Tuesday, February 14, 2017

What can you learn from the SGX shortseller report?




Shortselling report top 18 STI stocks by value


It's valentine and all I see is....

Data data data. Sometimes you ask yourself, I have so much data, how do I make sense of all of it?

Well. In essence, it helps to know what you are looking for, then look for the data that may give you the answer.

As my banking professor used to say context. You need to get the context right!

Take the example of SGX shortselling report. A useful report which few people know how to use...in essence what causes market fluctuations? How do you know a stock is bottoming out? How do you know you better stay away because the huge fund managers are hitting the stock on the dollar?

Well, maybe I can give some insight...hopefully its right because its very much my intuition.

1. If there is high shortselling percentage based on the shortsell ratio (e.g. >20%) + sharp drop in price (e.g. < - 2%).... do stay away because the selloff is not done yet.
- Think DBS and OCBC right at the top

2. If there are high shortsell % + minimal movement of share price downwards (or even increase)....do take notice...a possibility is that the upside is coming as the buyers are accumulating.
- Think Singtel, Starhub, HPH Trust as above

3. If there are low shortseller interest and the stock price falls significantly....maybe its best to cash out, it could mean the buyers are selling out totally and the stock may be a junk piece soon.

Additional PLUS point
4. If there are low shortsell interest and significant rise in price (e.g.>2%), take note because the upside is really there especially when paired with high volume.

In a nutshell, bottom fishing can be done with some thoughtful thinking. Alternatively, you can take note of your favorite great stocks (think good fundamentals) and wait for the shortsell ratios to drop to low percentages...that's probably a reasonable time to enter a purchase.

Happy investing,
TFG



Sunday, February 5, 2017

IREIT global v Croesus Retail Trust


I was considering looking into two shares that have great yield - both in terms of yield and wale.
As I looked at both the german and japanese economy, it seemed that the economy and government of germany are rather prudent in their approach. Steady slow growth seems to be evident for IREIT while Croesus has the stimulus package of the Japan economy that could push it upwards.

Given the same amount of money, the companies are rather similar apart from the country and industry they are in. In an additional note - IREIT appears to have a strong new sponsor (or more asset flow which requires more equity - note nearly 900m in real estate on standby) in Tikehau Capital while Croesus Retail has internalize its asset manager creating strong alignment of interest for the long run.

Honestly, both appear to be good companies with a growth path of some sort. Hard to say which will emerge top but japan does appear politically more stable while europe may break up. But as peter lynch said, no point second guessing the economy - it is likely a waste of time.

On a side note, both trusts are undervalued compared to that of their peers listed locally which could mean we are sitting on good value. You can research the undervaluation causes independently. Likewise - Quarz capital management has a well detailed one here (https://www.quarzcapital.com/en/research/i-reit). 

Based on Quarz target...a 25% upside + 8.54% gives a nice window of 33.54% baring no unforeseen circumstance.

Breakdown of data. Country's economic data courtesy of OECD

Happy investing,
TFG

Finance talk with a titan in Microfinance - Professor M. Yunus

Have you read the book - Banker to the Poor? 

If you haven't, maybe you should.

This is in view of the current shift in political tectonic places could mean that Muhammad Yunus ideas may be more important than ever. The human race has so many problems, many are left behind, wealth is not shared, rich are getting richer, ethics are being compromised and society created many individuals that really don't care about anything other than making more money.

The dear gentleman and professor was in NTU on the 23rd Jan 2017. I was really happy to be in the audience in NTU as I learned so much from an individual that shaped and changed the world using the capacity and resources he had.

Key argument is that while profit is a great incentive, it is not the only one. To the contrary, making other people happy is super happiness. The problem with charity money is that it goes out but never come back. It is difficult to raise, you spend more time raising it then doing the actual job. In contrast, social businesses focus on the objective of charity but are backed by the business engine.

Problems of capitalism
Capitalism assumes that human is driven by self interest. But this is a gross misinterpretation and is only just one dimension. There are other values that matter such as doing it for others.
Currently 8 of the world’s richest people own more wealth than the bottom 50% of the people. The system build and encourages this…this is not sustainable.

Happy reading
-TFG

-------------------- Notes and transcript as per below -------------------

Redesigning economics to redesign the world - M.Yunus

Microcredit beginnings
- The reality of the famine problem in Bangladesh show that traditional economics does not work. It is a fiction!
- Decided to make himself useful to one person, to just try
- Met all of the stakeholders (victim, loan shark)…decided to loan the money himself. The main idea is that the victim doesn’t need to borrow from loan sharks. 
- Soon he realized that this is not sustainable!

Bankers – part of the solution?
- Banks did not want to lend money to the poor, they wanted to lend money to those who have plenty of money. 
- Work around this problem by volunteering to be a guarantor.
- Banks became reluctant as the lending based grew…prof yunus decided that the reluctant banks should not be his partner
- Applied to create a bank…in 1983, it became a full bank
- As of the moment, 9m borrowers…97% of which are women.
- A very big challenge early on was that culturally, apologetic…women didn’t want to take the money needed for their business  Undoing the history is the tough job
- Started the target as 50-50
- Decided that women were delivering and managing money better…decided to increase the women ratio

Dealing with other monetary problems
1. Night blindness
- Distributed vitamin A tablets and vegetable seed selling business
- Vegetable Business under Grameen is self-sustainable as the profits earned are pump back into the business to grow it.

2. Sanitary Latrine 
- New clause started - If you want to join the Grameen Bank, dig a hole
- Grameen gave a separate loan for this building of latrine point and introduce a contracting company (self-run) that installs this for them
- This is a form of social liberation as women now can go anytime they want (instead of waiting for nightfall)

3. Cataract operation
- Setting up of eyecare clinics for villages by bring the clinic to the people (i/o people going to city)
- 10,000 ops per year
- People who pay full price do so, profit is made
- People who can’t, pay a token
- First clinic broke even in 4 years, Second clinic broke even in 3.

4. Malnutrition 
- Paired together with Danone to deal with the problem of malnutrition.
- Danone put all the necessary micronutrients in one small yogurt. Typically this taste bad but Danone made it taste good
- Over 6-7 months, children who took it recovered
- Only investment money is taken back while the social business continues to thrive

5. Food wastage
- Mccain the worldwide potatoes maker (60% market share) decided to do a social business in France
- 26% of all potatoes previous was thrown away simply because they weren’t the right shape for fries or chips
- The company decidedly made potatoe soup, a social business soup which a famous chef also agreed to endorse and put his name on it. Tasted good too
The moment the company put on the social business lens, they saw things differently.
- Likewise with ugly vegetables…previously these are not bought and as many as 1/3 of crops are all thrown away.
- Company chopped them up and sold them cheaply. Win-win.

1. The more people go into social business, the better…there will be more equality

2. Truth is life is not about jobs. Grameen bank states that a job is an obsolete idea. Everyone should not be job seekers but job creators. Jobs make young people feel small, entrepreneurship makes them feel strong and tall.
o Take the example of cavemen  they are the go-getters. problem solvers, the gathers, farmers, hunters.
o All human beings were born entrepreneurs, a creative entity…jobs created by capitalism is an artificial human destiny.

3. Grameen VC - social enterprise investor…make money return the money thereafter
o Young entrepreneurs that have no money, no experience, no one will lend him money…this is a wrong mindset that capitalism brought about
o At our VC, nobody is rejected, we work with you to create what you like and what we believe is feasible so that we invest in it. 
o We redesign the world not on greed but on wealth sharing.