myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.

Friday 23 December 2011

Malaysia's Tenaga may buy gas from open markets in 2012-report

KUALA LUMPUR | Tue Dec 13, 2011 8:31pm EST

Dec 14 (Reuters) - Malaysia's state utilities firm Tenaga Nasional may start to source gas from the international markets next year to make up for a shortfall in supply for power generation, the New Straits Times reported on Wednesday.

The paper quoted Tenaga President and Chief Executive Officer Che Khalib Mohamad Noh as saying the firm was in talks with oil majors such as Shell, Malaysia's national oil company Petronas, and private suppliers to get the best market price for gas.

The plan to source gas from the open market will be subject to approval from the government that has kept gas and electricity tariff levels low for consumers.

Tenaga officials could not be immediately reached for comment on the report.

Tenaga buys gas from Petronas at a subsidised price of 13.70 ringgit ($4.31) per million metric British thermal units (mmBtu), compared to 30 to 40 ringgit in the open markets.

That has required Petronas to fork out 20 billion ringgit annually to maintain tariff rates.

The latest move to buy gas comes as Petronas cut its subsidised gas allocation to Tenaga due to a domestic shortage, forcing the power company to import expensive distillates that have eaten into its profits.

But in early December, Tenaga said the government agreed to implement a fuel cost sharing mechanism to share extra costs incurred from buying distillates and other expensive fuels to offset the gas shortage.

The costs would be shared between Tenaga, Petronas and the government.

http://www.reuters.com/article/2011/12/14/idUSL3E7NE0B820111214?type=companyNews

UPDATE 1-Malaysia's Tenaga seeks 100,000 T Nov fuel oil

Fri Oct 7, 2011 7:53am EDT

By Yaw Yan Chong

Oct 7 (Reuters) - Malaysia's national power utility, Tenaga Nasional , has issued a tender seeking 100,000 tonnes of November-delivery fuel oil after buying similar volumes for this month, traders said on Friday.

The utility started buying large volumes of fuel oil regularly from the second quarter of this year and is expected to continue doing so until early next year, because the country's power sector has been receiving only two-thirds of its natural gas allocation from Petronas .

"They will probably have to pay more for their cargoes this time round, given the severely imbalanced state of the market currently," a Singapore-based Western trader said.

The utility is seeking four 20,000 tonne parcels and two 12,500 tonne lots of low 0.98 density, all for delivery Nov. 1-28 to Kapar in Selangor and Pasir Gudang in Johor, via the tender, which closes on Monday.

It last purchased a total of 105,000 tonnes, mostly from oil major Shell (RDSa.L), at premiums of $25-$30 a tonne to Singapore spot quotes on a free-on-board (FOB) basis.

So far, Tenaga has bought about 450,000 tonnes for April delivery onwards, mostly from Shell and European trader Mercuria.

Tenaga's demand, regarded as unexpected and irregular before April, is expected to squeeze the market for low-density cargoes, which is already tight due to a seven-month high in Western arrivals at 3.9-4.0 million tonnes for this month, leading to severe quality imbalances.

Reflecting this, the market's prompt structure has been severely backwardated for about the past three weeks since the start of the October pricing month, with October/November at seven-month highs of above $9 a tonne for the past week.

Tenaga had earlier said it has spent 400 million ringgit ($134.4 million) a month to buy power-generation fuel, draining its cash flow and eating into its reserves.

Petronas usually allocates 1,350 million standard cubic feet per day (mmscfd) of gas to the power sector. Supply has fallen below 1,000 mmscfd since the start of 2011 and now hovers between 900-950 mmscfd.

In its third-quarter financial results, Tenaga posted a net loss after it spent an additional 1.3 billion ringgit on fuel. (Editing by Jane Baird)

http://www.reuters.com/article/2011/10/07/malaysia-tenaga-fueloil-idUSL3E7L71LA20111007?type=companyNews

Malaysia's Tenaga seeks Nov fuel oil, continues rare purchase

SINGAPORE | Fri Oct 7, 2011 6:59am EDT
Oct 7 (Reuters) - Malaysian power utility Tenaga Nasional has issued a tender seeking 100,000 tonnes of fuel oil for November, after buying similar volumes for this month, traders said on Friday.
The utility is seeking four 20,000-tonne parcels and two 12,500-tonne lots of low-0.98-density. All are for delivery Nov. 1-28 to Kapar in Selangor and Pasir Gudang in Johor. The tender closes on Monday.
It only started buying large volumes of fuel oil regularly from the second-quarter this year, and is expected to continue doing so till early next year, because Petronas has cut natural gas allocation to the country's power sector by a third. (Reporting by Yaw Yan Chong; Editing by Manash Goswami)

http://www.reuters.com/article/2011/10/07/malaysia-fueloil-tender-idUSL3E7L71IO20111007
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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

myinvestingnotes.blogspot.my (Bullbear Buffett Stock Investing Notes)

Friday 23 December 2011

Malaysia's Tenaga may buy gas from open markets in 2012-report

UPDATE 1-Malaysia's Tenaga seeks 100,000 T Nov fuel oil

Malaysia's Tenaga seeks Nov fuel oil, continues rare purchase

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

Interesting Blogs