that year because stocks were good overall anyway. You could say that I could’ve stayed on with my coin-toss method of stock-picking and still make money, given how hot the market was. Well, maybe. But to this I would point out one barometer of gauging how good your progress is in the stock market, one that my friend compounder888 uses: whether or not you beat the index. I don’t have solid figures for the PSEI during that period, but I’m confident I beat it. But, much more importantly, I would point out that it was during this time that I developed my investment style, a style that (let’s hope) is much more successful and sensible that tossing coins.
It was this investment style that helped save me from the initial onslaught of the global meltdown brought about by the American credit crisis. By May of 2007, my portfolio was too bloated for comfort. I had stocks trading at beyond six times its book value (PAX) or thirty times its earnings (MEG). It was at this point when I decided to sell everything I had except PX, whose extremely bright prospects allowed me to look past the fact that its price was hovering just below 2:1 p/bv.
True enough, all the stocks that I let go took a beating (particularly PAX, which lost 90% of its value). True enough too, PX continued its stellar rise, hitting a high of P11.75 before being pulled back down to earth (I’m still confident this guy has what it takes to reach the low teens).
But I wasn’t totally spared: I bought into AGI just weeks before the meltdown. I also went back into the market too early (now would’ve been better) and downed a sizable amount into SMDC (enough to make it 17% of my portfolio) – a company that has 60% of its assets in equities and a quarter of whose revenues comes from mark-to-market gains. Needless to say, with the downturn, SMDC was slaughtered.
So now, here I am, coping with an 11% loss since June of 2007 and with no more money to buy more shares at lower prices. The journey’s just beginning.
(On a more personal note, I’d like to express my gratitude to my friend, compounder888, for forcing me to pull my head out of my ass and discover there’s more to stocks than posting a list of blue chips on the wall, throwing a dart at it and buying whatever I hit. Although this guy and I barely agree on anything stocks-, market- and economy-wise even until now, I don’t think I’d be writing this blog if he didn’t challenge me to be better at investing. As a matter of fact, his own blog, www.chiefstocks.blogspot.com, is one of the reasons why I thought of making one of my own. Copy-cat, yeah, I know, but who introduced who to stocks anyway?! Hehe, just kidding, Chief. “You can’t argue with success,” as compounder888 would say about Warren Buffett, but you sure can try to copy it. Anyway, this guy’s had more than his fair share of good calls as far as stocks is concerned, so check his blog out too while you’re at it.)
So now you know what the blog is about, and you have a background idea about the person writing it. Feel free to read on, comment, ask, object or refute. For any of that, don’t hesitate to e-mail me at rpstockblogger@gmail.com.
Enjoy!
About this blog:
Hi! Warmest greetings to anyone who may have stumbled into this blog and decided against his/her better judgment to read on. Welcome to rpstockblogger.com, my personal logbook about the Philippine Stock Market – a montage of thoughts, opinions, statistics, rumors, personal conspiracy theories, facts and what-else-not that I believe is worth writing down.
Seeing as this blog might go in all directions all at once, let me just set a few parameters and disclaimers:
1. All you see and read here are personal – i.e., they are not to be taken as professional advice or anything like that. I am as far from being a professional stock investor as from being a professional anything. So anything you see here, take it with a grain of salt.
2. My primary objective for doing this is to have a venue for remembering whatever thoughts, strategies, eureka moments and sudden, gut-wrenching realizations of a wrong investment that I may have made that pops into my head. It only happens to often with me: I’m sterilizing my daughter’s milk bottles or changing her diaper when I realize I should’ve looked into this or invested in that, only to forget it the next day when I go to the office. Though I have a spreadsheet for qualitative and quantitative data and opinions, I find that writing my thoughts in prose gives it more structure.
3. My secondary objective is to share – and, in the same process, to learn. There are many other stock market investors out there who may be looking for insights and who may want to read my cockamamie opinions. Also, there may be a lot of stock market enthusiasts out there who may want to CORRECT my cockamamie opinions. Both reasons, I believe, will make this endeavor worthwhile.
About the latter reason, though – the part where others may want to correct me – this is something I would highly appreciate. All stock investors are in it to make money, so feel free to be as frank as possible when commenting on any of my thoughts or opinions. I’d rather be corrected than realize too late that I’m stuck with a bad stock. Additionally, for those times when I believe I am correct, a more lengthy exchange of ideas would be a good thing to have J
4. The scope of my blog is largely limited to the Philippine Stock Market, i.e., the Philippine Stock Exchange. Expect to find also tidbits about the Philippine economy, specific Philippine industries, rumors from business clubs, etc. Of course, we can’t exactly pull ourselves away from the web of the global economy, so cause-and-effect relations from abroad will play a huge role here too.
About me and my trading style:
I consider myself a fundamental investor. I buy a stock based on financial soundness, operational efficiency, growth prospects and price attractiveness. To judge according to these criteria, I look mainly at news reports, PSE disclosures, annual reports and financial statements. Of course, I also get in touch with my broker and other friends who also invest for rumors, news, etc. From there, I come up with a quantitative and qualitative database per company that I pore over when deciding whether or not to buy.
As a fundamental investor, I usually hold stocks until I find them too expensive (that is, when the price becomes much greater than the book value, the price per share returns and the qualitative premium over that I place over these two, as dictated by my comfort level and appetite for risk). That usually takes anywhere between several months to several years, depending on the stock and the condition of the market. The shortest stock I ever held that I can remember (i.e., that I have a record of) is EIB, which I bought at P0.49 on March of 2007 and sold at P0.54 of the same year. The longest stock which I’ve held (and still holding onto to date) is PX, which I started buying at August of 2006 at an average price of P4.03 a share.
As for the buying, I prefer stocks with healthy balance sheets, good management strong growth potential and low per and p/bv ratios. Too much to ask under normal circumstances, yes, but that’s just the ideal. I’m pretty open to compromise as far as these criteria are concerned, otherwise I would have never been able to buy a single stock.
I have been investing in the stock market for over five years now. For the first two or three years, I just bought whatever stock I felt like buying; I was the coin-toss investor. After and 8%-15% gain, I’d usually sell, toss the coin again, buy again, and repeat the process. Luckily enough, I made 50% in my first year of investing in PSE!
The second year, I lost around 15% in the BDO IPO. The IPO price was P18.00, and it went down to the P15-P16 level in a few months. I cut my losses (a mistake, considering BDO is trading now at around 80 bucks a pop – but that’s why I’d like to learn and be constructively criticized) and went back to my darling at the time (and incidentally, a bank that was gobbled by BDO just last year): EPCI. I gained back what I lost and got out barely breaking even.
I stopped trading for a year or so after that, stung by the fact that I jeopardized my life savings (oh how youth is wasted on the young!). Then a good friend of mine (let’s call him compounder888) asked me about the stock market and how to invest therein. I gladly took him to my broker and introduced him to another friend (let’s call this other guy spyfrat – yes, he’s the same spyfrat whose name is among the most respected technical analysts in the PSE forums). From there, compounder888’s portfolio really took off. I was particularly challenged when he tripled his money in URC. His success made me take a long, hard look at how I was investing; I mean, whatever he was doing, I’m sure it was better than tossing coins.
So it was at this point that I decided to have a little discipline in how I invested. I still made some mistakes along the way (SMCB, PCOR). By and large though, I began to find my rhythm, and things started to fall into place. Overall, in the eighteen months spanning November 2005 to May 2007, my portfolio jumped 104.55% - can’t say I wasn’t happy with that.
But despite the satisfactory returns I got that year, there are still things I now realize in hindsight. There were stocks where I got lucky, stocks which I bought for the wrong reasons. There were the recommendations that I took at face value without any research on my part, and there were tons of research on my part that I did not act on because of the recommendations I took just at face value (JGS at P3.50++, ASIA at P5.00++ and RCB at P8.00++).
I suppose you could also say that I, along with many others, just got lucky that year because stocks were good overall anyway. You could say that I could’ve stayed on with my coin-toss method of stock-picking and still make money, given how hot the market was. Well, maybe. But to this I would point out one barometer of gauging how good your progress is in the stock market, one that my friend compounder888 uses: whether or not you beat the index. I don’t have solid figures for the PSEI during that period, but I’m confident I beat it. But, much more importantly, I would point out that it was during this time that I developed my investment style, a style that (let’s hope) is much more successful and sensible that tossing coins.
It was this investment style that helped save me from the initial onslaught of the global meltdown brought about by the American credit crisis. By May of 2007, my portfolio was too bloated for comfort. I had stocks trading at beyond six times its book value (PAX) or thirty times its earnings (MEG). It was at this point when I decided to sell everything I had except PX, whose extremely bright prospects allowed me to look past the fact that its price was hovering just below 2:1 p/bv.
True enough, all the stocks that I let go took a beating (particularly PAX, which lost 90% of its value). True enough too, PX continued its stellar rise, hitting a high of P11.75 before being pulled back down to earth (I’m still confident this guy has what it takes to reach the low teens).
But I wasn’t totally spared: I bought into AGI just weeks before the meltdown. I also went back into the market too early (now would’ve been better) and downed a sizable amount into SMDC (enough to make it 17% of my portfolio) – a company that has 60% of its assets in equities and a quarter of whose revenues comes from mark-to-market gains. Needless to say, with the downturn, SMDC was slaughtered.
So now, here I am, coping with an 11% loss since June of 2007 and with no more money to buy more shares at lower prices. The journey’s just beginning.
(On a more personal note, I’d like to express my gratitude to my friend, compounder888, for forcing me to pull my head out of my ass and discover there’s more to stocks than posting a list of blue chips on the wall, throwing a dart at it and buying whatever I hit. Although this guy and I barely agree on anything stocks-, market- and economy-wise even until now, I don’t think I’d be writing this blog if he didn’t challenge me to be better at investing. As a matter of fact, his own blog, www.chiefstocks.blogspot.com, is one of the reasons why I thought of making one of my own. Copy-cat, yeah, I know, but who introduced who to stocks anyway?! Hehe, just kidding, Chief. “You can’t argue with success,” as compounder888 would say about Warren Buffett, but you sure can try to copy it. Anyway, this guy’s had more than his fair share of good calls as far as stocks is concerned, so check his blog out too while you’re at it.)
So now you know what the blog is about, and you have a background idea about the person writing it. Feel free to read on, comment, ask, object or refute. For any of that, don’t hesitate to e-mail me at rpstockblogger@gmail.com.
Enjoy!
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