Thursday, February 23, 2017

My Keppel and Sembcorp in the Green

I've been so lazy (and also because the markets are sooooooooooooooooooooo boring) that I haven't done an update post to my SGX portfolio since April 2016, haha!

On the bright side, I do update the figures and it's all on my sticky page, I just haven't had the time to make a full post on it.

Guess what? I'll try to do one for end of Feb 2017, all right? No promises though. I might forget, haha!

Back in Apr 2017, Keppel and Sembcorp was 37% of my portfolio based on cost. Why cost? Because it's a static number and I'm lazy af. The good thing is that because I record based on cost, it's very easy for me to find out what is my average cost per share.

Anyway, since then and now, not much has changed. My portfolio's capital investment is ever so slightly higher, with some new investments made in Nov (all are doing quite well), and some trims like in PEC (56% returns), Food Empire (36% returns) and CNMC Goldmine (33% returns).


My highest purchase for Keppel was $8.48 and for Sembcorp it was $4.20. However, I doubled down on my investments in these stocks in January 2016, and that was my main accumulation point that helped me drop the average costs of my purchases to the $6.426 and $3.23 that we have now.

Looking at my investments as of now, Keppel is $6.89 (+7.2%) and Sembcorp is $3.34 (+3.4%).

This is likely due to crude recovering from it depths of under $30 USD per barrel to now at about $54. I've talked about oil a lot in the past, but my thesis was simple. At prices this low (back then!), not many producers can survive and while this low price might persist for the short term due to the glut in oil, it is not going to be the long term equilibrium price.

Which almost a solid 40% of my portfolio concentrated in just 2 stocks in 1 sector in 1 country, I'm running really high concentration risks. While now on hindsight it is easy to say that I should have dumped more into these stocks, since they seem to be poised to take off if a recovery unfolds, the truth is that at the time when I was buying all of these in late 2015 and early 2016, people were panicking like headless chickens and it took some real balls to plonk such a big position (at least, relative to my own portfolio) into these 2 stocks.

While taking a calculated investment into Keppel and Sembcorp and just waiting for the situation to repair itself, I have been collecting dividends on these fellows.

I've got 4.8% of my Keppel investment back, and I've got 3.7% of my Sembcorp investment back.

If I sold off all my shares now, I'd be looking at total returns of 12% for Keppel and 7.1% for Sembcorp.

However, I'm a greedy and patient man. I'm looking for much higher returns in both of these blue chips. And because I've managed to get into them low and have such a low average cost, I have a very comfortable buffer to keep me holding on because "I'm positive".

My personal outlook for oil and the oil sector is still not favourable, so once things start looking good, then I'll get ready to start letting go of my positions. Until then, I'm just sit on them and happily collect respectable dividends.

Am I crazy? I'm only going to sell when things are good and the price is high? Well...

Buy low, sell high. Right?

4 comments:

  1. why sell cnmc now? gold is poised to inch higher and they just finished paying their lease of their sokor mine so their mining costs moving forward should be even lower

    ReplyDelete
    Replies
    1. Hi Joel, I sold CNMC back in June last year, after Gold had a fantastic $200 run up from $1060, at roughly the same price that Gold is at today.

      Of course CNMC is a company and not a replacement for Gold, however my main play on them was as a leveraged play on Gold.

      My entry and exit if I had been in Gold would have been $1145 (in) and $1245 (out). That would have been a mere 8.7% in gains.

      My profit by using CNMC as a leveraged proxy for Gold during this same period and entry and exit points is 33%. It fulfilled its intended purpose as a leveraged play on Gold for me.

      Regarding the company specifics, I am a bit more fuzzy now than I have divested. With that rise of Gold from the $10xx levels, CNMC has gained much more market attention and I don't feel there is much room to milk it for market inefficiencies since it is no longer an unknown stock.

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  2. Hi Mr GMGH,

    Thanks for your sharing your blog, thoroughly enjoy your content.

    Very similar situation to you with respect to Keppel Corp.
    After going through the long period of gradual depreciation, we stayed calm, and reduced our dollar cost average to favourable outcome.
    Now we can see past the thick thorn forest, when might you considering parting ways with our eventual friend BN4?

    Let's be honest, we all are "greedy", but what price would you be happy with selling at?
    Strictly speaking, I'd be content with it touching 8 dollars (unlikely), but seeing as this market is rather volatile, maybe 7.5.

    Thanks,
    Mr WM

    ReplyDelete
    Replies
    1. Hi Mr WM, I'm not prepared to let go for anything less than 40%, so probably $9.0 might be a level I'll be okay to sell at.

      Strictly speaking though, a number is just a number and I would probably sell based on sentiment and other factors. If Keppel is surging, news is optimistic and oil has taken a huge run-up, I would be looking to take some profits off the table.

      Even in profits now, I am willing to sit on this stock for a very very long time. Unless things take a very bad turn for the worse internally, I would be happy just sitting in unrealized profits and adding more during mini market sell-offs.

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