Wolf Money(portfolio update end Oct 2022)

(CCP party flag)
 

Lone Wolf Fund(LWF)

Portfolio as at end of Oct

1.) Cash

2.) Bank of China(3988.HKG)

3.) Comfortdelgro(CDG)

4.) Boustead Projects(BP)


*Stocks are not rank in accordance to capital invested
*Just for sharing. Not an inducement to buy or sell.



Commentary 

It had been a while since I felt the butterflies in my stomach. There are plenty of mixed emotions at play. I would be lying if I told you I am not chuffed by the recent falling market. Finally value had arrived for a proper bargain hunt. On the other hand, it felt like déjà vu, the ghost of GFC had returned. 


(My Trading desk)


I was a young broker then at the height of GFC panic which was bought on by the near collapsed of AIG, of course some may argued Bear Stearns collapsed was the armageddon of GFC ,to me Bears Stearns failure was only an appetizer of what was to come during GFC. Telephones were ringing non stop. Some clients even called, asking what should they do with their AIA policies unfortunately I am ill qualified to advise them. My portfolio was suffering close to 50% paper loss. The pressure and stress were intense having to lick my own wound and listened to the daily soap opera of big contra losses in the trading room. Once upon a time Lone Wolf was a Lone Cat, a very fearful one. Luckily my clients’ credit worthiness went unblemished during GFC. Most clients portfolios returned to positive by early 2010 when the market make an astonishing recovery from the financial black hole. Some of my broker friends weren’t that lucky, a few had to do “National Service” for brokering firm to pay back clients’ contra losses that were defaulted. I felt sorry for them. It can happened to anyone in our industry.

The GFC episode hardened my view to be an informed and self reliance investor, never to depend on commission income ever. I set off on my path to take control of my own destiny. I was fortunate contra losses of my clients never hit my own bottomline. Brokers took on outsized risk to make a small living for themselves, the compensation is lopsided for the insane amount of risk undertaking. The lesson from GFC sow the seed for my eventual exit from the brokering industry. I remain independent since end of 2014. I am please to report in my decade long career as a remisier, had no outstanding contra loss when I finally said my goodbye to the industry. I am grateful to my clients/partners for their support and I survived to tell my story.

October market was terrible. Hong Kong Stock market traded close to 13 years low. Our market hit a 2.5 year low in October. The market was spooked by President Xi as no reformist or market friendly standing committee members were appointed at the recently concluded CCP Congress. I believe private enterprises in China and HK will playing second fiddle to state own enterprises with the later doing the heavy lifting of the economy. Most private businesses are likely to lie low away from the crosshairs of President Xi common prosperity cannon. I believe Chinese government might do a direct sale of properties to homebuyers similar to hdb scheme. SOE are likely to be tasked to build affordable flats in HK and China with SOE charging the government a fee for the service. The internal circulation ecosystem may look something like these, government award contracts to SOE to provide services to government, SOE make a profit and declared a dividend, the monies are flow back to government in form of dividend with Chinese government benefiting from their substantial share holdings in SOEs. I do believe most SOEs are going to benefit from any new policy shift. I don’t believe Xi is going to destroy the economy. One belt one road, common prosperity or any other revolutionary ideas require monies to implement. Chairman Mao’s culture revolution ended in failure because no one was better off after the experiment. Deng Xiaoping understood the need for private enterprises to make money. He allowed a small number of private businesses to thrive which lead to the eventual opening of China to foreign investment in 1979. Sun Yat Sen appeal for donations from overseas Chinese businessmen to over throw the Qing. “No matter what revolutionary work, first fill your stomach”. “革命工作要先填饱肚子” No moolah No talk. Teoh boh(meta Hokkien).



Bank of China(3988.HKG)

I am taking on an initial interest in one of the big four banks. BOC is consider a systemic importance bank due to the bank bearing the name of the country. The stock has a 10% yield(nett 9% for foreigner shareholders due to withholding tax of 10%) and BOC is trading at only 3x p/e. Dividend payout ratio is at 0.37x, lower than DBS payout ratio of 0.54x. Price of share is trading at 1/3 of book value. Banks are sensitive to economic growth, I am expecting better times ahead for Chinese economy. The current state of Chinese economy is like a loaded spring which can roar back to life with a flick of a switch if covid restrictions are lifted. Growth will be better than the 3.9% reported going forward. Hopefully! China need a certain level of growth to keep unemployment at bay. High unemployment rate can cause social unrest which could result in common hardship rather than prosperity.




Comfortdelgro(CDG)

I am blaffled by the continue weakness of the share given it is trading near 14 years low, valuation is lower than height of covid crisis. Company has a net cash of 600m equaling to 27c cash per CDG share. CDG is trading at 1x book. Rail ridership had gone back to 88% of pre covid. Mini pound crash had more or less dissipated. Pound vs Singapore dollar exchange rate is almost back to pre mini budget blowout. I had decided to buy back 40% of what I had sold more than a month ago. The company will be giving a Q3 update early November. I did a detail write up months ago



Boustead Project(BP)

Share price of the company is almost flat. Strong order book and balance sheet were key attributes of the company. The company will be coming out with half yearly report at the mid point of November. I am looking forward to hearing their business prospects on Vietnam and the leasing progress on the Bideford property which they bought at fire sale. I did a previous write up on the stock.

Cash

I continue my slow march into SSBs for at least the next 3 months. Cash has outperformed all asset class by a mile this year. It is starting to feel like X’mas for saver. Cash is truly King. As wisdom goes “look after the penny, the pound will look after themselves”. Saving a small amount of money regularly goes a long way towards successful wealth creation. LWF is unchanged for the month of Oct. YTD gain stands at positive 9%. 

As we glued to the TV screen for the upcoming World Cup in Nov, History had shown market tend to be quiet during World Cup month. Let’s catch some football first before we go back scoring in the stock market. My money is on an African country to win the World Cup. God bless.


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Disclaimers 

All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware,do you own due diligence.

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