Wednesday 26 February 2014

Yeoman 3-rights value investing

On market timing
Yeoman de-emphasize market timing, market sentiment, and macro views from politicians or central bankers. Macro views are like the views taken from a helicopter, flying high over the jungle. We, being bottom-up securities analysts, are like the ants and the squirrels on the jungle floor. The view on the jungle floor is vastly different from that of a helicopter.

Importance of staying focus
The managers of the underlying business of the stocks we've selected stay focused on what they said they would be doing. We don't like companies that zig and zag and try this and that. We like simple-to-understand and focused businesses and owners who stay focused.

We call our investment process the "3-Rights" (Right Business, Right Price and Right Management). Subject to the 3-Rights criteria being met, we are usually fully invested holding little or no cash. For us, performance attribution is from securities selection and portfolio construction, not market timing. We apply the private business approach and ported it to the public world. We look for businesses with the right economics, that are undervalued relative to the assessed merits of the business, and they must have management that are able to safeguard the interests of shareholders and ensure that the hoped-for benefits eventually accrue to us.

Value and share will eventually converge
If we get the '3-Rights' right, time is our friend. In the short term, price and value may not converge but over the longer term they surely must

Business like investing
If we have the comfort of time on our side and the stocks that we own are backed by real businesses generating adequate earnings relative to our price at entry and the cost of the company's capital employed, then we are getting richer by the day, no matter where the market goes

Diversification is the key
The maximum exposure to a single stock is about 1.4 per cent. And it has tremendous defensiveness. If something doesn't work out in one stock and we suffer permanent and total impairment, we would have lost 1.4 per cent. But if the remaining stocks work out, and typically we pay 50 cents on the dollar - that is, we assess that the stock is worth $1 and we pay 50 cents - ... the loss would be more than covered.

Invest only when there is undervaluation
Undervaluation is the prime and only motivation for investing. If we can't get undervaluation, we don't participate.

Importance of margin of safety
A lot of people spend time picking that one winner that makes a killing. We think that's best left to the person with a strong imagination. As stewards of other people's money, we can't take liberties. As we work on probabilities, this method of investing is very good. The reward is maximised through the '50 cents on the
dollar' approach. Value will be realised at some point. Should something come up to hurt us, the loss is well contained.

Sunday 23 February 2014

You "touch" the card, money "go"; You don't "touch" the card, money also "go"

Do not keep too many touch & go cards or store too much value in touch & go card if you rarely use it. You will be imposed RM5 every 6 months once it becomes dormant (no transaction/top up within 1 year). To reactivate your card, you need to pay further RM5.

You "touch" the card, money "go"
You don't "touch" the card, money also "go"

Dormant/Inactive Card
  • What is the definition of DORMANT or INACTIVE TOUCH 'n GO CARD?
    • Under the Terms & Conditions of Touch 'n Go card, an inactive card is defined as a card which has not had any Card Transactions by way of Add Value Transaction or which has not had any utilisation of its pre-paid balances with any Service Providers for a consecutive period of 12 months.
  • How to keep my Touch 'n Go card active?
    • Your card will remain active as long as you reload or use at least once a year.
  • What do I do if my Touch 'n Go card has been deactivated?
    • Please visit our counter to surrender your card and get back your unutilised card balance (subject to the terms & conditions)
  • Why TNGSB needs to deactivate dormant card?
    • There is quite a number of dormant or inactive Touch 'n Go cards in our system. These dormant cards have caused unnecessary load that prevent the system from operating optimally, thus affecting our service level to all active users. By deactivating these non-active cards, we will be able to streamline our system to improve system efficiency and to provide good services to all our customers.
  • Will there be a fee when a card is deactivated?
    • Once a card is deactivated, an ADMINISTRATION FEE of RM5.00 will be imposed immediately and deducted from the deposit or unutilised card balance.
    • In the event of a deactivated card continues to remain inactive, a MAINTENANCE FEE of RM5.00 will be charged and deducted from the said deposit or unutilised card balance once every six (6) months.
    • We will stop charging maintenance fee when the card is reactivated, returned for refund or until the deposit and card balance are depleted.
  • Why TNGSB imposes a deactivation fee and maintenance fee?
    • The deactivation and maintenance fees are to cover system maintenance and administration cost.
  • Why TNGSB imposes a maintenance fee once every six months?
    • This is to urge customers to quickly visit our counter to claim the unutilised card balance (subject to the terms & conditions).

Saturday 22 February 2014



Monday 17 February 2014

SUNREIT - Sunway Putra Place

Sunway Putra Place (Sunway Putra Mall, Sunway Putra Hotel, Sunway Putra Tower)

The trust aims to double Sunway Putra Place's net property income (NPI) from RM25.87m it attained in FY2013 ended June 30. (Sunway Putra Mall RM10.19m, Sunway Putra Tower RM4.83m, Sunway Putra Hotel RM10.85m)

Total acquisition cost and related expenses for the 3 properties were RM522.1m. Refurbishment cost was RM459.2m. Total investment in Sunway Putra Place RM981.3m

Sunway Putra Mall
Net lettable area (NLA) will be increased by 16% to 580,000 sqf.
Cost psf RM910

Sunway Putra Hotel
618 rooms.
Cost per room RM550,000

Sunway Putra Tower
NLA of 317.000 sqf.
Cost psf RM350

Reference for acquisition cost

Pavilion KL RM2,390psf in 2011
Lot 10 shopping centre RM1,561psf in 2009

Office (2008-2011)
Bangsar South's The Horizon Phase 1 Block 6 RM781psf, highest between 2008-2011
Darul Takaful RM412psf
Pavilion Tower RM738psf

Hotel (5 star hotels in KL)
Westin Bukit Bintang RM1.01m per room in 2006
JW Marriott RM586,453 per room

Source: The Edge Weekly February 17, 2014

Thursday 6 February 2014

Be greedy when others are fearful?

Thinks that market has over-reacted to the news that Tan Sri Taib is resigning as Chief Minister.