The Perfect Storm of the Stock Market II

[tenyawph]

The perils of stock investment.  A real-life example: Japfa. 

 

At the beginning of Apr, Japfa is traded around $0.81.  It is now trading at $0.60.  This is a 25% drop in share price.  There are three main reasons for this. 

 

1) Analyst's negative report released on 17 Apr.  This resulted in the first huge price fall from $0.81 to $0.72 in a single day.

2) Subsequent dumping of shares between 18 Apr to 26 Apr 2017. 

3) 1st Qtr 2017 results released on 27 Apr.  This resulted in another price fall from $0.64 to $0.60 on 28 Apr 2017.. 

 

See the price chart.  Click on it to zoom it to see the details.

 

 

Investors who were unfortunate to put their money on Japfa, basing on a DBS research published on 15 Mar 2017 (see below) of a target price of $1.25, would have taken a big hit.

 

 

Looking back at my past stock investment, I could be one of those unfortunate investors as well, if my stock picks had not performed the way they actually did the past few months.  This thought gave me the shudders. 

 

Is Japfa going to go down further?  If you are a chartist, the immediate outlook does not look good at all.  All the 3 moving averages (short, medium and long term: yellow, blue and green lines) trend-lines are still sloping downwards.  

 

The only bright spot?  The company has started its first daily shares buyback on 28 Apr 2017 - 2.59M shares.  Is it enough to stop the bleeding? It certainly did not prevent the price fall on the day of the purchase itself.   But perhaps the fall could have been worse without this share buyback. 

 

From the long term investment point of view, is this a temporary setback? I don't have the answer.  I am still your regular old newbie.

 

  

 

 

   

 

 

Edited April 30, 2017 by tenyawph

[Throttle2]

There are tons of people calling this and calling that.

Tons of analyst trying to link past data with current and making calls.

 

So your guess is as good as mine.

 

I go with my own calls, knowledge, opinion, and gut feel.

Thats how it has been, and i suspect thats how it will be.

 

Therefore part of the strategy is in staying diversified and extracting an income.

Instead of gunning for capital gains most of the time.

Repeat

[tenyawph]

I will be monitoring Japfa closely in May to learn more about market psyche.  

 

What goes through the minds of buyers and sellers:

 

Buyers

1) Punters who think the share price has gone low enough and there is a chance for a quick rebound to make a quick profit?

2) Punters who think that the company will continue to support the share price by daily share buyback and hence the price should go up in the near future?

3) Long term investors who believe in the long term future of this company and treat the temporary price drop as an opportunity to accumulate more of the same stock?

 

Sellers

1) Punters who think that the share price is still on the downtrend and hence continue to short this stock?

2) Speculators who buy earlier based on a favourable analyst report and decided to cut loss now?

3) Investors who think that this company is no longer doing things right and feel it is time to pull out of their investment?

 

Looking at another angle: currently, 15% of Japfa's shares are held by the public which translates to 266M shares.   In 2014, it offered 248M shares at $0.80 per share during its IPO in Aug 2014.  It should not be too financially difficult if the majority shareholders decide to take advantage of a temporary depressed share price to take the company private at a relative bargain price.   Daily share buybacks (which use internal funds) will help to reduce the amount of finances (which use external funds) required to take the company private.

 

 

[Throttle2]

Less than 20% public floating and we are talking about market psyche?

Honestly better to throw a dice.

japfa SG is part of Japfa comfeed mother co in indo

The santosa family owns more than 80% of japfa sg

Their sneeze can decide the fate of japfa sg.

 

Maybe @tedlhw is having dinner wih Pak Ferry next week

I better ask him how is dinner

 

Personally i made more than $40k in japfa to date

But not in the equity market

stocks is not everything as i said.

There are tons of other instruments that an accredited investor can use.

 

Being stuck in one asset class is like using a fork to eat every course in a meal.

 

Maybe i should call myself super old newbie?

Or newbie laochiao?

I dont know, best to pepper the post with questions so that when wrong wont lose face

 

[Throttle2]

Folks who want to get into pennies and stocks which have low public float should know that part of the game is the dynamics of the big shareholders and founders.

Ask yourselves some key questions, then decide if you even want to step into the water.

Water which you have no determining the depth.

 

Thats probably why i always stick to big names and blue chips.

Pennies to me is little different from a trip to the casino

Especially when liquidity is an issue and personal goals and objectives can flip company situations overnite.

[tenyawph]

May is a busy 1Qtr Y2017 reporting month for our local stock market. 

 

When a company reports better results, will it automatically means its share price will rise further?   A few names come into my mind.  Great Eastern, Jardine C&C, Micro-mechanics, Sheng Siong, Tianjin Zhongxin, UOB, Venture Corp, Yangzijiang, etc which announced better earning results at the end of last week.  A good time to observe how they will fare this week.

 

Looking at my current stock portfolio, REITS takes up 25%, with 75% in Midas and Sapphire.    Sapphire is the only stock I purchase in Apr 2017.  My broker is not getting enough trading commissions from me lately!

 

With a remaining 88% of war-chest in cash, it certainly looks like I am under-investing for now.  Where is the market crash I wanted?

 

Since I booked some profits, I have taken a back-seat in investment, and started to analyse stocks and market behaviour.   It is understandable if people put in money in rising stocks, hoping to get some gains.   But a falling stock?  Some names come into mind:  ISR, Noble, Yuuzoo.  Are there so many punters/speculators out there getting burnt every day?   I was hoping to get some answers for Japfa, but all I got was noise. 

 

There are now many market noises, from political events like North Korea, Brexit, French Election, etc.  Mostly, I choose to ignore them.  What are important are the business environment and economic outlook.  Has there been a change? 

 

Properties, stocks, cash.  It's high time I look at gold investment as well.  Gold bullion, to be precise.  

        

 

 

 

 

 

 

.   

[Throttle2]

Ok lah, share share a bit, how i made money with Japfa.

 

In 2014, i bought $200k of 6% USD debt issue by Japfa Comfeed at 92

i have collected 3 yrs of coupon equivalent to $36k or SGD 50k

 

My cost for usd200k nominal was only about SGD241k due to usdsgd fx rates

which i took position at 1.31.

Therefore the fx profit on capital deployed works out to be another sgd40k

 

So all in all if i sell the bond today and convert back to my original base currency my net profit is about $90k . With an outlay of sgd241k , this 3 yr trade will bag me an annualised return of 12.5% pa or 37% absolute.

 

Not bad right?

My annual target return for my portfolio is only 6%

This trade already doubled that return.

I dont need to make 37% pa.

 

Those who dont understand, sorry.

 

Cheers

[Tedlhw]

Ok lah, share share a bit, how i made money with Japfa.

 

In 2014, i bought $200k of 6% USD debt issue by Japfa Comfeed at 92

i have collected 3 yrs of coupon equivalent to $36k or SGD 50k

 

My cost for usd200k nominal was only about SGD241k due to usdsgd fx rates

which i took position at 1.31.

Therefore the fx profit on capital deployed works out to be another sgd40k

 

So all in all if i sell the bond today and convert back to my original base currency my net profit is about $90k . With an outlay of sgd241k , this 3 yr trade will bag me an annualised return of 12.5% pa or 37% absolute.

 

Not bad right?

My annual target return for my portfolio is only 6%

This trade already doubled that return.

I dont need to make 37% pa.

 

Those who dont understand, sorry.

 

Cheers

Wah you didn't support our 5.5% issue in March?

But good trade la.

Can issue lower now this year due to lower perceived risks from 12% stake by KKR. 

Edited May 2, 2017 by Tedlhw

[Throttle2]

Wah you didn't support our 5.5% issue in March?

But good trade la.

Can issue lower now this year due to lower perceived risks from 12% stake by KKR.

Two reasons.

 

Firstly, i wouldnt lend them money to pay me back.

As the 5.5% issue was to repay the 6% issue.

 

Secondly i pm you.

[Throttle2]

Ok share another trade. But nothing to do with stock market.

 

Plse note that these are all opportunistic bets and are small bits of my portfolio which i dont depend on.

I do not advocate anyone to follow, becos to do such trades, you need good feel, fair understanding, and of course market info.

 

A contrarian trade as all the father mother gentlemen banks and houses were calling for USDCNH to hit 7.2 by mid year.

 

I did not think that CNH would go any weaker so i short USDCNH early Jan.

Felt that USDCNH had reached its peak near 7.

Also had advantage of the huge swaps almost 1000pts in 3mths

 

Selling at almost all time high with a huge carry to take advantage of?? Why not?!?

The result?

Another Rolex on my wrist right now.

 

So much for all the analysts reports.

 

Dont understand the above?

Sorry.

Edited May 3, 2017 by Throttle2

[Throttle2]

Sorry, i know that some wont understand and thats normal.

If you guys understood everything that i said then i wouldnt have the edge anymore.

 

Those who know hopefully can appreciate the ideology behind

At the end of the day, its about putting money where the mouth is

 

If you start talking IT to me, i wouldn't understand either.

I am a techno laggard.

Still using IpadAir1

Edited May 3, 2017 by Throttle2

[Still2016]

My Lolex man

 

Would it be true that investing in USD debt issue by Japfa Comfeed is similar to investing in penny stocks?

 

Someone made millions from Innovalue stock recently. There are many undervalue "penny stocks" worth looking into. You need to do due diligence. 

 

 

 

 

Ok lah, share share a bit, how i made money with Japfa.

In 2014, i bought $200k of 6% USD debt issue by Japfa Comfeed at 92
i have collected 3 yrs of coupon equivalent to $36k or SGD 50k

My cost for usd200k nominal was only about SGD241k due to usdsgd fx rates
which i took position at 1.31.
Therefore the fx profit on capital deployed works out to be another sgd40k

So all in all if i sell the bond today and convert back to my original base currency my net profit is about $90k . With an outlay of sgd241k , this 3 yr trade will bag me an annualised return of 12.5% pa or 37% absolute.

Not bad right?
My annual target return for my portfolio is only 6%
This trade already doubled that return.
I dont need to make 37% pa.

Those who dont understand, sorry.

Cheers

 

[Throttle2]

My Lolex man

 

Would it be true that investing in USD debt issue by Japfa Comfeed is similar to investing in penny stocks?

 

Someone made millions from Innovalue stock recently. There are many undervalue "penny stocks" worth looking into. You need to do due diligence.

 

 

Nope it is not the same.

It is not even similar

It is very different.

 

In fact your post is self contradictory.

 

You are lumping things up just by saying due diligence.

 

The instruments that an investor uses makes huge difference.

How they use it and base on what methods of analysis there could be similarities

 

There is money to be made in all sorts of things.

 

Mai keh kiang leh

Edited May 3, 2017 by Throttle2

[Still2016]

Walau ....

 

Ask also kena from you proper and good.

 

Lucky I wear protection.

 

Actually what I asking is within the category of this type investment vehicle, Japfa Comfeed is it similar to penny stock in equity. Obviously they are different type of investment.

 

 

You must be the minuscule number of investors that never got burnt. So far your postings only huat huat huat.

 

Can take a few of us here as student can?

 

Hope not need to buy full gold Lolex as application fee.

 

 

 

 

 

Nope it is not the same.
It is not even similar
It is very different.

In fact your post is self contradictory.

You are lumping things up just by saying due diligence.

The instruments that an investor uses makes huge difference.
How they use it and base on what methods of analysis there could be similarities

There is money to be made in all sorts of things.

Mai keh kiang leh

[Throttle2]

Walau ....

 

Ask also kena from you proper and good.

 

Lucky I wear protection.

 

Actually what I asking is within the category of this type investment vehicle, Japfa Comfeed is it similar to penny stock in equity. Obviously they are different type of investment.

 

 

You must be the minuscule number of investors that never got burnt. So far your postings only huat huat huat.

 

Can take a few of us here as student can?

 

Hope not need to buy full gold Lolex as application fee.

The way you frame your question is poor lah.

Anyway, the answer is that it is different still.

 

Regarding never getting burnt.....

I think i have mentioned, that everybody pays tuition fees.

And i continue to pay.

Havent i ?

I lose but i come back making much more.

 

So the key is that if you pay $2k, you make $20k. Does it matter to pay?

I also mentioned that i do not run or manage my portfolio hitting on single stocks and carving single bets.

 

Next time you have a few hours, you buy me lunch and cigar, i explain to you. Ok?

Dont say not friend enough.

 

And dont say take students, say sharing session.

I wont take students except for tennis lessons.

Edited May 3, 2017 by Throttle2

[Wt_know]

is this good enough for T2 to throw in $200k and forget about it?

Edited May 3, 2017 by Wt_know

[tenyawph]

A fairy tale.

 

At Japfa.

 

FM1:  So stressful.  I dread picking up the phone because of margin calls..

FM2:  Well, the buybacks have been quite successful.  The price went up finally.

FM1:  Yeah, thankfully.  I hope it continues to hold up.

 

 

At Winsland House.

 

BB1:  How's your day?

BB2:  Very good.  After I covered Japfa in the early afternoon, the price shot up.

BB1:  Thru' thin trading? (BB2 nodded.) Let's them be happy for now.  Did boss give any indication about shorting ISR again?

BB2:  After the audit report came out before Good Friday, boss said to accumulate.  Let the price go up for a while.  Boarding.  Then he will give green light to go ahead.

BB1 (smiled): As usual, preparing the killing field. How's Yuuzoo? 

BB2:  Quite smooth so far.  Last week, the e-Sports news came as a surprise so we had to double up our position to keep it down, but yeah, we prevailed.

 

 

At Tel Aviv.

 

H1: What have we got from Singapore today?

H2: Nothing exciting.  Just some info to make pocket money.

H1: Ok.  Don't let boss catch you doing that. Continue tracking our main target.   Our client needs an answer real soon.    

[Throttle2]

is this good enough for T2 to throw in $200k and forget about it?

Please lah, bro.

My toes are laughing

Structured note with cap protection upon maturity

2%pa for 5 yrs???

 

Better show it to goondu folks lah.

 

Either Maybank is short on funds and using this for their balance sheet or else I can tailor better terms myself.

 

Muayhahahahahahaha, wt know, you sibei joker lah.

Edited May 3, 2017 by Throttle2