Martin Lee @ Sg
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2014 Investing and Trading Review – Part 1

I’m back from a long break and I would like to start the year with a review of some of my own personal investing and trading in 2014.

This is not something that I have done publicly before but I would like to do it more often if readers like you find it useful. Feel free to give your comments at the end of this post.

I will be be covering three instruments that I use : Singapore equities, forex and futures.

Part 1 of the review will cover Singapore equities which are mainly long term concentrated positions.

In 2014, there were two major divestments and one acquisition in my portfolio.

This leaves me with two main holdings in my equity portfolio at the end of 2014.

I do own a few other companies with odd lots here and there but those are considered insignificant in the greater scheme of things.

Singapore Equities

Divestment of Global Premium (GP) Hotels

GP Hotels is the entity that runs Fragrance Hotel. Previously, the hotel business was combined with the property development business and listed as Fragrance Group.

When Fragrance Group spun off the hotel arm as a separate listed entity GP Hotels in 2012 at a price of $0.26, it did not take me long to acquire some shares of GP Hotels. Budget hotels are a recession proof business to me so I bought some shares at $0.24 in August 2012. .

Just two short years later, there was a general offer by the majority shareholder Koh Wee Meng at a price of $0.33. I did not accept his offer but subsequently I sold my stakes at $0.39 in July 2014 following a sudden spike in price to $0.40. I might re-enter the position at levels close to $0.33. It’s currently trading at around $0.35.

Divestment of Saizen REITS

I first bought Saizen in 2008 before the financial crisis. For those of you who remembered, the IPO price was at $1.

My entry price was around $0.70 but the price clashed all the way down to almost $0.10 due to their internal debt problems and inability to refinance their debt during the financial crisis. In order to survive, Saizen had to do a massive rights issue at $0.09 and I was forced to cough up cash to take up all my entitlement.

After the financial crisis, the price rebounded back to around $0.20. They also did a 5 for 1 share consolidation so the price went up briefly to almost $1 after that.

I have attended the Saizen AGM a few times and find their management quite open in answering questions and sharing.

Even though Japanese properties are starting to go up in value, I am concerned that the increase will be more than offset by the declining Yen. This is evidenced by their declining NAV.

As there is no currency hedge for the underlying properties (they only do hedging for the income streams), I have decided to divest most of my holdings in 2014 (at an average price of $0.92) leaving only a few odd lots behind.  The current trading price is around $0.86.

Despite the initial disaster, Saizen actually turned out to be one of my big winners with an overall annualized return of more than 20% in six years due to my aggressive purchases in 2009.

Acquisition of Courts Asia

I am sure everyone knows what business Courts is in. This is a new position that I acquired in late 2014.

The interesting thing about Courts was that Courts Singapore and Courts Malaysia were previously listed on the Singapore Stock Exchange and the Kuala Lumpur Stock Exchange but were privatized in 2007 by private equity groups. They were then consolidated and relisted on SGX in 2012 at a price of $0.77.

This is the type of monkey business that private equity funds do. Buy low (delist) and sell high (IPO).

Now, why should I want to be on the other side of their trade?

I did not subscribe to any shares during the IPO but the price went up to more than $1.10 after listing. After that, the price dropped steadily and I took notice of the company again when it started to buy back its own shares at around $0.60+.

Not bad for the company, making easy profits. IPO at $0.77 and buy back shares at $0.60. The profits comes partly at the expense of some IPO investors who sold at the lower prices .

I can actually be a very patient investor (This is both a good and bad thing). I tracked the price (and buybacks) of Courts Asia for almost one year before I finally bought some shares in November 2014 at $0.40.

This happened to be at the recent low and the price has rebounded by almost 20% since then. Unfortunately, this also means that I’m unable to accumulate more holdings at my initial low price. So, the quick price jump is not necessarily a good thing for me.

Lesson : If you are a long term investor, you actually want prices to remain low for as long as possible so that you can continue to buy more at low prices over time.

Incidentally, Courts Asia is not my first foray into an electronics business.

Side Story About Pertama

Back in 2001 when I first started investing, I had bought some shares into Pertama at a price of $0.255. You might find its store name more familiar – Harvey Norman.

The company was profitable and kept paying increasing dividends every year. There were years where the dividends I received was around 20% yield of my original purchase price.

The only reason why I sold Pertama eventually was that it was delisted in 2013 at a price of $0.65 by its majority shareholder. Before delisting, the shares were even suspended for more than a year as the free float was too low. This means that you can’t sell the shares even if you wanted to.

That suspension is no problem for a long term shareholder with a mindset of a business owner but might pose considerable problems for a trader with a short term mentality.

The sad thing about my investment in Pertama was that I only bought one lot in 2001. Yes, one pathetic lot.

To add insult to injury, I did not buy more of it for the next ten years. So even though the returns were high on a percentage basis, the absolute amount was peanuts (not the $600,000 one).

However, I did buy a big chunk of it at $0.52 in 2012 before it got suspended from trading. Made 30% by holding it for another two years before it got delisted. So overall still not too bad la.

Missed Opportunity With Hyflux

Hyflux has been on my watchlist ever since its IPO more than ten years ago.

The valuations (PE) can be a bit rich at times but this is the type of shares that can suddenly become a stock market favourite. Just take a look at its chart.


Those who bought it at IPO and managed to sell it at $5 would be laughing all the way to the bank. Of course, this is extremely difficult in practice.

On the contrary, if you had gotten caught during the downtrend, the losses can be brutal.

This is a scenario where my patience did me no favours.

Ever since the price reached $1 last year, I have been monitoring it more frequently.

When it hit a low of $0.71 in December 2014, I was very close to buying some of it. Unfortunately, I was sucking my thumb and didn’t do anything. The price has gone up by more than 20% since then. This is what Warren Buffet would call a mistake of omission.

Now, I’m not sure when I will be buying shares in Hyflux, if ever.

And with that, I round up my 2014 adventures with Singapore equities. Stay tuned for my adventures in futures and forex in part 2 of my review.

Leave a Comment:

Lee says 9 years ago

Hi Martin
Thanks for sharing your 2014 investing adventures. What is your investment philosophy for 2015?
Just focus on courts n hyflux? Any specific investment theme to look out for?

Looking forward to your adventures on futures n forex. I am keen on these instruments but would like to keep risk to a minimium.
I have seen some articles that mentioned forex is a zero or negative sum game. So I need to be careful. Any pointers will be most appreciated.

Joan Lim says 9 years ago

Hi Martin

I am also eyeing Hyflux! At what price is it a good buy?
Also, I would like to invest in Oil and gold! How do i go about doing this?
Appreciate your advice!

Tks & Rgds


    Martin Lee says 9 years ago

    Dear Joan,

    I don’t have a target price for Hyflux yet, the PE ratio always seems to be too high for me.

    Gold ETF is listed on SGX as GLD US$. Alternatively, if you want exposure to the gold mining firms, there are some of these funds around.

    No direct way of buying Oil on SGX. Perhaps you can look at some of the companies in the Oil and Gas industry. Eg Kep Corp, Sembcorp Industries, etc.

      James says 9 years ago

      Thanks. So, your core strategy of stock/company selection is based on under market price of actual company’s value? This means value investing, when market price is around 60% of company’s real value depending on (1) NAV or (2) Company’s potential future earnings/growth. In this regard, have you ever heard of CNAV, e.g. when CNAV of a company/stock is worth $10, but market price is only $6, you would buy it & sell it when market price goes up way beyond $10? This way, there is no second guessing, right ?

        Martin Lee says 9 years ago

        Dear James,

        sorry for the late reply.

        The whole genesis of my investment philosophy is to find a good company, and only buy when the price is attractive. For the term CNAV, are you referring to the term conservative NAV as coined by some trainers?

        This is quite similar to “margin of safety” used by Benjamin Graham and Warren Buffett.

        You can’t use NAV for all types of companies though. I think using intrinsic value would be applicable for more types of companies. However, it would be more difficult to come up with a precise value for intrinsic value compared to NAV.

James says 9 years ago

Thanks for your sharing. May I know your strategy for buying the said shares? Based on fundamentals (value investing on net asset or potential future earnings/growth) or simply technical on chart indicators (which?) Care to reveal more?

    Martin Lee says 9 years ago

    Dear James,

    I don’t use much of TA. There were different reasons for buying the various stocks.

    For Saizen, it was a yield play and discount to NAV. Turned out to be a very bad choice as their source of financing was suspect and went belly up during the GFC.

    For GP Hotels, like I mentioned earlier I liked the core business. Buying a good business is one thing, but it is just as important to buy at the right price. This can be evaluated using the PE ratio. If insiders buy alongside you, that is an additional positive indicator.

    For Courts Asia, I had been targeting to re-enter an (profitable) electronics business every since I sold Pertama. A disappointing earnings announcement (followed by a price drop) presented that chance to buy at an attractive price which gives me an additional margin of safety. The window of opportunity for that price drop to $0.40 was one day.

    Hyflux is a low conviction speculative play on water fad. If you ask me about it’s competitive edge against its competitors, I have no clue. That’s probably why it is harder for me to pull the trigger.

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