Thursday, May 22, 2014

Future Portfolio Developments

While I did previous have a good run through the SGX listed stocks looking for decent tickers, especially based on dividends, I definitely think more can be done.

I think one extra layer of screening should also take into consideration the free float of the company shares. The requirements of SGX are detailed here, but I think I will come up with my own ordinal grouping, since the amount of free float can also determine the amount of corporate governance and also shareholder value creation. Companies with more than 51% in the hands of non-controlling interests will be the highest on the list, while those just near the minimum free float will rank very low.

I also want to group companies by sectors and related industries, for example:

Property: Fragrance, Second Chance, all the REITs
Shipping: HPH Trust, Rickmers, FSL, NOL
Consumer Staples: Sheng Shiong, QAF, SuperGroup
and etc...

Although the economy is linked, certain sectors will be under or over exposed to certain risks, so it would be prudent to look out for these sectors which are temporary distressed with negative sentiment for opportunities, rather than just all stocks as a whole.

Another consideration is also beta. I want to sort out the stocks based on how high or low their beta is. During choppy times, low beta investments would be wise for more stability. Throughout the market cycle, it's easier to keep on eye on stocks with high beta, especially if you're looking towards making exits after a long run, and also to load up after a correction.

Right now, I wouldn't say that my stock picking skills are that bad, but I think by creating different groups, it is much easier to compare and have a much better basis of comparison to a similar company, rather than analyzing the stock individually. As much as absolute fundamental analysis can help in valuing a company, comparative analysis can also provide information about the sector, as well as the company's performance within that sector.

Been super busy studying for my CFA while working and having a social life. Young adulthood is a lot more tiring than I thought it'd be.

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