This morning I added some more shares in China Metal Recycling (HK:773) to the portfolio. The combined effect of the very strong interim results, bullish forward looking statements from the company, insider buying, a sound macro environment, industry consolidation and, most recently, a very aggressive price target released by one research house made a compelling case for adding to my position. I paid HK$7.96 for the additional shares.
In an effort to avoid running down the cash too far, to fund the purchase I sold some of my shares in each of CMOC (HK: 3993) at HK$3.56, Herald Holdings (HK:114) at HK$0.90 and AUPU (HK:477) at HK$0.62.
Wednesday, November 02, 2011
Some small portfolio adjustments
A slightly late update.
On Monday I added a few additional shares in K Wah (HK:173) and HKR International (HK:480) to the portfolio. I paid HK$2.12 for K Wah and HK$3.25 for HKR.
K Wah is a mid tier Hong Kong property developer (some projects in the PRC as well). Sales of its current JV project Marinella have been going well even without allowing for current market conditions. The balance sheet is strong. The discount to NAV is large - even if there is a very large write down in asset values - but so are most property companies. IMHO the shares have been oversold.
HKR is a smaller property investor and developer (with a few other businesses). The companies track record of delivering growth and keeping up a respectable dividend is excellent. The discount to NAV is huge and, together with a strong balance sheet, provides considerable long term downside protection.
Right now it seems a bit counter intuitive to be buying property companies.
I'm trying to get into the habit of funding new acquisitions by selling some existing investments rather than repeatedly running down my cash position - once I eventually stop working I won't have much choice in the matter. The K Wah and HKR purchases were funded by selling part of my position in CMOC (HK:3993) for HK$3.88. CMOC has been a disappointing investment (to put it mildly). That said, I have no particular views on whether to hold or sell my remaining shares in CMOC.
The amounts involved are not large.
On Monday I added a few additional shares in K Wah (HK:173) and HKR International (HK:480) to the portfolio. I paid HK$2.12 for K Wah and HK$3.25 for HKR.
K Wah is a mid tier Hong Kong property developer (some projects in the PRC as well). Sales of its current JV project Marinella have been going well even without allowing for current market conditions. The balance sheet is strong. The discount to NAV is large - even if there is a very large write down in asset values - but so are most property companies. IMHO the shares have been oversold.
HKR is a smaller property investor and developer (with a few other businesses). The companies track record of delivering growth and keeping up a respectable dividend is excellent. The discount to NAV is huge and, together with a strong balance sheet, provides considerable long term downside protection.
Right now it seems a bit counter intuitive to be buying property companies.
I'm trying to get into the habit of funding new acquisitions by selling some existing investments rather than repeatedly running down my cash position - once I eventually stop working I won't have much choice in the matter. The K Wah and HKR purchases were funded by selling part of my position in CMOC (HK:3993) for HK$3.88. CMOC has been a disappointing investment (to put it mildly). That said, I have no particular views on whether to hold or sell my remaining shares in CMOC.
The amounts involved are not large.
Greece - digging a deeper hole
The announcement that Greece intends to put the austerity/bailout package to a national referendum undid much, if not all, of the positive that could be taken from the rather sketchy EU bailout plan.
There is widespread and probably realistic expectation that, when the time comes to vote, the Greek people will reject a package of tax increases and entitlement cuts. This is likely to be true, even if the alternative is the national equivalent of bankruptcy and even greater hardship. Even if the referendum is passed, it would be a safe assumption that no sane person would have failed to take their money out of the Greek banks, out of overseas banks based in Greece (ring fencing risk etc) and out of Greece generally. (Quite frankly, I'm a little surprised that Greece hasn't been stripped bare already.) At this point, no amount of regulation is going to stop that from happening and, one way or another, people will get everything they can off the ship before it finally sinks.
For what it's worth, matters have reached the point where the rest of the EU should wash its hands of Greece, let the country (and its creditors) sort out its own mess and put the stability fund to work to ensure that European banks do not fail (or, if they do, nationalise them to prevent a domino effect). Greece clearly wants to fail and should be allowed to do so as a lesson to other states that consistently spending beyond your means will, sooner or later, lead to considerable economic hardship. I'd say it would also teach lenders and investors to at least consider the possibility of country default risk when lending/investing but that would be a waste of effort - every few years they seem to need re-educating.
There is widespread and probably realistic expectation that, when the time comes to vote, the Greek people will reject a package of tax increases and entitlement cuts. This is likely to be true, even if the alternative is the national equivalent of bankruptcy and even greater hardship. Even if the referendum is passed, it would be a safe assumption that no sane person would have failed to take their money out of the Greek banks, out of overseas banks based in Greece (ring fencing risk etc) and out of Greece generally. (Quite frankly, I'm a little surprised that Greece hasn't been stripped bare already.) At this point, no amount of regulation is going to stop that from happening and, one way or another, people will get everything they can off the ship before it finally sinks.
For what it's worth, matters have reached the point where the rest of the EU should wash its hands of Greece, let the country (and its creditors) sort out its own mess and put the stability fund to work to ensure that European banks do not fail (or, if they do, nationalise them to prevent a domino effect). Greece clearly wants to fail and should be allowed to do so as a lesson to other states that consistently spending beyond your means will, sooner or later, lead to considerable economic hardship. I'd say it would also teach lenders and investors to at least consider the possibility of country default risk when lending/investing but that would be a waste of effort - every few years they seem to need re-educating.
Subscribe to:
Posts (Atom)