Debt Woes in Greece present buying opportunity. But where are my funds?

Recent events in Europe are weighing heavily on investors' sentiment. It seemed that the fiscal problem faced by Greece is the tip of the ice berg. Looking at the way this whole saga is playing out, this is the correction that many people have been waiting for.

I am not in the best position to talk about the economics behind Greece debt problem. But I want to touch on a dilemma that should be troubling many investors right now. 

For investors, the selldown in the stock market is a blessing in disguise. For those who have stayed sidelined ever since the rally has began, this significant correction will allow them to enter the market. For those with a long term horizon, the selldown presents an opportunity to buy into the weakness. So which group do you belong to?

But the one big question begets. How much funds do you have to capitalize on this buying opportunity?

I cant speak for others. As for myself, I am sad to say that my funds are pretty low at the moment. Sad to say, I am unable to load more position to my existing portfolio.

This is the main purpose for my blog entry. I want to remind myself on the importance of setting aside a pool of emergency funds for such scenario. Back in 2008, it was noted that Warren Buffet had a huge sum of money sitting in his bank to capitalize on extreme market weakness and that amount was US$1 Billion.

I for one, hate to accumulate so much cash in my bank account. The thought of leaving it with the patry interest rates are just too disturbing. So whenever I have spare cash, I just put add them to my existing stock portfolio. Timing the market is not my forte. To me, the time in the market is more important that timing the market. But I cant help feel a sense of dejection to know that if I had a pool of readily available funds, I will be in a better position to take advantage of the market weakness.

For a start, thou have decided to set aside a 5 digit figure to be left in the bank to take advantage of future volatility. And by that, I am referring to the scenario where I will add position to my stock portfolio when the stock market has corrected by 5% or more.

This is all about developing discipline and I see this strategy as a variation and not a contradiction of the age old philosophy of not timing the market.

So let this be a good lesson for me and I shall revisit this topic when such a scenario takes place again. Right now, I am going to stay by the sideline and watch the wild swing of the market while lamenting to my pathetic self.

Portfolio Summary and Company Updates for Feb 2010

There wasn't much changes to my portfolio for the month of Feb as most of the company were slated to apprise their shareholders on the companies financial results. Trading activity for February was subdued as investors chose to stay sideline for the time being. There was much price movement for my stock holdings. While i believe that my stocks are still deeply undervalued, i consider this lack of movement a blessing in disguise as I am waiting for my bonus to come in to load up on some of my counters. This is something which I have been wanting to do - called re-balancing my portfolio.

Let's hope March will be a better month ahead. Here are the rest of the updates for my companies.

Adampak

On 26 Feb, Adampak announced that it has achieved record sales for 4Q 2009 with net profit soaring 68.1% year on year to US$2.4m. Company proposed $0.015 cents dividend for shareholders. Current cash holding remain healthy at US$11.3million. With 263,625,000 outstanding shares, that works out to be approximately 6cents per share.

Boustead

On 1 Feb, Boustead Subsidiary Awarded S$11m in Water & Wastewater Contracts from Power Industry.

On 8 Feb, Boustead announced its 3Q 2010 financial results. 9M 2010 net profit up by 13.7%. The division that turn in profit were the waster & waste management division and the geo-spatial technology division. Balance sheet is healthy with 173.8million and the order book is in excess of $575 million. At 514,245,520 outstanding shares, cash/share is 33 cents.

On 12 Feb, Boustead announced full acquisition of Map Data Science for a cash consideration of A$2.5 Million. << I read this as a positive sign of the company putting their cash hoard to good use. This is a good sum of money to pay to get access to the distribution network of MDS and it will certainly bode well for the development of the Geo-Spatial Division in Boustead.>>

Midas

On Feb 22, Midas announced its third interim Dividend of $0.0025.

On Feb 26, Midas Announced 14.9% Rise In Full-Year Profit Attributable To Shareholders To S$37.5 Million.

APWR

On Feb 16, APWR announced that its subsidiary, Shenyang Power Group ("SPG") has completed the establishment of a project company related to the development of a 600MW wind farm in Texas and has made an initial cash contribution of $36.625 million.  This cash contribution has affirmed the company plans to move forward with the project and is a significant first step for the company in the Texas Wind Farm Project.

Thoughts on APWR

As an astute investor of APWR, I began noticing in myself that I am developing a love-hate relationship with this company.

For one, this company is one of my strongest conviction holding till date. I see plenty of opportunities in this growth company that is being involved in the upstart of the wind energy development globally. I am very bullish about the future prospect of this company and I believe that it will be a $30 stock by the end of 2010.

However, if there is one aspect of the company that I will love to see some immediate changes, that will be its "TRANSPARENCY". As a shareholder who maintains a close tab on the company, I have to admit that there are times when the company drives me crazy with regard to her conduct of transparency, or a lack of to say. Being open and transparent is of paramount importance because you need to keep the shareholders in the loop of whats happening. Let me run through what are some of the areas that I think APWR need a serious relook.

1. The website is outdated and does not present much information to feed the information hungry investors.

2. I have heard of so many contracts being won and that the firm is in progress of building many turbines for delivery. Could we see some of the pictures of your factory or video of the manufacturing process.

3. Investor relations is sorely lacking because my email to the company has gone unanswered till this date. Is there even a corporate communications department in APWR?

4. The company will do well if they could furnish the shareholders with their batteplan on how they intend to execute the huge orders coming in as well as the financing portion of their projects. These are critical information that investors will need to know to conduct meaningful analysis and execute their judgement. Until the day I get this information, I still see APWR as a black box and I certainly do not want it to fall into the category of dubious and empty-shelled Chinese Company that is all but a big fraudulous organization.

In this age of information technology, where timely information is critical for investors, APWR cannot afford to be so lackluster in its investor relations. Its time to pull up your socks, APWR. Dont make your shareholders upset. You got to do better than this.

Portfolio Summary and Company Updates for Jan 2010

This is a tad late as I was overseas for a training exercise. But nevertheless, here are the updates on my portfolio summary as well as company news for the month of Jan 2010.

Portfolio took a hit when APWR made an announcement on its private placement. Shares tanked by close to 30% from a high of $20. I will comment more on this anti-shareholder move by APWR in a later post. The rest of the companies are holding up well. Jan has been a volatile month with US making announcment that it wants to curb lending and the Central Bank of China has taken steps to increase the reserve requirements for all national banks in a bid to curb excessive lending. These news did not go down well with investors and they triggered a long overdue correction across the globe as shares suffered the worst period for the month of Jan.

This is a stark reminder to all investors that the period of easy money is over. It is time to pay attention to your selection of stocks to ensure that you ride out the year comfortably and safely.

The rest of my companies update are reflected below.

Adampak

Nil

Boustead

5 Jan - Secures $68 million for its energy related engineering division. This impact will only be visible by end of FY 2011.

Midas

18 Jan - Won a RMB 353 Million High Speed train contract to supply 80 train set equivalent to 1120 trains. Delivery of the train cars is expected to take place between 2010 to 2014 and this delivery will be expected to deliver positive financial impact for year ending between 2010 and 2014.

5 Jan - Secure two contracts totalling RMB 60.6 million for metro projects.

(1) RMB 38.7 mil for Singapore Downtown Line Project. Delivery will take place between 2010 to 2015 and is expected to have positive impact on financial results ending 2010 to 2015

(2) RMB 21.9 mil for Shenzhen Line 4 Project. Delivery to be done between 2010 and 2011 and will have impact for financial year ending 2010 and 2011.

A-Power Generation

21 Jan - A Power Energy Generation announce closing of private placement. The company issued 5,777,932 common shares at a price of $14.37 per share. In addition, the company has issued warrants to purchase an aggregate of 2,888,966 shares. These warrants are exercisable at 16.90 per share and will only be in effect 6 months from the date of notice.

5 Jan - Signs license agreement W2E Technologies GmBH to manufacture, operate and sell T8x 2.0 MW wind turbines. Under this agreement, APWR has the exclusive right to manufacture, operate and sell them in China and US market.

Increasing my learning curve

Over the last one year, I have to admit that I was not maintaining my investment blog daily. So this year, one of my resolution that I have set is to update my investment decision dutifully as well as to discuss more in depth on the company financial statements.

Previously, while I scan the forum and research the companies on my own, it is sad to admit that most of the time, my decision, while fundamentally sound, was sorely lacking in rigors of financial analysis.

Analysts use 12 month price target for stocks, at the end of 12 months, these are the things that I want to see on my blog.

1. Monthly update of my portfolio
2. Monthly updates of company news
3. Montly analysis of company financial report
4. Analysis of significant news pertaining to any company

It will be interesting to see if I can meet my 12month target by the end of 2010.

Buy on dip, Buy and Hold - Investment Strategy for 2010

2009 has been a great year to say the least. All the markets have rebounded sharply and I am pleased that my portfolio has broken even after the devastation caused by the financial crisis.

As we leave the troubled times behind, it has been said many times that the easy money had been made, now the route to wealth creation will rely on a strong stock selection. Many analysts have had their versions on how 2010 will pan out. Some say that this is the beginning of the multi-year bull run, others qouted that the road to recovery will be bumpy. The big question that everyone have in mind will be : When will interest rate be raised to curb inflation and speculation?

As a value investors, one must hold true to its fundamental principles. Ignore short term volatility and focus on the fundamentals of the companies.

Cut things shorts, my stock selection for this year are:

1. Adampak - Manufacturers of die-cut, labels
2. Boustead - Multi industry focusing mainly on energy-related engineering and geospatial and real estate solutions
3. Midas - Infrastructure play dealing with carriage construction
4. A-Power Generation Power - Wind Turbine Manufacturer

Reason for my choice

1. Adampak and Boustead remains my value play stocks. Low P/B, high ROE and consistent dividends. 40% of my capital are invested in them.

2. Midas and APWR are my selections for growth stock. China's growth may not be as high as before but it is still growing and as long as rail way gets constructed, there will be business for Midas. APWR is a green alternative energy play. $450 billion has been committed for the wind energy over the next 5 years. They have recently won contract with GE to build wind farms in Texas and recently concluded a license agreement to have exclusive rights to build a particular model of the wind turbine.

Current game plan right now is to build up hoards of cash in anticipation any possible correction that will present opportunity for entry.

Well, this is it. Let's see how this year will pan out.

On Commodities and Fertilizers

For a start, just teaser for everyone:

1. Jim Roger is a firm believer in the commodities. He admitted that volatility of the commodities still exist but he also believe that the general trend of commodities is upward.

2. China with its bursting population growth will need to produce more food to feed its population.

3. Talks about importance of commodities is all over the papers. You cannot possibly miss it!

4. Though land is not scare, but I believe that farmer's - plot ratio has a optimal figure because nowadays not many people are still engage in this work of being a farmer.

In this post, I am not going to delve into discussion on the impact of commodities. I am moving down the value chain further and the area that I am looking at is:

"FERTILIZERS"

I believe that this is an important yet often neglected industry. It may not be an exciting business but its relevance in the world facing food shortage should spell "OPPORTUNITY" for investors who takes a long term view of the unfolding events around the world.

Just browsed through a IFA report on the "Fertilizer Industry in China" and I will like to share the findings on the long term trend of fertilizers by the authors.

1. Population increase in China will continue to drive increase in fertilizer but at a slower rate.
2. Growth in the consumption of single fertilizers will not be rapid. Instead growth in the consumption of compound fertilizers will be the main contributor. The application of compound fertilizer will accelerate the consumption of P and K fertilizers.
3. The small quantity of organic fertilizer applied in China is the chief reason why the demand for P and K fertilizers to continue to grow and this has promoted the consumption of compound fertilizers.

Insofar, there are a couple of stocks that I am reading up on. Clean balance sheet with zero debt and growing EPS. They are:

1. China Agritech (NASDAQ: CAGC)
2. China Green Agriculture (NYSE: CGA)

I dont any position in them but they are definitely worth reading up.