Tuesday, May 19, 2015

[SGX Portfolio] Throwing Out The Dirty Fish


I bought into China Fishery back in November last year when priced had dropped 10% to sell at $0.30 a share. I thought that such a plunge was a huge, and it looked like an opportunity similar to Valuetronics.

Of course, it was not. I made 70% from Valuetronics in a mere 6 months.

After they announced their rights issue to raise money to reduce their leverage, their stock got smacked all the way to the rights price of $0.173. If I am not wrong, it even traded under that price for a while.

For a company reducing it's expensive debt, I didn't understand why it was being smacked down. The release and explanation by the board also made me decide that I should participate in the rights issue, so I did.

However, after hearing words of caution from Felix and LP, as well as learning more about their company and their parent company, I felt a bit more uncomfortable with my position. Based on my 1st initial lot that I bought, I was down more than 40% on that position! However, because I averaged down and took part in the rights issue, my final average cost of all my holdings were $0.21286.

The latest quarter results showed that net profit is down 75%, but strangely the stock soars. This was my chance to get out.


Today I sold off all my holdings at $0.235, which represents a modest 10.4% return over the last 6 months when I had skin in the game. Taking into account transaction costs, my net return is in the high 9+%.

I think that I did quite well considering that I was down more than 40% when things were at the worst! I was queuing up to sell at $0.25 yesterday, but I think that 10% returns is very modest considering how many people find this a horrible stock. I will never know how I managed to come out of this strange counter in the green, but I feel a lot more relieved now that I am finally out.

When things get worse and their stock price drops, I wouldn't mind to be a buyer actually. However, if things get worse and the stock price pops? Then it's the time to cash out your winnings and leave the casino.

9 comments:

  1. The stock market is unpredictable. Salted fishes can come back alive. It not just happen; but it keeps happening many times!

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    1. True, true uncle! But this fish a bit too salty for me, I go drink water now and let someone else finish where I left off :P

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  2. Maybe they are on its way to become a multi-bagger ;)

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    1. Aiyo B, I hope not, since I'm out already! Who knows though, I'm might end up owning this stock again in the future! But just not now, heh.

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  3. Having a good outcome doesn't mean that it's a good decision in the first place. Looking forward to your post action report on this one ;)

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    1. Hi LP, you are right. I think I was very lucky that I got away unscathed.

      I don't think I'll do a post action report, but I learnt that just because something gets smack downwards and is cheap, that in itself isn't a good enough reason to buy. I need to remember that quality also plays a role in stock selection, not just valuations!

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  4. One of those that can make the heart stop.

    Once upon a time (before 2007), this company was touted as a growth story given global population growth and increasing demand for food. Such macro themes are just nice stories. It's ultimately the business that matters.

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    1. Hi Lizardo,

      You are right, this one has been the most rollercoaster of all my holdings so far! The narrative was and still is quite sexy, but they just aren't delivering shareholder performance. I also need to keep reminding myself that the story has to match up with the numbers!

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  5. Nice blog post, providing a brief overview of singapore stock market on a regular basis.

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