Portfolio Update Jul 2015

About time to do a portfolio update for myself on this blog. When I started this blog, the equities made up a very small portion of my total portfolio. If you refer to the slide below, equities only made up 4% of my total portfolio.

Fast forward to 31st Jul 2015, equities made up a higher portion at about 9%. My equity portfolio consists of:
Ascendas REIT
Asian Pay Television Trust
Capitaland Commercial Trust
Ezion Holdings
Hutchison Port Holdings Trust
IHH Healthcare
Keppel Corp
Keppel REIT
New Silkroutes
Otto Marine
Sembcorp Industries
Sembcorp Marine

2015-07-31 portfolio update

My portfolio has a large exposure to the offshore marine and the REIT counters, which are two of the sectors which are currently on the down cycle (oil and real estate). As a result, my equity portfolio is facing a paper loss. However, I am positive on the long-term prospects of these two sectors.

Strategy moving forward
Currently, the market is quite volatile right now but I will be conservative in my approach to acquire counters bit-by-bit. I will look out for sectors which are on the down-cycle and sectors which will ride on the world’s mega trends.

The sectors are on the down-cycle are oil and gas and real estate sectors. For oil and gas, I believe the world’s demand for energy will continue. Oil majors like Royal Dutch Shell and Exxon Mobil are on my radar.  For the real estate sector,  I will acquire a bit more REIT and property developers like like Capitaland and Ho Bee Land are interesting.

Sectors which will ride on the world’s mega trends are the worlds demand for healthcare and healthcare services and growing middle class. Big pharma companies such as Pfizer and Novartis are interesting. However, the strengthening of the Swiss Franc made it less attractive. For the growing middle class, I am not looking luxury goods which are discretionary. Sporting goods (UnderArmor) and supermarket chains (Dairy Farm) are the sectors which I think will benefit from the growing middle class.

Disclaimer: I am not an equity analyst and the counters mentioned are not meant to be recommendations. Please do your own due diligence.

Strategy and capabilities

It has been a long time since my last post. I had been quite busy the last month due to work. For this post, I shall talk about strategy and capabilities as it is what I do for a living.  I have not explained about my work before but it largely involves business strategy.  The work is multi-faceted and it could involve how to build differentiating competencies, leveraging financial markets, identify strategy partners and strike win-win partnerships, just to name a few.

However, one of the key elements which all strategies depends on is capabilities. In particular, the capabilities of the people of the organisation.   In order to acquire the required capabilities, you can “build, borrow or buy”. You can read more about it at this INSEAD URL.

Build – train the current staff
Borrow – strike partnership and borrow other people’s capabilities
Buy – poach people with the required capabilities from competitor or related industry

How does this link to investment and stock analysis? Other than quantitative ratios of companies, the qualitative analysis portion of the intangibles of a company are mainly the management and intellectual property. I shall not mention about intellectual property as it’s difficult to analysis unless you are an industry expert and I have no knowledge of intellectual property.

Analysis of the management is all about this intangible asset which, as retail investors, we do not have the ability to put a finger to because we are not analyst who can request for a meeting with the C-suite executives of the companies. How can we then make this assessment?

For me, I will look at the history of the two or three key management personnel, the CEO, CFO and the COO.  CEO’s CV and his history will help to tell me how well he or she sets the direction for the company and then manage and find the right people for the right job.  CFO is very important because he or she manages the finance and think of ways to unlock, seek or grow capital required for business growth. COO is also important especially for company has a lot of operations in industries such as manufacturing, utilities and telcos. COO is important because he or she will be the person that ensures existing operations are running silky smooth and maintains or reduces the cost of operations.

Feel free to comment on my mode of management analysis and feel free to share some of the methods you use to analyse the qualitative part of the company, be it management or intellectual property!

Cheers!