When do i sell my shares?

(1) When the Revenue Drops significantly for 1 to 2 Quarters, will divest all my shares.

(2) When the Profit Drops significantly inline with the Gross Profit Margin & Net Profit Margin.

(3) When the PEG > 1.2x (PE ratio to profit growth rate is more than 1.2x)

(4) When the PE > 10x and trading > 120% of NAV.

(5) To rebalance my portfolio.

Portfolio Value as per June 2019

No.	Counters	No of Shares	Market Price per Share (SGD)	Total Value (SGD)
1	AEM	50,000	$1.04	$52,000.00
2	Centurion	50,000	$0.410	$20,500.00
3	Innotek	250,000	$0.525	$131,250.00
4	SingMedical	250,000	$0.385	$96,250.00
5	Sunningdale	50,000	$1.370	$68,500.00
6	Tat Seng Packaging	50,000	$0.500	$25,000.00
7	Ani Pharmaceuticals	280	$105.590 (US$77.64)	$29,565.20 (US$21,739.20)
8	Cash			$39,883.10
			TOTAL:	$462,950.30

(1) Divested all my Best World at about @$1.35 per share.
(2) Received total dividend of $7,700.00 for FY2018.

My portfolio value has dropped significantly from March 2019. The main drop were AEM, Tat Seng Packaging, and Best World. I am not too worry on the drop, since i am investing in small cap so that is the main risk i have to bear with it - the volatility of small cap stock. 

I managed to divest all Best World shares. Now Best World is in suspension, i think it could take some time to conclude the findings. I do not think i will ever go into Best World again if it resumes its trading.

I have set not to do any more buying to the end of 2019. So now more to holding and trying to add more fresh fund into the portfolio.

I will continue to learn more and improve my system to be better!

My 1st Growth Stock from Nasdaq

I have started to search for growth stock from Nasdaq a few weeks ago.

I was particularly zooming my target to Pharmaceutical companies for the following reasons:

(1) Pharmaceutical companies tend to have high barriers to entry business, especially in United States due to high research and manufacturing startup costs, time to build and maintain functioning capital requirements, brand recognition, and long process of legal requirements with a few cycles of approvals by relevant authorities.

(2) Market size of pharmacy industry is very wide and growing.

(3) High gross and net profit margins.

(4) High operation cash generator.

(5) Is not a seasonal market.


I selected ANI Pharmaceuticals, Inc as my 1st Growth Stock from Nasdaq.

ANI Pharmaceuticals, Inc., incorporated on April 11, 2001, is an integrated specialty pharmaceutical company. The Company is engaged in developing, manufacturing and marketing branded and generic prescription pharmaceuticals. The Company focuses on areas, including controlled substances, anti-cancer (oncolytics), hormones and steroids, and complex formulations.

Below are few short summaries for ANI Pharmaceuticals:

(1) Basic data:

My purchase price is about US$71/share with market capitalisation of about US$842mil.

No of common shares: 11.863mil

Revenue 2018: US$201.6mil (increase of 14% from 2017)

GAAP net income 2018: US$15.5mil

Adjusted Non GAAP EBITDA 2018: US$84.4mil

Current ratio: 0.9x

Debt/equity: 0.93x

Net leverage: 1.5x

Gross profit margin 2018: 63.8%

FCF 2018: US$61.3mil

Number of employee: 304


(2) Projected 2019:

Revenue: US$231mil - 245mil

Adjuted Non GAAP EBITDA: US$95mil - 105mil


(3) Raising of capital:

1. Public offering of common stock: US$46.7m

2. Convertible debts: US$143.8mil

3. Credit line with Citibank: US$265.2mil


(4) Acquisitions:

1. Acquired 75 total products,

2. WellSpring Pharma Services Inc,

3. The NDAs (New Drug Application from FDA- Food and Drug Administration) for Cortrophin gel,

4. The NDAs for Cortrophin-zinc.


(5) High barriers to entry:

1. Formulation complexity: manufacture complex products and also low dosages products.

2. Patent status: products whose branded bioequivalents do not have long-term patent protection or existing patent challenges.

3. Market size: strong market share position: top 10 products has average approximately 50% market share as of February 2019.
ANI's pipeline consists of 75 products, addressing a total annual market size of $4.5 billion, based on data from IQVIA.

4. Profit potential: high profit margin.

5. Manufacturing: own facilities to have quality control and maximise profits.


(6) Industry Peers Market Capitalization:

1. Amgen, Inc: market cap is about US$120b.

2. Gilead Sciences, Inc: market cap is about US$85b.

3. Celgene Corporation: market cap is about US$66b.

4. Vertex Pharmaceuticals Incorporated : market cap is about US$48b.
5. Biogen Inc: market cap is about US$45.5b.


(7) Risks:

1. Two of their products are marketed without approval from NDAs. (Esterified Estrogen with Methyltestosterone (EEMT) & Opium Tincture) which made up to 12% of their total revenue 2018.

2. Three wholesalers are the main contribution of their revenues which made up about 77%: McKesson Corporation (21%), AmerisourceBergen Corporation (33%),and CardinalHealth, Inc. (23%).

3. Possible risks derived from products, customers, consumers, suppliers, raw materials, management team and employees, rules & regulations, etc.


(8) My Strategy:

1. Invested 200 shares for the first time purchase.

2. To allocate budget of SG$50k in total for this company.

3. To add when the share price drop to about US$64/share.

4. To add when the share price drop to about US$56/share.

5. To add when the share price drop to about US$46/share.

6. To keep monitoring their 10-Q, 10-K reports or any other reports relating to their business.

7. If their business continues to grow with double-digit rate yearly as well as their bottom line, will hold it for a minimum of 3-5 years.



Above are only my personal views and it is solely for my personal references/case study. The accuracy or completeness of the information provided in this blog cannot be guaranteed. Readers should carry out independent verification of information provided.

Portfolio Value as per March 2019

No.	Counters	No of Shares	Market Price per Share (SGD)	Total Value (SGD)
1	AEM	50,000	$1.19	$59,500.00
2	Best World	15,000	$2.54	$38,100.00
3	Centurion	50,000	$0.415	$20,750.00
4	Innotek	250,000	$0.525	$131,250.00
5	SingMedical	250,000	$0.455	$113,750.00
6	Sunningdale	50,000	$1.370	$68,500.00
7	Tat Seng Packaging	50,000	$0.610	$30,500.00
8	Cash			$38,513.25
			TOTAL:	$500,863.25

(1) Sold 10,000 shares of Best World @$2.34 per share.
(2) Sold 10,000 shares of Sunningdale @$1.51 per share.
(3) Bought 50,000 share of Innotek @52cts per share.
(4) Injected fresh fund of $10,010 into the portfolio.

Year	Capital Injected (SGD)	Capital Accumulated (SGD)	Dividend Received (SGD)	Portfolio Value (SGD)
2010	$2,000.00	$2,000.00	--	--
2011	$0.00	$2,000.00	--	--
2012	$34,200.00	$36,200.00	--	--
2013	$34,200.00	$70,400.00	--	--
2014	$34,200.00	$104,600.00	--	--
2015	$34,200.00	$138,800.00	--	--
2016	$34,200.00	$173,000.00	--	--
2017	$26,414.00	$199,414.00	$14,865.00	$402,954.00
2018	$21,452.00	$220,866.00	$11,200.00	$442,543.00
2019	$11,960.00	$232,826.00	--	$$500,863.00

My system to Best World

Best World shares was halted for about 5 days from Monday 18th Feb and opened for trading again on the following Monday 25th Feb. The reaction of the management in order to respond to a Business Times article written about Best World was the trigger of the trading halt. Best World responded with 15-page response. Since then Best World shares price has dropped from its peak abt $3.33 to about $2.01 in 2 weeks time. Its share price has since stabilized and been up a bit to about $2.55 after Best World said it has appointed Independent reviewer PricewaterhouseCoopers Consulting (PwC) to examine its franchise mode.


How is my Investment System reacting to this situation?

After a couple of years in the market, with some changes made into my system from time to time, i am more prepared now to any situation happening or will happen to my portfolio.

When i decided to sell 8,000 & 25,000 shares of Best World last year, i had decided to make some modifications to my system based on my Selling Criteria.

I also sold 10,000 shares of Best World early of this month at an average price of about $2.34 per share.


Why did i sell my Best World shares? Was i worry about Best World situation? Did i think that Best World market valuation has reached its full valued?


My reason to sell some of my shares last week was i thought with the market capitalization of about 1.3B, Best World is definitely not my cup of tea anymore. It is out of my capability to understand the business to be exact.

However, i am still comfortable with the key managements leading the business and their business prospect, i have decided to keep 15,000 shares for the time being. It only takes about 8% of my total portfolio and i am comfortable in holding them.

Emotions play a big role in investing or Investing is an emotional game which can lead us to make terrible financial decisions. To be kind and able to control my emotion, i will slowly employ my investment strategy in divestment of a business.

Portfolio Value as per February 2019

No.	Counters	No of Shares	Market Price per Share (SGD)	Total Value (SGD)
1	AEM	50,000	$1.02	$51,000.00
2	Best World	25,000	$3.25	$81,250.00
3	Centurion	50,000	$0.405	$20,250.00
4	Innotek	200,000	$0.475	$95,000.00
5	SingMedical	250,000	$0.445	$111,250.00
6	Sunningdale	60,000	$1.560	$93,600.00
7	Tat Seng Packaging	50,000	$0.630	$31,500.00
8	Cash			$16,375.82
			TOTAL:	$500,225.82

(1) Bought 10,000 shares of Innotek @46cts per share. My average cost for the second time entry is about 40cts per share.

(2) Injected fresh fund of $1,960 into the portfolio.

(3) Reporting season for FY is here, so will be a very busy month for me.

Investing is a very tough job

I first got to know about stock market and registered my trading account with Phillip Security in July 2010. At that time i did not know anything about stock market. Two years had passed, i only bought 2 S-chip counters which were recommended by my friend. I did not read any financial reports of the two companies.

The first two years i did not really know how to start trading with my own stock selection. There were about 1000 companies in SGX. How could i select which company to buy? There was a time i tried to check on the stock which had a very big jump down from the historical highest price to the lowest price. The stock i ever considered to buy at that time was Advance SCT. At that time, the share price of Advance SCT had dropped to about less than 5% from the historical high. I was hoping the share price would run back to its highest price, then i would made 20 baggers from that stock.

I asked my friend if i could buy Advance SCT and he told me that it is actually a technically bankrupt company. Thanks to my friend i did not buy into Advance SCT.

In September 2012, i had found my way to do my own stock screening. I started to browse thru the financial reports of all companies which were announced via SGX. However, i would eliminate few criteria like blue chip (simply because i am not able to interpret the reports), S-chip, and some other criteria.

I think that moment could be considered as i first went into stock market with my own way to do it. Now 6.5 years have passed, i am still in my learning journey. If i measure my performance so far, i think it can be considered as 7 out of 100 or 7%. Meaning there are still a long way for me to go and learn more about investing in stock market.

I have gone thru a few years of my investing journey. I find it is not an easy job at all. In fact, it is a very tough job. I think anyone wishes to be part of the journey, he/she has to spend at least 5 years to get to know the basic thing about stock market. It will need about 8 - 10 years to measure our performance and sustainability.

I am glad i have found investing journey as part of my life. Special thanks to my friend who introduced me into stock market. I feel this journey suits me the best and i am going to go through it until i get old. 

Am i a Dividend Investor?

I am not a Dividend Investor but will go for Growth Stock for the time being.

However, it does not mean that dividend is not an important element in my stock selection.

My investment focus are:
(1) High growth:
      -  good balance sheet
      -  companies with annual growth rate > 15%
      -  net profit margin > 15%
      -  most likely traded at multiple its NAV
      -  assets light/intangible assets value to be appreciated over time
      -  no dividend or little dividend as profits will be used for growth
      -  potential to be multibaggers in future

(2) Mature growth:
      -  good balance sheet
      -  companies with annual growth rate 3 - 6%
      -  net profit margin 3 - 6%
      -  must be traded below its NAV (<70% NAV)
      -  must distribute at 40 - 55% of their profit or free cash flow as dividend
     
(3) Turnaround growth
      - good balance sheet
      - trading below its NAV (<70% NAV)
      - have show some significant improvement since new management has taken over with good strategy
      - low portion of their profit/free cash be distributed into dividend
      - expect dividend distribution to be at 40 - 55% of their profit or free cash flow once its business performance has stabilized

Short, Short Term Trading, Contra, Margin, Blue Chip, S Chip - SKIP ALL!

There are many forms of strategy or trading pattern in the market.

I used to do short term trading and contra in the past. Some times i lose money, some times i made money. I still remember i made 5 figures from a short term trading of SBI Offshore in the past. I used a catalyst to buy and held for about a month then sold them. But does this kind of strategy suit my personality and is able to deliver a good return for me in a long run?

Recently i was very tempted to buy Singtel when it dropped to $2.86. Then i asked myself "What is my purpose to invest in Singtel? As it is trading near historically recent low? Do i plan to have dividend income from Singtel? How much do i value Singtel's business? Do i think that my portfolio value is high enough for me to change my investment strategy? Do i hope it will bounce back to a higher price then i can sell and profit from it? How much do i plan to invest in it? What is my strategy going forward?"

There were many more questions popped out from my mind at that time. I have been trying my best to discipline myself to stick to my own investment strategy which i think it is heading in the correct way so far? Maybe i can speed up my portfolio value by adding in a variety of trading strategy, but is it what i want to have in my investment journey? It is clearly the answer is "No".

What i am working towards is having a good & reliable system and is able to deliver a consistent return in a long period of time (maybe in bull or bear market).

My investment journey is not about having a race to have a faster finishing line, in fact i hope to have a longer finishing line so that i can learn more along the way.

I want to eliminate many kind of thing which is irrelevant to my main strategy now.

To have a simple system in a very complex market is the best strategy for me so far!

I will keep learning and maybe i will have to change my system along the way, but let it be baby steps!

The Little Book That Still Beats The Market - for my own references....

I just finished reading "The Little Book That Still Beats The Market" - by Joel Greenblatt.


(1) Buying a share in a business means you are purchasing a portion (or percentage interest) of that business. You are then entitled to a portion of that business' future earnings.

(2) Figuring out what a business is worth involves estimating how much the business will earn in the future.

(3) The earnings from your share of the profits must give you more money that you would receive by placing that same amount of money in a risk-free 10-year U.S government bond (for US market).

(4) Stock prices move around wildly over very short periods of time. This does not mean that the values of the underlying companies have changed very much during that same period. In effect, the stock market acts very much like a crazy guy named Mr. Market.

(5) It is good idea to buy shares of a company at a big discount to your estimated value of those shares. Buying shares at a large discount to value will provide you with a large margin of safety and lead to safe and consistently profitable investments.

(6) Paying a bargain price when you purchase a share in a business is a good thing. One way to do this is to purchase a business that earns more relative to the price you are paying rather than less. In other words, a higher earnings yield is better than a lower one.

(7) Buying a share of a good business is better than buying a share of a bad business. One way to do this is to purchase a business that can invest its own money at high rates of return rather than purchasing a business that can only invest a lower ones. In other words, businesses that earn a high return on capital are better than businesses that earn a low return on capital.

(8) Combining points (6) & (7), buying good businesses at bargain prices is the secret to making lots of money.

(9) Most people and businesses can't find investments that will earn very high rates of return. A company that can earn a high return on capital is therefore very special.

(10) Companies that earn a high return on capital may also have the opportunity to invest some or all of their profits at a high rate of return. This opportunity is very valuable. It can contribute to a high rate of earnings growth.

(11) Companies that achieve a high return on capital are likely to have a special advantage of some kind. That special advantage keeps competitors from destroying the ability to earn above-average profits.

(12) Although over the short term Mr. Market may price stocks based on emotion, over the long term Mr. Market prices stocks based on their value.

(13) If you truly understand the business that you own and have a high degree of confidence in your normalized earnings estimates, owning five to eight bargain-priced stocks in different industries can be a safe and effective investment strategy.

Poor Charlie's Almanack: Investing Principles Checklist

(1) Risk - All investment evaluations should begin by measuring risk, especially reputational:

1. Incorporate an appropriate margin of safety

2. Avoid dealing with people of questionable character

3. Insist upon proper compensation for risk assumed

4. Always beware of inflation and interest rate exposures

5. Avoid big mistakes; shun permanent capital loss


(2) Independence - "Only in fairly tales are emperors told they are naked":

1. Objectivity and rationality require independence of thought

2. Remember that just because other people agree or disagree with you doesn't make you right or wrong - the only thing that matters is the correctness of your analysis and judgment

3. Mimicking the herd invites regression to the mean (merely average performance)


(3) Preparation - "The only way to win is to work, work, work, work, and hope to have a few insights":

1. Develop into lifelong self-learner through voracious reading: cultivate curiosity and strive to become a little wiser every day

2. More important than the will to win is the will to prepare

3. Develop fluency in mental models from the major academic disciplines

4. If you want to get smart, the question you have to keep asking is "why", "why", "why?"


(4) Intellectual humility - Acknowledging what you don't know is the dawning of wisdom:

1. Stay within a well-defined circle of competence

2. Identify and reconcile disconfirming evidence

3. Resist the craving for false precision, false certainties, etc

4. Above all, never fool yourself, and remember that you are the easiest person to fool


(5) Analytic rigor - Use of the scientific method and effective checklists minimize errors and omissions:

1. Determine value apart from price, progress apart from activity; wealth apart from size

2. It is better to remember the obvious than to grasp the esoteric

3. Be a business analyst, not a market, macroeconomic, or security analyst

4. Consider totality of risk and effect; look always at potential second order and higher level of impacts

5. Think forwards and backwards - Invert, always invert


(6) Allocation - Proper allocation of capital is an investor's number one job:

1. Remember that highest and best use is always measured by the next best use (opportunity cost)

2. Good ideas are rare - when the odds are greatly in your favor, bet (allocate) heavily

3. Don't "fall in love" with an investment - be situation-dependent and opportunity-driven


(7) Patience - Resist the natural human bias to act:

1."Compound interest is the eighth wonder of the world" (Einstein); never interrupt it unnecessarily

2. Avoid unnecessary transactional taxes and frictional costs; never take action for its own sake

3. Be alert for the arrival of luck

4. Enjoy the process along with the proceeds, because the process is where you live


(8) Decisiveness - When proper circumstances present themselves, act with decisiveness and conviction:

1. Be fearful when others are greedy, and greedy when others are fearful

2. Opportunity doesn't come often, so seize it when it does

3. Opportunity meeting the prepared mind: that's the game


(9) Change - Live with change and accept unremovable complexity:

1. Recognize and adapt to the true nature of the world around you; don't expect it to adapt to you

2. Continually challenge and willingly amend your "best-loved ideas"

3. Recognize reality even when you don't like it - especially when you don't like it


(10) Focus - Keep things simple and remember what you set out to do:

1. Remember that reputation and integrity are your most valuable assets - and can be lost in a heartbeat

2. Guard against the effects of hubris and boredom

3. Don't overlook the obvious by drowning in minutiae

4. Be careful to exclude unneeded information or slop: "A small leak can sink a great ship"

5. Face your big troubles; don't sweep them under the rug

Portfolio Value as per 31 December 2018

No.	Counters	No of Shares	Market Price per Share (SGD)	Total Value (SGD)
1	AEM	50,000	$0.825	$41,250.00
2	Best World	25,000	$2.630	$65,750.00
3	Centurion	50,000	$0.415	$20,750.00
4	Innotek	190,000	$0.415	$78,850.00
5	SingMedical	250,000	$0.400	$100,000.00
6	Sunningdale	60,000	$1.440	$86,400.00
7	Tat Seng Packaging	50,000	$0.610	$30,500.00
8	Cash			$19,043.50
			TOTAL:	$442,543.50

(1) Sold 25,000 shares of Best World at $2.43 per share.

(2) Bought SingMedical to have the total of 250,000 shares with an average cost of 42.40cents per share.

(3) My portfolio has grown from $402,954.15 (as per end December 2017) to $442,543.50.
Capital injected in 2018 is about $21,452.30.
Portfolio value has gone up by $39,589.35 including capital injected.
Portfolio value has gone up by $18,137.05 or about 4.5% in 2018 (excluding capital injected).

(4) Started to read Poor Charlie's Almanack book since last week.
Hopefully can gain some wisdom from the book.