Monday, October 11, 2010

Small cap purchases

Over the last few weeks I have purchased shares in six small cap companies. In all cases, the shares have been selected based on meeting all or most of the following criteria:

1. low PE ratio
2. strong free cash flow
3. good dividend yield
4. no debt
5. little or no dilution of shareholders over the last three years
6. insiders holding meaningful interests in the company
7. no selling by insiders in the last two years

In all cases, I have read the most recent annual report and (if more recent) interim report as well as any other recent announcements.

In some cases, the liquidity is very limited so I have only purchased small parcels - in all cases less than my usual allocation (probably violating the principle that one should always play for meaningful stakes).

The six companies and the average price paid are:

1. Tai Sang Land (89) - HK$3.23
2. Kenford (464) - HK$0.63
3. AUPU Group (477) - HK$0.99
4. Allan International (684) - HK$3.24
5. Varitronix (710) - 2.72
6. Perenial (725) - HK$0.84

5 comments:

Chong Kong Hui said...

You really put in effort on stock selection.

May you share with us the objective of this portfolio?

traineeinvestor said...

Hi

Thanks for dropping by.

Retirement planning is the purpose of the portfolio. We have no equivalent of Amercia's social security, MPF is a sick joke that does more harm to investors than good and I have no pension. Unless I want to get ripped off with outrageous fees, building my own portfolio of investments is my preferred way of doing things.

If the ultra low cost Vanguard products were available, I would probably have a greater allocation to those funds.

Cheers
traineeinvestor

Anonymous said...

I am curious as to your timing - what made you buy them now ? After all, many of these have been a lot cheaper in the not too distant past.

traineeinvestor said...

Money and time.

My investments are funded out of cash flow - from my job, net rent on the properties and dividends. All of these are quite erratic.

Also, my work schedule is very hectic. Sometimes I have a lot of time to do the research and other times I have very little time to think about it which means the cash accumulates for a few months before being deployed.

So some months I have quite a bit of cash to invest (all things being relative) and other months very little.

Anonymous said...

How can the Vanguard products not be available in HK? You should be able to purchase the ETFs from any brokerage account. Short of that, being an HK resident, you can open a tax-free, non-resident, account in the US. Find any brokerage firm and fill out a W-8 instead of a W-9. You can even do comission-free trades on certain ETFs with some of the brokers (like Charles Schwab).