Portfolio Review #5 - directly held equities (part 3)

This is the third and final part of the review of my positions in directly held equities and deals with what I call Group C - positions that are valued at less than 0.8x a standard weighting. Given the relatively small amounts of money involved and that a small investment has at least the potential to require as much time and effort as a larger investment, I need a reason to justify buying and holding these investments. For most of them, I should either increase the investment to a more meaningful amount of

In no particular order the seven Group C positions are:

Daisho Microline (HK:576): is a small company that specialises in PCBs for the telecommunications industry. It incurred substantial losses in 2009 and 2010 during which time it retooled to cater for developments in the industry. For 2010H1 the company returned to profit. This was the first small speculative position I purchased in 2009. Only a small position was taken to reflect the fact that the shares are very illiquid and, at the time of purchase, the company was losing money;

Allan International (HK:684): this small company manufactures and distributes electrical appliances. Purchased largely for its attractive yield (currently around 5.8%), this ended up being a small position due to an order being partially filled when the share price advanced past my limit. I decided not to chase the stock;

Kenford (HK:464): is another small manufacturer of electrical products. Based on trailing earnings it is cheap and offers a good yield of 5.9%. The investment was kept small due to the limited liquidity at the time of purchase;

Perennial (HK:725): another small manufacturing stock, specialising in power cords, cables and wires. Again, the company looks cheap on fundamentals and yields 6.4%. The investment was kept small due to limited liquidity at the time of purchase;

China Merchants Bank (HK: 3968): I purchased a small number of warrants instead of a larger position in the underlying shares. This is pure speculation and I am currently down aver 40% on my investment - fortunately a very very small position;

Automotive Holdings (ASX: AHE): an Australian car retailer offering good fundamentals, including a nice dividend yield, and a focused and coherent plan to expand the business;

Specialty Fashion (ASX: SFH): an Australian retailer which has been marked back due to economic conditions generally and intensified competition. In buying this stock, I have attempted to pick the bottom of the retail cycle and buy a company with a solid balance sheet, a growing business and which offers attractive fundamentals (including a good dividend).

In relation to AHE and SFH, these ended up being relatively small investments due to the availability of AUD at the time of purchase. In both cases, if more money had been available I would have taken a standard sized position.

With all of these positions (except the CMB warrants), while there is no need to sell as all six companies appear to be doing well (famous last words), as the portfolio has grown in value and number of positions, going forward I should make an effort to only invest in companies that I am willing to take a standard sized position in - it's not really worth the effort otherwise.