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Friday, December 19, 2014

Direct From the Federal Open Market Committee


Forget about CNBC, Bloomberg, Reuters, Analysts Reports, Newspapers e.t.c. It's best to be informed from the source. 

"......When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run......"- Federal Open Market Committee, 17 Dec 2014

Seems like those who are heavily leveraged in loans, especially floating rate home / mortgage loans can heave a great sigh of relief. 

Current US inflation rate: 1.3% as reported by the Bureau if Labor Statistics (BLS) on December 17, 2014. 

Saturday, December 6, 2014

IFAST IPO - What i like and dislike

To me, no matter how excellent a company's business model or financials is, it is extremely important to a minority shareholder to know what his or her exit strategy is. What's the use of investing in an excellent company where the returns are not shared meaningfully with the minority shareholder? Many people say that as long as the business is doing well, the company share price will follow suit. Yes, that happens and the minority shareholder can reap a return from the capital appreciation, BUT, stop and think about companies which don't give much or any dividends and yet,  it's price still increase.

Why should the share price increase when there is no or very little sharing of the profits when the company is doing very well? In my opinion, it is just sheer hope or speculation that Mr Market will buy it at a higher price OR the majority shareholder will sell the assets or company at a high price and capital be distributed back to the minority shareholders. In short, investing purely for capital appreciation is purely gambling, instead, cashflow(dividends) and its reinvestment and more cashflow and its reinvestment is what Albert Einstein called, the eighth wonder of the world. He who understands compounding earns it, he who doesn't, pays it. Thats why i launch http://sgminorityshareholders.blogspot.sg/

What i like about IFAST

This is a type of company which do not need much in terms of capital spending and super scalable. It is able to churn out free cash flow consistently, assuming it can ward off competition. Current competitors are DollarDex, Aviva Navigator,Poems platform,banks. 

What i really dislike about IFAST
They have no dividend policy and have only recommended a dividends of 60% of their net profit in 2015 and 4Q2014 only. Thereafter, it is really a gamble on whether any dividends will be paid as they did not promise nor recommend anything beyond 2015. See below print screen.Important data is underlined in RED.

At 95 cents, IPO price and using year 2013's net profit of $8,474,000 as a guide for the net profit of year 2015. (because this has been audited and is the most recent full year. Note that this is just an estimate, assumption,guide e.t.c).

Pay out as dividends in 2015 : 60% of $8,474,000 = $5,084,400
Post-IPO shares: 256,225,334
Dividend yield in 2015 ONLY: (5,084,400/256,225,334)*100% = 1.98%. 

This is not attractive to me and after 2015, who knows. 

Sunday, November 30, 2014

Launch of SGMinorityShareholders

I have been investing for many years and feel dis-empowered as a minority shareholder. When i see majority shareholders who are usually directors enriching themselves with their high remuneration or cementing their control over their companies with relatives, while at the same time, giving little as dividends to the other shareholders, i feel helpless and the only avenue is to divest. I remember having invested in numerous companies which were subsequently delisted at a very low price due to a very low offer(relative to NAV)by the controlling shareholder. I wished i could just connect with the other shareholders to reject the offer but there was no such avenue.

What you will see for now:
The board of Directors remuneration will be compared with the total dividends paid out to all shareholders for each year.
The board of Directors remuneration will be compared with the net profit of the company during the year.

Should the total remuneration of the board of Director's be more than the total dividends paid out to all shareholders?
 I hope this site ( sgminorityshareholders.blogspot.sg) serves as a small stepping stone towards a greater voice for the Minority Shareholders.
Make use of this site to get updated, connect with other Minority Shareholders before AGMs, push for EGMS/Resolutions or agree on a fair offer price.

Friday, November 28, 2014

Oil Price and Interest Rates

Most people have been forecasting the interest rates to rise by 2015, including me. The chorus of selling bonds and REITS in anticipation of such a scenario have been deafening. The chorus of selling shares now in anticipation of tightening and interest rate rise has also been deafening.Having held off doing anything in the past 2 years , other then buying Super Group (yes, im still holding on) and buying and selling Jardine CC), i finally gave in to picking up some other shares, given the change in market conditions and also the uncomfortably high proportion of cash i hold.

The US Fed desires an about 2% inflation growth and a low unemployment rate. Currently, the inflation rate is low at about 1.7%. With oil price being DECIMATED, i do foresee a reduction in inflation rates and HENCE no pressure on the US Fed to increase the interest rates to squall any runaway inflation scenarios. The act of China lowering their interest rates and Europe, together with Japan, doing QE makes it even harder for the US Fed to raise interest rates which if they do, would increase their US dollar strength and hurt US employment.
I got this feeling that since QE, ultra low interest rates have not helped, now oil prices through shale oil production are being used to spur the economic engine by US. They do have a lot of tools.

Seems bullish for the general stock market.

Friday, June 20, 2014

Super Group - Very Peculiar


Super Group's price increased from the 52 weeks low of $1.34 on 18 June 2014 to close at $1.50 on 20 June 2014 on the back of higher  than average volume. This represents a price increase of about 11.9% within 2 days. (19 and 20 June). This large increase may be attributed to short sellers closing their positions or some buying from a big fish.

A look at the short selling volume these two days ( 19 and 20 June) is however utterly surprising to me.
20 June - 595,000 shorted
19 June - 593,000 shorted
18 June - 234,000 shorted
17 June - 193,000 shorted
16 June - 131,000 shorted
13 June - 120,000 shorted
12 June -120,000 shorted
The volume of Super Group shares shorted is increased more than two folds BUT instead of the the price decreasing, the price shoots up instead. Now this is peculiar. 

1)How accurate are these short selling figures? Short sellers are to declare that they short sell when they input the order. Anyone who declares that they short sell but doesn't is also guilty of wrong doing, but how does SGX enforce these? I wonder.

2) Assuming these figures are accurate, does this mean that the price will still continue to shoot up because those short sellers have to scramble to cover their positions(a.k.a buy back) as the tide seems to be going against them? 

3) Super Group has a share buy back mandate. Is the price increase attributed to company buy back? Or some existing substantial shareholders are buying back?We should know soon as they have 2 days to announce.

Now all this is very interesting and the worst thing for me is i have not accumulated enough. Anyway, did you know that Super Group actually sponsors a popular basketball group in the Philippines ( through the JV with San Miguel Purefoods) called San Mig Super Coffee Mixers.
It was a good feeling that during my due diligence in the supermarkets of Philippines that i saw people buying this.