Panzer's equity portfolio

August, September and October have been active months in terms of my equity portfolio. A number of my stock picks prior to August had been duds in that I bought into shares that were over-priced prior to the correction. I took the opportunity to re-align my portfolio and in the process paid "tuition fees" to the market resulting in some realised losses.

This did help free up some capital and allowed me to buy into some stocks that have since performed spectacularly due to PURE DUMB LUCK on my part. Not all have performed spectacularly but one of them has been a winner. The following is my portfolio as at today (in no particular order):

Current Stock holdings

1. SingTel
   
2. Singapore Petroleum Company (SPC)
3. Singapore Press Holdings (SPH)
   
4. First Ship Lease Trust (FSL)
   
5. United Overseas Bank (UOB)
6. Tuan Sing
7. Oversea Chinese Banking Corporation (OCBC)
8. China Aviation Oil (CAO)
9. ComfortDelgro

Three reasons for holding the stock
Peter Lynch recommends that as a stock investor, you should be able to articulate three reasons simple enough to convince a child why you are holding that counter. If you are unable to do so, then perhaps you shouldn't be holding that stock! It makes a lot of sense to me so let's try and see if my stock portfolio is able to pass this simple rule of thumb:

SingTel
1) Group A and Group B (Sold my Group C long ago at a loss!)
2) Singtel is still showing growth and dividends through its acquisitions - notably Telkomsel (where I have some first-hand knowledge of its growth in Indonesia, particularly Jakarta) and Bharti
3) Optus with strong Australian economy

Singapore Petroleum Company (SPC)
1) Peak oil prices
2) Oil and gas play
3) Fantastic dividends and only Singapore-based oil refinery play on SGX

Singapore Press Holdings (SPH)
1) Monopoly on national dallies and print classified advertisements
2) Emerging outdoor media and events business
3) Property investments are still doing well in real-estate boom times

First Ship Lease Trust (FSL)
1) Good dividend play (yields around 9%+ at my cost-in)
2) Shipping sector recovering and set for growth in tandem with global economy
3) Dividends!

United Overseas Bank (UOB)
1) STI component stock
2) Growing wealth management and banking services
3) Economy and growing GDP play

Tuan Sing
1) Commercial properties development potential
2) Riding the property boom
3) Speculative play (not a very good reason, hence I didn't bet big on this counter)

Oversea Chinese Banking Corporation (OCBC)
1) Growing wealth management and banking services
2) Economy and growing GDP play
3) Cheapest of the 3 banks to buy (not a very good reason too... :-( )

China Aviation Oil (CAO)
1) Oil and gas play
2) China QDII play
3) Speculative play

ComfortDelgro
1) Monopoly on bus services for allocated sector and NEL
2) Benefits from built-in fare increase formula
3) Virtual monopoly on taxi (Comfort/CityCab) rentals

As you can see. Some of my reasons are also pretty crappy. For example, CAO for me is a very speculative play and it's gambling really. The oil and gas play angle lends some veneer of respectibility but if I'm honest with myself, it's really VERY VERY SPECULATIVE as those who track china shares on SGX and CAO know this baby can move up and down very quickly in a SINGLE DAY!

Tuan Sing is also quite speculative in some respects because I'm banking on the management to develop their commercial properties in their holdings to unlock some value. Again, I really don't know that much about the company to really bet big and hence my exposure in this counter is relatively small compared to my overall portfolio.

Of the entire lot, SPC has been the best performer and really it was pure luck that I went into SPC when it corrected in August and since then peak oil prices have helped to push this baby into the stratosphere. Fundamentally, it is a very sound counter because it is in an incredibly sexy industry now : OIL AND GAS. In addition, the stock's dividend policy is pretty generous and at my cost-in I was already looking at 5%+ returns even before factoring capital gains.

Stock picks: As much tikam as analysis
My personal preference for stock picks depends on a few factors. One of them is whether I am looking to trade or to hold for the long-term or when the stock makes me a millionaire! :-) Most of my stocks tend to be blue-chips because these are fundamentally sound companies with good businesses. Blue-chips also tend to pay dividends which helps to generate a stream of recurring passive income. However, I also succumb to the "itchy-finger" syndrome and punt on a few with money I can afford (but hate) to lose. Stocks like CAO, Tuan Sing are punts for me that didn't turn out as I hoped and hence I am still holding them. I generally do not play contra as it puts undue pressure on my investing decisions.

Capital gains are hard to predict as my ability to guess where a particular stock's price is going is as good as my prediction of the winning TOTO number. Since I am still spending time writing this blog and not relaxing in my dream palatial bungalow in Queen Astrid Park, it must mean that my predictive skills are NON-EXISTENT. But computing dividend yields is something I know how to do and at least that makes my stock picks less random and provides some basis for some of my picks. For example, SPH which will give me a yield of around 4%+ at the price that I bought it is doing reasonably well because I went in at a price that was reasonable and I have holding power.

Develop your own stock picking approach
Many investment books will teach you different ways of picking equities. There is no magic formula. For me, it is a mixture of dividend yield, my own understanding of the company's business and my "feel" of its share price given the historical price for the past year or so. This is combined with views from other punters in stock forums as well as my sense of market sentiment at that point in time. In short, my stock picks are guesses based on information I have to work on and my success rate is also not fantastic. But I can say this... While I cannot give up my day job and do day-trading, my equity investments have on average made me an additional 2-3 months bonus from dividends and capital gains annually and more importantly, allowed me to better understand how the equity market works and to understand human psychology that little bit more.

May you be well and prosper in your own quest for picking equities.