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My Portfolio – Dragged by Gloomy Outlook! What Should I Do?

Global Market Downgraded
Major indexes were depressed in the
past week as pessimism over Global Market looms. On Friday, DJ suffered triple
digit loss and S&P fell more than 1%. STI was not spared, dropping to 5
month low of 3223.87. 
IMF downgraded global growth earlier
this week, while Germany weak data exacerbated the panic. What appears encouraging
as Fed announced no rush in interest rates rise, should instead make investors
more mindful of the slowing growth in US. There are also fears of Ebola
outbreak after a British man died in Macedonia and a Spanish nurse infected.
How will all the bad news affect my
portfolio and some of the stocks of interest? 

Oil Price Tumbles
Brent Crude Oil price tumbles below
US$90 a barrel, the lowest in two years citing reasons of Europe woes and China low
consumption. Clearly the falling oil price will have a negative impact on earnings
for many energy companies.
My Portfolio
Vallianz
holdings fell below S$0.10 for the first time this year. This is despite strong
earnings last quarter followed by many contract wins. Its recent acquisitions
of shipyard and offshore services firm with exchanged of shares valued at premium
of S$0.138 to 0.140 respectively does not help either.
Nam Cheong
sees record deliveries in FY14/15 as well as expansion into Indonesia collaborating
with Marco Polo recently.  Major shareholders Dato Tiong and spouse purchase
a total of >15 million shares at market price 0.435-0.45 from 30 Sep to 10
Oct. This does not prevent share price falling from a high of S$0.47 in Aug to
S$0.42 yesterday.
Other stocks
Ezion fell
5.4% to all time low of S$1.575 with oil price weakness and reason of USD
denominated debt rising due to appreciating USD. Ezra‘s EMAS
Offshore first day IPO trades as low as 14% below its IPO price of $1.21. Swissco announcement of new contracts
instead of raising its share price, sink it more than 5% to S$0.94 within a
day. Sembcorp Marine price plunged to
S$3.58, all time low in close to 3 years, with price to book ratio similar to
that during the GFC. Frantic investment house immediately initiated analysts to
send out “Buy call” reports. 
Rolf’s view
I took bites of Swissco and Nam
Cheong this week! My queue for Semb Marine expired! Will try again if price is
right. The fundamental demand of Oil & Gas over long term is sound. Although
IOCs projected to reduce CAPEX but NOCs need to increase investment in view of
the depleting and aging fields.
Australia Currency Woes
The Australian share market writhed in agony over its biggest
one-day fall in more than a year seeing red of close to two percent. The
country’s currency is seeing feebleness and predicted to trade at S$1.10 in the
near future.


My Portfolio
My two biggest exposure in Australia
includes Coca Cola Amatil and Comfort Delgro. Coca Cola Amatil fell
to 5-year low of A$8.42. Comfort Delgro still hold well in the range of
S$2.4-2.60 range.
My stocks in REIT/Propery sectors
with exposure in Australia include Suntec
Reit
, Fraser Com Tr, AIMS AMP Cap Reit, Chip Eng Seng. In general earnings derived from Australia may be
adversely affected due to AUD depreciation against SGD.
Cushioned by good news that MAS is
strengthening REIT governance, the market sees confidence in REIT sectors. On
the reverse, ARA Asset Management
being manager of REITs shall be affected in the light that managing fees structure
will be reduced. Price fell from S$1.76 to S$1.70 within a day.
Rolf’s View
The brand of Coca Cola is too strong
for me to show signs of panic. If price breaks below A$7.50, I should start
accumulating. Moreover falling price may mean growing dividend yield.
For my REITs portfolio with exposure
in Australia, the contribution may not be as significant as their overall
Assets. Anyway, I am collecting good dividends!
The proposed fee structure changes
for REITs to their manager may not be a bad news to ARA in the long run. By and
large, greater interest in REITs should benefit their manager

Political Struggles – Indonesia & Hong Kong
In Asia, Hong Kong protests revive as China premier Li Keqiang says no change in autonomy policy. Newly elected Indonesia President Jokowi’s new economic reform plans are facing strong challenges from Opposition.
My Portfolio
Lippo MIRT price range is still stable ranging S$0.40 to 0.4. Indonesia near term outlook is bleak with political uncertainty and budget deficits worries depreciating its currency.
Rolf’s View
Over long term, the uncertainty in Indonesia can be noise. I am still confident over Indonesia young population and growing middle class. Anyway I had been collecting dividends from LMIRT, so no issue.
Should We Sell or Buy?

I certainly do not know if market is
going to drop further? I am also no guru to advise buy or sell. 
What I know is you do not sell over fear. You should
sell if company fundamental deteriorated or if better opportunities
appear.  Over the next few months, I am also sure there will be many buying opportunities around. 
I hate to repeat what Warren Buffett
said before, as so many bloggers/writers had quoted countless times, but still…… 
“Be fearful when others are greedy and greedy when others are fearful”.
Another piece of good news is my current portfolio adhering to Warren Buffett’s Rule No. 1 and No. 2, so far.
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1”

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14 thoughts on “My Portfolio – Dragged by Gloomy Outlook! What Should I Do?

  1. Hi Rolf

    Keep focusing on the business. Ive tried harder to do that now.

    Macroeconomic factors are something we cannot control.

  2. Rolf,

    You're the insider in the O&G industry – you "should" know more than us 😉

    As for me outside the industry, and as more of a top down macro guy, I am watching Brent, WTI, and natural gas futures as my indicators 😉

    2 different styles. One macro top down, one micro bottom up 😉

    Same same but different?

    Or 2 sides of the same coin?

    LOL!

    1. Hi SMOL,

      You philosophy always so chim and let me think so much!

      "Stand byside people more clear (chinese please)" than insider sometimes!

      Top down approach is clear. Stay away!

      If you know more than others and can control well, then bottom up approach. But do not be drunk after the bottoms up!

      Rolf

  3. Hi Rolf,

    I agree with you regarding the long term demand for oil and gas is sound.

    Opportune time to accumulate! Managed to buy some Sembmarine during the recent sell off. Keppel also looking attractive.

    Saw SMOL's post that you are in the oil and gas industry. Can seek your thoughts on Otto Marine?

    Best regards,
    Naro

    1. Hi F4U&M,

      Thanks for the maiden comments. I use to be more active insider in O&G. Now I am just as close as a outsider.

      SM seems a safe bet now considering its price, not so highly in debt and strong backlog. Keppel is always strong but 1 lot is > 10k.

      Otto Marine has been suffering for many years! I am still waiting for the turnaround. You need to check if they managed to charter out their last VS490 AHTS, which caused their misery for the past years from the Mosvold shipping.

      I do not like their big batam yard overhead, without any substantial shipbuilding order. Their vessel chartering is focused locally and Australia. Aussie is not doing well lately, hopefully not affected. But current price seems attractive and if there is a turnaround, Otto will be Turbo Motor in terms of share price.

      End of the day…your take!

      Rolf

  4. ur analysis is good. vallianz have been falling and broke below 10cts. tough time ahead i feel.

    i am vested. whats ur view?

    1. Hi Anonymous,

      Vallianz is a high volume stocks that traders enjoy buy in/out. Feels like a prostitute stock! Haha LOL

      It gives you heart attacks at times. Rising to 0.2 at one point from 0.05 then free falling now.

      Maybe it's good to ask ourselves why are we vested in the first place. Because price rise is very fast and everyone says good times ahead? Now it is tough time?

      Is earnings perceive to drop? Or the crowd has lost interest in the pretty woman of last Christmas?

      I had been holding this stock for close to 4 years. At one time, I lost as much as more than 50% paper after the rights! Sleep peacefully still! During the mild euphoria, I sell/gain some to re-balance my portfolio.

      I am still having Val as one of my major port – maybe no choice! "Dice please. Buy or Sell? I just ignore!

      Please read my label on Vallianz. Tks.

      Rolf

  5. Hi Rolf,

    Thank you for your insights. Really useful for an outsider, not even an insider before!!! 🙂

    I would research further into the issues/concerns that you highlighted. I took the opportunity to accumulate some Otto Marine counter today. 🙂

    Cheers,
    Naro

    1. Hi Naro,

      No problem. To be honest, I really like Otto Marine. They are one of my biggest clients before the GFC with a good boss and many good people in the company, timely payment, and many projects etc

      Unfortunately they were caught by one bad decision taking on the contracts for the 4 big AHTS from Mosvold Shipping. These vessels are on speculation without oil company contracts. Mosvold withdrawn the bank guarantees and cancel the contracts after GFC. Otto had to take over these vessels. It is a wound they are still licking now!

      If you need more info on Otto, do email me. I welcome if you can also share your analysis too! 2 heads are better than 1.

      Thanks, Rolf.

    2. Hi Rolf,

      Reason why I quite like Otto Marine is that their "shipping" segment provide about 50% of its revenue. From the AR, it refers to chartering of support vessels. I feel that it takes the load off securing and delivering new builts which are lumpy and one-off and more cyclical.

      Also, I think the current price has factored in the losses of FY11 and FY12.

      That's my layman's analysis.

      Cheers,
      Naro

  6. Hi F4U&M,

    To be honest, I never follow Otto Marine "OM" closely recently neither is an analysis done. But you may be just right? If I ever go into OM, lets keep sharing. By the way, what is your email?
    Mine is rolfsuey@gmail.com.

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