Hi all,
I would just like to add a small note on posting any reports of your analysis. Do try to support your findings/reasons with given data from your data source. Things like when we write "I think/believe that the future prospects are wonderful" do tell us by showing your findings from your source data on how the data might affect your beliefs/attitude regarding the event.
Here we are trying to avoid serious errors of being speculative in our behaviour, therefore it shall be a good practice to support with evidence (if any), if not try not to post it.
And for those who have been through vigorous financial training from a business school, please do not use huge statistical formulas of any sort in this blog. Do summarize your values/findings and translate them into terms that can be read by any individual. In passing, I shall say that a smart finance professional is not necessarily a smart value investor.
The goal is to produce data that is as conservative as possible so that we can insure ourselves against serious over estimations on the businesses. And also a blog that can be understood by everyone who are not necessarily trained in the field of finance.
Tuesday, October 21, 2008
Welcome to the team of future enterprising value investors
Dear all,
This blog shall be used as a tool for inspiring value investors to hone their skills in the art of stock picking. The skill is one that not everyone is able to master because of the long hours needed for intense research, and one that requires alot of emotional discipline.
However, I believe that working with a team of good investors that carry the same values and goals, as well as learning from each others strengths and weaknesses and past mistakes, will make the learning process quicker, not only by looking at each others' posts but also by inspiring one another.
On a personal note, I shall say that the purpose of this blog is NOT one that helps you to get rich quicker (value investing does not make you overnight rich). Hard work, ability to learn from past failures and experience are far more important factors. Bearing in mind of such factors rather than emotions and greed, rewards will just ride along for the effort put in.
This blog shall be used as a tool for inspiring value investors to hone their skills in the art of stock picking. The skill is one that not everyone is able to master because of the long hours needed for intense research, and one that requires alot of emotional discipline.
However, I believe that working with a team of good investors that carry the same values and goals, as well as learning from each others strengths and weaknesses and past mistakes, will make the learning process quicker, not only by looking at each others' posts but also by inspiring one another.
On a personal note, I shall say that the purpose of this blog is NOT one that helps you to get rich quicker (value investing does not make you overnight rich). Hard work, ability to learn from past failures and experience are far more important factors. Bearing in mind of such factors rather than emotions and greed, rewards will just ride along for the effort put in.
General Comment
Well, because of my test next week, I couldnt be posting much stuff here for the time being. But its good we have point of views and recommendations from other investors. Thanks to those who have posted.
However, I have scanned through Stockland Limited's (SGP) business yesterday night. I realized that profit margins were wide, I think somewhere on the 30% region (unadjusted), looking through a 2 year result (2007-2008). This gives a good stead for higher profits and low costs in the near future. Closing price as of 21/10/2008 was $5.09.
If any of you guys are free. Please post up a detailed analysis of Stockland (5 year period) and I shall add in more details of that business soon.
Or if you find any potential attractive business, please tell us the core businesses of the company and give us a brief reason why you think the business is good. You can also do up a detailed analysis of the business (in a seperate post) so that we can compare the results of such studies with its peers and make informed decisions.
However, I have scanned through Stockland Limited's (SGP) business yesterday night. I realized that profit margins were wide, I think somewhere on the 30% region (unadjusted), looking through a 2 year result (2007-2008). This gives a good stead for higher profits and low costs in the near future. Closing price as of 21/10/2008 was $5.09.
If any of you guys are free. Please post up a detailed analysis of Stockland (5 year period) and I shall add in more details of that business soon.
Or if you find any potential attractive business, please tell us the core businesses of the company and give us a brief reason why you think the business is good. You can also do up a detailed analysis of the business (in a seperate post) so that we can compare the results of such studies with its peers and make informed decisions.
Monday, October 20, 2008
Virgin Blue Holdings (VBA)
VBA caught my eye because I think it is selling at a discount mainly because Toll holdings got rid of it and suddenly the market is flooded with VBA shares that nobody wants.
It has 2 Billion dollars worth in tangible assets (planes, machinery, equipment etc.), but only a market capitalization of 300 million. Their earnings last year was more than 100million, making their P/E ratio about 2.5-3.
From a solely value prespective, I think they are incredible. However, airlines in general is an industry that I definitely want to avoid because of every rising cost of fuel, unionized workers, price based competition etc. that makes it an incredibly hostile envioronment to operate in. Under initial investigations, it seems unlikely that it follow Ansett (another Oz airlines early this decade that went bust) to bankruptcy, however, that goes against Charlie Munger's advice of buying a business that you would want to keep forever and ever.
I've bought tiny bits (less than 1k) worth of their shares, which is a little speculative.
VBA is something I am keen to explore a little more, but for the rest of the year, I'm going to be completely broke and will have 0 dollars to spend buying more shares. When I do get $$$, VBA is something I'd want to take a closer look into for sure!
The Art of Stock Picking by Charlie Munger
http://vinvesting.com/docs/munger/art_stockpicking.html
Just thought that I'd share this article by Charlie Munger:
Essential points:
1. Pick good businesses with strong pricing power that can transfer any savings in the business process to the owner.
2. Buy shares that you'll hold forever and ever (i.e. it is better to buy a wonderful stock for a reasonable price than to buy a reasonable stock for a wonderful price) as if you hold for a long long long time the wonderful stock wins out.
3. Markets are efficient most of the time, but it fucks up once a while. And when it does, you act fast and enter with commitment, vigour and courage.
Mortgage Choice Ltd
Company: Mortgage Choice
closing price as at 20/10/2008: 90 cents
Avg earnings per share (2004-2008) Dilutive: 13.54 cents
PE ratio as of current price and current eps (2008): 5.52 x
PE ratio as of current price and historical eps: 6.64 x
Based on avg EPS approx price should be at 75 cents
EPS 2008 Dilutive: 16.3 cents
Operating Cash Earnings Per share: 14.43 cents (2008)
" " " : 14.22 cents (2007)
" " ": 10.84 cents (2006)
Return on Assets (adjusted for core operations): 9.42 % (2008)
Return on Assets (adjusted for core operations): 10.42% (2007)
Return on Equity (adjusted for core operations): 33.76% (2008)
Return on Equity (adjusted for core operations): 37 % (2007)
Free Cash Flow: $5.4 million (2008)
Free Cash Flow: $ -3.8 million (2007)
Current Ratio: 1.57 x
Debt to equity: 0
Profit Margin (adjusted for operations): 12.94% (2008)
" " : 13.35% (2007)
" " : 13.48% (2006)
" " : 11.78% (2005)
Proportion of dividend paid to NPAT: 11.35% (2008)
" " ": 22% (2006)
" " " : 14.41% (2006)
Net Asset Value: 43 cents (2008) adjusted for intangibles and goodwill
Net Book value: 45.57 cents (2008)Calculated based on avg equity
Outstanding avg shares for 2008: 117786500
closing price as at 20/10/2008: 90 cents
Avg earnings per share (2004-2008) Dilutive: 13.54 cents
PE ratio as of current price and current eps (2008): 5.52 x
PE ratio as of current price and historical eps: 6.64 x
Based on avg EPS approx price should be at 75 cents
EPS 2008 Dilutive: 16.3 cents
Operating Cash Earnings Per share: 14.43 cents (2008)
" " " : 14.22 cents (2007)
" " ": 10.84 cents (2006)
Return on Assets (adjusted for core operations): 9.42 % (2008)
Return on Assets (adjusted for core operations): 10.42% (2007)
Return on Equity (adjusted for core operations): 33.76% (2008)
Return on Equity (adjusted for core operations): 37 % (2007)
Free Cash Flow: $5.4 million (2008)
Free Cash Flow: $ -3.8 million (2007)
Current Ratio: 1.57 x
Debt to equity: 0
Profit Margin (adjusted for operations): 12.94% (2008)
" " : 13.35% (2007)
" " : 13.48% (2006)
" " : 11.78% (2005)
Proportion of dividend paid to NPAT: 11.35% (2008)
" " ": 22% (2006)
" " " : 14.41% (2006)
Net Asset Value: 43 cents (2008) adjusted for intangibles and goodwill
Net Book value: 45.57 cents (2008)Calculated based on avg equity
Outstanding avg shares for 2008: 117786500
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