This morning I added some additional shares in VTech (HK:303) to the portfolio. While their most recent result was adversely affected by a combination of reduced demand in Europe and North America for their products and increased cost pressures, both factors were less significant than I would have expected. My expectation is that revenues will continue to grow - the tablet for children product is particularly interesting.
The balance sheet is very sound with USD128.5 million in net cash on hand (about HK$15 per share) and the interim dividend was maintained at the same level as last year.
I paid an average of HK$78.10 per share.
Friday, December 02, 2011
Some contrary indicators
CNBC carried a report on hedge funds reducing their exposure to stocks . Given that hedge funds are supposedly managed by some of the best and brightest investors around, it's tempting to adopt the view that if these people are reducing exposure to equities (by around one third according to the report), maybe the rest of us should follow. I prefer to look at it as another contrary indicator - if so many people (including professionals) are underweight equities, maybe it is time to increase exposure? Of course, it would be much nicer if I'd been underweight during this year's bear market but that's another story....
I also received an interesting report on emerging market equities issues by one of the bulge bracket houses (which I can't link to for copyright reasons). Among the data points used to make a case for over weighting emerging market equities was the correlation between net fund outflows and market troughs. Over the last few months, net fund outflows from emerging markets have reached very elevated levels. If history repeats itself, this bodes well for median term equity performance.
Lastly, amid all the doom and gloom about falling property prices in the PRC its also worth noting that the volume and aggregate value of new home sales have held up well - indicating that while developers will be experiencing some pain (possibly a lot of pain), at least there should be plenty of cash coming in to cushion the downside for the developers and the banks which finance their developments. It's still not an attractive situation but, so long as they can keep shifting their inventory, the wider effects of the fall in prices may not be as bad as many fear.
I'm starting to sound like a permabull....which is not a good thing.
I also received an interesting report on emerging market equities issues by one of the bulge bracket houses (which I can't link to for copyright reasons). Among the data points used to make a case for over weighting emerging market equities was the correlation between net fund outflows and market troughs. Over the last few months, net fund outflows from emerging markets have reached very elevated levels. If history repeats itself, this bodes well for median term equity performance.
Lastly, amid all the doom and gloom about falling property prices in the PRC its also worth noting that the volume and aggregate value of new home sales have held up well - indicating that while developers will be experiencing some pain (possibly a lot of pain), at least there should be plenty of cash coming in to cushion the downside for the developers and the banks which finance their developments. It's still not an attractive situation but, so long as they can keep shifting their inventory, the wider effects of the fall in prices may not be as bad as many fear.
I'm starting to sound like a permabull....which is not a good thing.
Thursday, December 01, 2011
NWS Holdings purchased
I added a few more shares in NWS Holdings Limited (HK:659) to the portfolio today, paying an average of HK$10.95 for the additional shares. The company looks comparatively cheap on valuation grounds and is operating what I consider to be a mix or relatively low risk (toll roads) and strategically attractive (water) businesses. The trailing yield of 6.4% is attactive.
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