Saturday 28 November 2020

Hardest part of investing for me is knowing when to sell

 

Some reflections:


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Sell when you no longer believe in a company

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When the fundamentals change, sell it.

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Honestly, when I would have sold the stocks in my portfolio which were 40% down instead of up, I would have made far better returns.

Ask yourself a question: "would I buy at this price?"

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When your position doubles, sell half and let the house's money ride.

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Depends on your investment horizon. 

Great business will continue to grow as will their price in the long term. Short-term volatility will always be there. If you’re invested in great businesses don’t worry about short term price fluctuations.

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If you’re looking for short term gains then you can consider using options to supercharge your returns. But first learn how to trade options.

For the short term, the power of technical analysis will give you indicators of when to sell.

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Depends what you are in it for. 

I have long term holdings and trading cash. 

Long term is just that, as long as the story doesn’t change I hold. 

Trading cash is completely different and gets a bit wild. Can be in and out in a day if the return is good enough.

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For Deep value stocks, or stocks that you buy simply due to cheap valuation, some investors simply buy and exit when the stock is close to 90% of his calculated intrinsic value. 

But if the business deteriorate to the point whereby the intrinsic value keeps eroding, you might want to sell it once you find a better opportunity.

For growth investing or superior business, if you managed to find a good price to enter, try to never sell it unless the fundamentals / thesis changes.

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I very rarely sell. I try to find companies I believe in long term. I only sell if something changes so I no longer believe that companies can give me good returns. Like if a see a shift in technology or how people use products.

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If you are not willing to buy again then it's time to sell

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I use allocation of portfolio. for example, I allocate 20% portfolio to AMD. when it rises, I will be gradually trimming it over time and transferring the funds to other stocks I find of value. When it start to crash, I will buy gradually as it goes down. This will inevitably mean I wont sell at highest or lowest. But valuation will also help me decide the %allocation so when AMD is overvalued based on the metrics, I chose to drop it to 15% of portfolio so I sell 25% of my holding. I use this as a guideline to discipline my buying and selling.

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I control my greed by setting the selling price BEFORE I buy the stock.

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Actually if it is an uptrend stock, don’t sell, ride the trend ... set a trailing stop like if it falls back more than 10% from new high, get out, else just ride the trend .... this is not greed ðŸ™‚

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As long as the fundamental doesn’t change and the management continue to commit and grow the company... never sell

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Always have a sell mark before buying the stock unless you are planning to hold long term. And that is if it is positive or negative. You may lose some profit but I'd rather take a little profit than lose it all.

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I like a trailing stop loss. The stock can still go up, but if it starts to fall I don't lose my gains.

How often is the stock stop loss triggered? Has the stock price ever gapped below your stop loss?

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Be greedy. Don't sell your winners just because they're up. Only sell when your original thesis no longer holds. Don't practice portfolio socialism lol

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Do whatever consistently works for you. Doesn’t matter what I say or anyone else.

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You shouldn’t sell. Unless the number is ridiculous, I’ve learned to avoid selling. If I never sold any of my positions I would easily have over 100 more money today.

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I sell when is overvalued 15-20%~.

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I set up trailing stop sell orders when a stock reaches 7 percent gain.

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Have a plan when you buy it, then stick to the plan, whatever it may be, sure you can re-evaluate but by and large stick to the plan.

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It's a loaded question. It depends on your plan/goals. Part of your plan is whether your stocks are in taxable vs qualified accounts. I tend to rebalance once or twice per year in my qualified accounts. I'm a net buyer of stocks in each year in the taxable account that I intend to hold very long term for compound growth and at that time sell very little for income.

In my IRA, my goal is to build equity/net worth and consider converting some stocks for income/dividend. The end of each year, if the fundamentals change for a company, I highly consider selling.

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That’s another great question.

Buffett actually covered a piece of this in his most recent annual meeting...

Quoting back something that Sir John Maynard Keynes (an old, and very famous economist) was famous for saying:

"When the facts change, I change my mind. What do you do?"

In other words, one of the biggest reasons, and probably the most difficult is to actually change our minds when our original thesis for the investment has fundamentally changed.

Trust me when I say that this is not easy.

I like to say you should hold onto our opinion the way we have to hold onto a bar of wet soap. If you hold on just a little bit too tightly, it's likely to get away from you when you need it...

The second biggest reason is when our investment thesis actually comes true.

I think it was Guy Spier who talked about how much more difficult it is to sell something we own, than it is to buy into it.

We get attached to it. Especially if it's making us money!

I literally ran into this recently.

I bought a company that I determined to have an intrinsic value of roughly $23. I bought in at $10. in less than a year it quickly went up from $17 to $23 and guess what I did...

Nothing!

The story in my thesis hadn’t changed and it would have still been a great investment (prior to COVID) but even though I knew it was at fair value, I didn’t act.

I’m still trying to analyze that and figure out if I made the right or wrong choice.

Obviously if I knew a pandemic was going to hit it would have been the right choice to sell, but it’s not true when people say hindsight is 20-20.

There are always factors at play that we can’t see.

Honestly right now I think it was greed that made me hold on.

The speed at which it was rising was too exciting and I probably allowed my “what if” emotions to kick in.

Everyone who's not a robot struggles with this (bleep bleep blorp for you robots out there...)

The simple answer is to know what something is worth and only ever sell when it’s roughly 20% above that fair value.

Normally my rule is to sell at 120% fair value, so it wasn’t quite there, but I could have just sold and been happy with the return I would have got.

I think it goes back to that 80/20 principle. Except we can flip that in it’s head.

If we are waiting for 80% of the time to receive our last 20% is that time we’ll spent?

John Templeton, one of my favorite investors, would have had a sell order already set after he bought the stock.

He was amazing at doing anything he could to eliminate his emotions while he was still rationally analyzing the business.

I think I should start this as well.

One of the beautiful aspects of investing is that’s its continuous learning.

I think we can all learn a lesson from this. And as you can see.

As you can clearly see... I’m still learning.

Hope that helps!

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Sell as much % as you are up, quarterly. Buy as much % as you are down.

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Never. I usually buy with the intent of keeping the cash flow Forever. I sell if the company seems to be collapsing, or I have made such a huge growth that I want to invest in something else. This is just my way of investing, and my tip - it’s in no way the only or «correct» way to invest. ðŸ˜Š

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Put a trail limit and let it run.

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Check the volume versus the 10 day average volume to be able to see a good exit strategy....not really a value investing type of thing....but has helped me understand why stocks go up and down throughout the day!

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Make a habit of rebalancing chances are if a particular stock is overvalued it will be a larger portion of your portfolio so you can sell some of it and use that money to buy another stock you deem undervalued.

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Don’t sell for years. Quit trying to time the market. Buffet holds for decades.

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As soon as you think about "should i sell?"...sell some. Better to be a fool and lose out on more gains than a fool who rode his gains back down to break even or worse...a loss.

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For people with a "PURE" value investing strategy, a P/E of 40 or a minimum of 50% profit is a good time to sell in the short-term (Walter Schloss strategy). Personally, I prefer to seek great companies and never sell if the fundamentals don't change. ✌️


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I sell when I find something better

 

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If it's a great business purchased below intrinsic value and now overvalued, I'd keep it anyway. You may not a get another chance to purchase it below intrinsic value. If you're feeling like you're becoming too concentrated in one position, go ahead and trim it, but great businesses are seldom undervalued.

 

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Philosophically!!! This is the question that you have to come to self realization. you will always wrong when you sell is your thinking. You sell with a profit but price go higher so you think you are wrong. You sell at a loss but the price bounce back so you think you are wrong. You sell at a profit then price drop you still think you are wrong because you should sell at the very top. the whole idea is you are not happy with yourself no matter what. So it would make more sense to set a goal for a time period and when you reach the goal celebrate and set the next goal. Don’t bother if you are right or wrong. 2 steps back < than 1 big step forward to reach your goal. This is just a game.

 

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Tuesday 24 November 2020

Taking a deeper look at Share Buybacks

A buyback is when a company buys back its own stock.  As a company buys back shares, its future earnings, dividends and assets concentrate in the hands of an ever-shrinking shareholder base. 

These companies become more valuable by losing shareholders.  

Warren Buffett wrote in his 2000 letter to shareholders:

There is only one combination of facts that makes it advisable for a company to repurchase its shares:  

"First, the company has available funds - cash plus sensible borrowing capacity - beyond the near-term needs of the business, and, second, finds its stock selling in the market below its intrinsic value, conservatively calculated."

If those two requirements are met, Buffett is an enthusiastic supporter of stock buybacks.  When done right, buybacks can accelerate the compounding of returns.  When you find a company that drives its shares outstanding lower over time and seems to have a knack for buying at good prices, you should take a deeper look.

In a slow to no-growth economy, this tactic is becoming a more important driver of earnings-per-share growth.  But you have to actually shrink the number of shares outstanding.

Since 1998 to 2015, the 500 largest US companies have bought back about one-quarter of their shares in dollar value,, yet the actual shares outstanding grew.  This is because they hand out the shares in lavish incentive packages to greedy executives.


 Warning! : 

When evaluating share buybacks, make sure to look at actual shares outstanding. Relying on company news releases alone can be misleading. 

Companies also buy back shares 

  • to support employee incentive programs or 
  • to accumulate shares for an acquisition

Such repurchases may be okay but aren't the kind of repurchases that increase return on equity for remaining owners. 



Additional reading:

100 Baggers by Christopher Mayer (Foreword by KC Chong)

Tuesday 3 November 2020

Do not buy company warrants and structured warrants.

The price of warrant closely follows the price of its parent stock.

Warrant has a lifespan which is very short and no dividend is distributed to its owners.

They are mainly for short term speculation.

Do not buy company warrants and structured warrants.

Those with warrants given out "free of charge" as a result of rights issue subscription or bonus issues, their chances of winning are next to none if held to exercise date.

One of the most foolish ways is to squander your hard-earned money on speculative warrants because short-term speculation is an effective way to part with your hard-earned money.

Saturday 17 October 2020

The Circle of Wealth

The Miser and his Lump of Gold

Aesop, twenty-six hundred years ago, told the story of the miser who sold all that he had and bought a lump of gold, which he buried in the ground.  He went to look at it every day.  One day, the lump of gold was stolen and the miser was distraught.  A neighbour, learning of his grief, suggested that he find a stone and bury it in the hole and imagine that the gold is still lying there.  

"It will do you the same service, for when the gold was there you didn't really have it because you didn't make the slightest use of it."  

The moral of the story is that the true value of wealth is not in its possession but in its use.  Wealth unused might as well not exist.


The Burdens of Wealth

The burdens of wealth are in 

  • the act of creating, 
  • the fear of keeping, 
  • the temptation of using, 
  • the guilt of abusing, 
  • the sorrow in losing and 
  • the responsibility of handing it over to a succeeding generation.  
Just like building a business, with wealth you need to create, build, sustain and pass the baton.



"Riches get their value from the mind of the possessor.  They are blessings to those who know how to use them and curses to those who do not."(Ancient Rome playwright Terence 190 B.C.)

"For a person to build a rich and rewarding life for himself, there are certain qualities and bits of knowledge that he needs to acquire.  There are also things, harmful attitudes, superstitions, and emotions that he needs to chip away.  A person needs to chip away everything that doesn't look like the person he or she most wants to become."  (Earl Nightingale)



The Importance of Integrity

Warren Buffett looks at three character traits in people who surround him:  integrity, energy and intelligence.  He says, if you don't have the first, the last two will kill you.  In fact, if they don't have integrity, he would rather his managers be lazy and dumb.

"Integrity is like oxygen.  If you don't have it, nothing else matters."

"Be honest.  Never lie under any circumstances.  Just basically lay it out as you see it.  Simply speak openly and frankly."

Integrity is also about principles, full disclosure and openness.

Integrity is a choice, and the lack of it most often leads to self destruction.


The Value of a Good Reputation

"Conduct all business way inside the lines. and if it is near the line or on the line don't do it."  This advice would keep you out of trouble.

"Never do anything in business that you wouldn't want printed on the front page of your local newspaper written by an intelligent but critical reporter."

Always be on the lookout for managers and business with excellent reputations as possible acquisitions.

"It takes twenty years to build a reputation and only five minutes to ruin it.  If you'd think about that, you'll do things differently."

"He that is of the opinion that money will do everything may well be suspected of doing everything for money." (Benjamin Franklin)


Respect Yourself and Others

Follow the rules of common courtesy and political politeness.  Answer all letters promptly with a lighthearted one-paragraph reply.

"Of the billionaires I have known, money just brings out the basic traits in them.  If they were jerks before they had money they are simply jerks with a billion dollars." (Warren Buffett)


Good Character, Strong Ethics

Business success and wealth creation can be achieved with the highest ethical standards and without shady, questionable practices.

Warren Buffett treats his shareholders like partners and has created wealth with them, not at their expense.  

Character is tested most in defeat or when you have great power or great wealth.  A powerful man in business has stood the test of time and power.

One of the most powerful messages Buffett delivers in his humorous style is this:  Make a list of all the traits you admire and respect in others.  Think of people close to you or even those who have passed away.  His point is that whatever character traits you put on your list, you can adopt those same qualities and be that person.  Warren Buffett also suggests to his student audiences to make another list of the character traits that they don't admire or respect in others.  If you think about it and put some effort to it, you too can avoid all of the negative characteristics of the person you don't want to be.

Character cannot be hidden or faked.  You can tell if someone is the type of person with whom you want to associate.

A German motto says this, "When wealth is lost, nothing is lost; when health is lost, something is lost; when character is lost, all is lost."


Money Can't Buy Happiness

"No matter how rich you become, how famous or powerful, when you die, the size of your funeral will still pretty much depend on the weather."

Most people agree that if you have created wealth at the expense of your relationships, health or ethics, then you have nothing.   Life is more than money and more than wealth.

"Happiness is not the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort." (Franklin D. Roosevelt)

True happiness is doing what you were born to do, also known as self-actualization or following your bliss.  

Each person is born with a different genetic code.  The challenge for each of us, in order to find our happiness, is to figure out what our passion is, what our talents are and how best to express them.

Many people have found the attainment of wealth is without happiness if you fail to:

  • Give credit to others
  • Live with moderation
  • Select the right heroes and mentors
  • Give back and mentor others
  • Look after your health.
  • Earn the respect you deserve
  • Stay well within the laws (including paying taxes)
  • Be industrious
  • Be socially connected and have friends 
  • Have the love of those you want to love you
"Tell me who your heroes are and I'll tell you what kind of person you will become."

With the ability to buy most things, Warren chooses to enjoy few possessions and to keep the things he does have for a lifetime.  Warren finds happiness not in his vast fortune, but instead in delivering newspapers with his grandson and taking his family to the Dairy Queen on Sunday, talking with and mentoring college students, explaining that he lives no better than they do, he just travels better.

"Good managers never take credit for more than they do."

Warren carefully chooses those friends who, when they are around, bring out the best in him.  

Hang out with people who are bigger than you, bring out the best, and inspire you, and you will have a network of giants.

In the end, happiness does not come from Buffett's wealth, but rather from the number of people who love you. The most important thing is not how many or how large his assets are, but how his children feel about him.  Warren considers parenthood vital to happiness,  and unfortunately there is no rewind button on child development.

The more love you give, the more you get, and you can never give too much of it away.  It is inexhaustible.



Reference:  Warren Buffett's Lesson on Having a Rich Life

Thursday 8 October 2020

Is Inflation Good for Stocks?








Conclusions:  

Back-tested data does not show any significant relationship between inflation rates and stock market returns.

Stock valuations may be negatively impacted by higher-than-normal inflation (due to increase in the risk-free rate which makes short-term Treasuries more attractive relative to equities).

Stocks may not be as good a "hedge" against inflation as the theoretical argument may suggest, this may be limited to SHORTER-TERM stock market movements.   

LONG-TERM investors in the stock market should take comfort in the fact that the S&P 500 has steadily outpaced inflation with an annualised real (inflation adjusted) return of 3% between 1871 and 2009.

 



Notes:

1.  Deflationary fears amidst weak economic growth have led to much liquidity being injected into the financial system by various central banks around the world.

2.  Motto:  "Deflation:  Making sure "it" doesn't happen here."

3.  Fundamentally, there appears to be a strong case for stocks to perform under inflationary conditions.  
  • When raw material costs rise, companies can raise selling prices and pass on the increased costs to the consumer.  The goods and services produced by companies make up the composition of the CPI, and it is not unreasonable to expect selling prices to rise in tandem with the CPI.
  • Also, companies hold real assets like property and land which can rise in nominal value over time.  Thus, investors in such companies should benefit over an inflationary period as the underlying assets increase in nominal value.

4.  The threats of deflation to economic prosperity are perhaps more obvious to investors who look to the beleaguered Japanese economy as a prime example.  
  • An economy where consumers postpone spending as items become cheaper in the future is certainly not an ideal one, especially for stock investors whose companies suffer from declining revenue and shrinking asset values.



Back-Testing the S&P 500

Monthly historical inflation and stock market returns

1.  Inflation in the US has historically been represented by year-on-year changes in the CPI and this is reported on a monthly basis.  

2.  We looked at monthly stock market returns based on the S&P 500 and compared the historical stock market returns to different levels of inflation.

3.  The majority of monthly historical inflation data was below 4%, with a surprisingly huge number of periods where inflation was negative (14.4%).

4.  Instead of the expected poor returns in periods of deflation, the S&P 500 actually averaged a 1.1% monthly return where the CPI posted year-on-year declines.

5.  The best average monthly return was logged in months where inflation was between 7% and 8%, but this accounted for only 18 of the 1150 months, less than 2% of the data tested.

6.  On the other hand, inflation rates higher than 8% saw negative average monthly returns.

7.  Inflation between 1% and 4%, more moderate levels of inflation, saw an average return of 0.8%.



Extension of the study to annual inflation and stock market returns.

1.  A large proportion (61%) of the annual inflation rates fell between 0 and 5%.

2.  There appeared to be little correlation between high/low inflation rates and stock market returns.

3.  The high or low inflation rates resulted in both positive and negative stock market returns.



Theoretical Benefits of Inflation May Not be Reflected in Stock Returns

This evidently does not show up in back-tested data for the S&P 500, where our results indicate a lack of any observable correlation.

Why? 

1.  Both company specific and industry-specific factors can play a huge role in determining the ability of a company to raise prices.

2.   The uniqueness of a company's product or its extent of substitutability can determine whether the company is able to raise prices without hurting demand.  If there are many substitutes available, the company may be forced to keep prices low to remain competitive.

3.  Companies whose business models depend on being low-cost producers will find it difficult to do well in an environment where raw material prices rise without a corresponding increase in selling prices.

4.  In certain highly regulated industries like the utilities or fixed-line telecommunications sector, regulatory authorities may prevent companies from raising selling prices, resulting in a price ceiling which caps profits.  

5.  Ultimately, a higher input cost which cannot be passed on to the tend consumer means lower profit margins and smaller profits.

6.  Recognizing the inflationary pressures faced by companies, it would appear that the benefits of inflation (rising asset prices, higher nominal revenue and profits) may take a significant period of time to occur.

7.  Industry consolidation and technology breakthroughs may also take place to counter the short-term negative impact of inflation, with surviving companies reaping the benefits while others go out of business.



Impact of inflation on valuations

1.  Inflation between 2% and 3% saw a wider range of valuations over the past nine decades (1950s, 1960s, 1990s and 2000s).

2.  Valuations of the 1920s and 1930s are perhaps less meaningful, as they encompass the Great Depression where unprecedented corporate bankruptcies could have skewed market earnings and thus valuations.

3.  More noteworthy are the decades with higher average inflation (1940s, 1970s and 1980s) were met with lower valuations.  How can this anomaly be explained by the impact of inflation on valuation metrics for the stock market?    

-  Periods of high inflation are generally met with interest rate hikes (as a means to subdue inflationary pressure), which make short-term treasuries more attractive relative to equities.  
-  Inflation normally results in an increase in the risk-free rate, which raises the required return on equities.  
-  The resulting impact on the stock market lowered valuations.  


Thursday 1 October 2020

Hidden hands behind penny stock surge (The Edge)

Special Report: Hidden hands behind penny stock surge 

The Edge Malaysia September 30, 2020
This article first appeared in The Edge Malaysia Weekly, on September 21, 2020 - September 27, 2020.



ASTUTE market observers would have noticed on the local bourse a group of individuals, supposedly acting in concert, who have amassed shares in more than 20 publicly traded companies. These companies — linked via shareholding and directorships — are often on the most actively traded list, with huge, fluctuating share prices. “It (the companies) is all linked to the same person; usually, the most actively traded list on a daily basis involves these counters,” one source says when asked which are the companies that are linked. 




However, research by The Edge (see chart on the 21 companies) indicates that while other businessmen have surfaced, the individual said to be in control of the group of companies is not officially onboard or present as a shareholder.   “This [his not surfacing] could be due to several issues,” another source adds. 

It is also telling that nine of the 21 companies mentioned — 
  • AT Systemization Bhd, 
  • MLabs Systems Bhd, 
  • Focus Dynamics Group Bhd, 
  • mTouche Technology Bhd, 
  • Fintec Global Bhd, 
  • XOX Bhd, 
  • M3Technologies (Asia) Bhd and 
  • NetX Holdings Bhd 
— have their principal place of business, head office, business office or corporate office in Menara Lien Hoe, near Tropicana Golf Country Resort in Petaling Jaya. 

On its website, Lambo Group Bhd states that its address is at Menara Lien Hoe, even though the address in its annual report is in Old Klang Road in Kuala Lumpur. 

In 2006, Lien Hoe Corp Bhd sold Lien Hoe Tower Sdn Bhd, which owns Menara Lien Hoe, to privately held E-Globalfocus Sdn Bhd for RM1 and the assumption of RM43 million in debts. Meanwhile, E-Globalfocus was 68%-controlled by Cubes Innovative Sdn Bhd, a company 99%-controlled by Chuah Hock Soon. 

Chuah and businessman Datuk Kenneth Vun @ Vun Yun Lun were charged with four others in July 2014 for allegedly manipulating DVM Technology Bhd shares in March 2006. 

Vun has had several issues with the Securities Commission Malaysia and, in 2009, had to restitute RM2.496 million — being the amount of company funds that he had caused to be misused for his personal benefit, according to the regulator — to his then flagship FTEC Resources Bhd. Since FTEC — which morphed into Tecasia Bhd and later Mangotone Bhd — was delisted, 

Vun has had little direct presence in the market. However, Vun’s two sisters, Carol Vun On Nei and Grace Vun Siaw Nei, hold stakes of 3.64% and 0.67% respectively in Xidelang Holdings Ltd. 



Fragmented shareholding 

While Fintec Global seems to be a prominent company at the centre of the maze, its shareholding is fragmented, with several blocks of shares parked under Sanston Financial Group Ltd. In several of the 21 companies on the list, Sanston Financial is present in the shareholding list. Other companies that surface as shareholders in these list of companies include Global Prime Partners Ltd and Cita Realiti Sdn Bhd, a private company wholly-owned by one Kamarudin Khalil. Other shareholders, albeit usually holding small stakes, among the 21 companies include Datuk Jacky Pang Chow Huat — who, apart from a 11.84% stake in Sanichi Technology Bhd — has small stakes in DGB Asia Bhd, Focus Dynamics, MNC Wireless Bhd and Xidelang. Pang is also a director in Sanichi Technology.

Meanwhile, businessman Mak Siew Wei has 23.4% in AT Systemization, 17.07% in Green Ocean Corp Bhd and small stakes in Focus Dynamics and Xidelang. He is also a director at AT Systemization, Green Ocean and Saudee Group Bhd. Datuk Eddie Chai Woon Chet recently acquired a 62.37% stake in restaurant operator Oversea Enterprise Bhd, and has a 6.71% shareholding in Anzo Holdings Bhd, where he is managing director and has a board position in M3Technologies (Asia). Another name frequently seen is Datuk Kua Khai Shyuan, who, besides a 5.9% stake in mTouche Technology, has small shareholdings in Focus Dynamics, PDZ Holdings Bhd and Sanichi Technology, and has board seats on Trive Property Bhd, DGB Asia and MNC Wireless. Former Umno treasurer and former Bank Simpanan Nasional Bhd chairman Datuk Abdul Azim Mohd Zabidi surfaces as a director in four of the companies — Fintec Global, DGB Asia, Anzo and XOX. 

Most of the companies are loss-making and small in terms of market capitalisation, with the exception of Focus Dynamics, which has a market value exceeding RM5 billion. Nevertheless, Focus Dynamics, which is involved in operating food and beverage outlets, seems to be the star performer, with its stock price hitting a multiple-year high of RM2.64 recently on Sept 17, despite mustering a meagre RM3.08 million in net profit from RM20.72 million in revenue for its six months ended June this year. Year to date, Focus Dynamics stock has gained about 400%. 


Irrational exuberance 

Trading volume on most of the 21 companies is generally high, and many have shown unexplainable strong gains over the past few months. 

  • For instance, Saudee’s stock hit a low of eight sen on March 17, and picked up momentum in June to hit a 52-week high of 67 sen on Aug 13, gaining more than 300%. For its nine months ended April this year, Saudee, whose mainstay is in frozen food and poultry, suffered a net loss of RM27.78 million from RM57.61 million in revenue. Last Friday, Saudee closed at 48 sen, translating into a market capitalisation of RM77.3 million. 
  • If you are impressed with Saudee’s gains, Anzo — a loss-making company that has a business in timber products — gained more than 1,000% from mid-May to hit a high of 26 sen in July. Anzo closed at 11.5 sen last Friday, giving it a market capitalization of RM102.7 million. 

There are several companies on the list that have shown similar patterns. 

  • XOX, which is involved in cellular telecommunication services, gained more than 430% from mid-July to hit a high of 39.5 sen at end-August. In mid-March this year, XOX was trading at one sen. The stock closed last Friday at 19.5 sen, translating into a market value of RM562.8 million.
  • Ailing shipping company PDZ’s stock was trading at one sen in mid-March, but at end-June, it gained more than 500% to 32.5 sen in mid-July. For a company mired in law suits and a significant dearth of shipping assets, PDZ’s meteoric rise is surprising to many. PDZ ended last Friday at 10 sen, giving it a value of RM89.4 million. 
  • Similarly, Sanichi Technology, which is in precision moulding, saw a sudden surge in trading volume at end-May, with its stock spiking more than 150% to hit a high of 12.5 sen on June 2, after which it tapered off. 


While the peaks may be enticing to punters, the change in fortune, with counters falling to their troughs, can be a deterrent. 
  • mTouche Technology, which has a wireless network and mobile messaging business, saw its stock crash from a high of 20.5 sen on Feb 20 this year to a low of 5.5 sen on May 12
  • DGB Asia, a tracking solutions company, was trading at 19.5 sen in the early part of November last year, but by mid-March, it had shed most of its value to close at 1.5 sen on March 19. 

It is also noteworthy that companies such as Water Beaute World Bhd and WBW Global Sdn Bhd, have 1.02% and 0.42% respectively in Trive Property. These two companies were involved in get-rich-quick and fake online investment schemes. Both these companies were reported in the past to have stakes in XOX, while WBW Global also had a substantial stake in Anzo Holdings.

Comment:

Fine piece of investigative financial investigation and journalism.  Thanks to Edge.