Friday, September 29, 2017

Q3 2017 Portfolio Update

I didn't bother to find the exact date, but I should be 2.5 years old in the market as at September 2017. When I first started out in investing, I read voraciously (both books and blogs) and checked the prices of stocks in my watch list fastidiously. Now? I really couldn't be bothered with the latter.

I am predominantly an income investor who invest for the long term. Once I identified my target, I allocate a sum of money that I am comfortable with to it. The amount I allocate varies, depending on the counter's riskiness and the extent of opacity I have on that particular counter. Therefore, the counters which I have more knowledge and conviction in are given a higher weight in my portfolio than counters which I am less knowledgeable in. Once done, I check up on the individual counters from time to time.

Sometimes, I think I am pushing my luck with my sloven ways in portfolio management. Whenever there are new corporate actions, I observe bloggers, investment sites, and forums bustling with activity. Yours truly is the clueless clown who is last in line to get and react to any new information. There have been multiple instances when I logged in to my bank account and realized that there are dividends that I do not know of that have come in! How unbecoming of me!

What's with my ramblings? My Q3 2017 dividends were lesser than my Q3 2016 dividends. At first, I don't even know why that is the case until it dawned on me that I have been trimming down my portfolio in Q2 2017 (see here). Clueless? Much.

Moving forward, I expect dividend income to drop further. I am waiting for the payout from Croesus Retail Trust in end October. Once CRT is delisted, it will deal yet another blow to my portfolio's income generation.

Next, we have my USD-denominated counters. Do note that the y-axis for the above chart is different from the first chart. I am still getting nowhere in terms of dividend income from my USD-denominated portfolio. Well, if I really wanna force some sort of silver lining to focus on, I could say that: Hey! I got some kopi money in Q3 2017 instead of a big fat zero in Q3 2016.

Portfolio Actions in Q3 2017
I am still cautious and am still holding tightly to my cash. However, my itchy fingers got the better of me, so I nibbled on Singtel, Raffles Medical Group, and General Mills.

Singtel to increase my non-REIT income and reduce my exposure to the REIT sector. I was already vested in Singtel previously.

Raffles Medical Group to average down. When I first initiated a position in RMG, it was a nibble as well. Back then, the price has corrected slightly, but the earnings multiple was still fairly lofty. I kinda knew it would fall further but my itchy fingers got the better of me, so I initiated a super small position to mitigate the risk of the potential fall.

It is a psychological thing, really. It is something that I must learn to overcome myself. I either learn to: (1) accept and internalize the fear-of-missing-out feeling, wait for value to emerge and enter at a safer level, or (2) nibble a new position and nibble down together with the down trend.

New position in General Mills. Consumer staples company facing some headwinds. Nuff said.

The Bleeding ones
Ho ho ho! The consumer staples sector is bleeding.

In my portfolio, J.M. Smucker and Hormel Foods are bleeding. Will be looking forward to nibble average down if the price permits.

Kimberly Clark is going to bleed soon (with reference to my entry price), so it's back on my watch list. Same goes for Welltower REIT.

At the SGD-portfolio side, the bleeding ones are the usual culprits (QAF, Raffles Medical Group), so I am not too concerned. There's a new member to the list though (Kingsmen Creatives).

Net worth breakdown
I think it would also be helpful if I include a section on my net worth breakdown. It's more for identifying how prepared I am for a market crash (available cash for investment against what I currently have in equities).

The pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals. 

Moving forward, and after deducting allocations to our emergency fund, I will be trying to increase the proportion of cash held in the overall pie chart of my net worth. That's provided if gold/silver prices doesn't pull back and tempt me and I don't suffer from "itchy finger" and nibble on equities further.

Sunday, September 24, 2017

Physicians Realty Trust: How are the Acquisitions funded?

Now that Physicians Realty Trust is on a downtrend, it is time to revisit a particular aspect of the counter.

Physicians Realty Trust is a medical office REIT listed on the NYSE. It went public in 2013 and, since then, have been embarking on an acquisition spree. I first came to know of the counter when I looked through the holdings of some other US financial bloggers and it piqued my interest. I have left it at the back of my mind as it wasn't the right time to invest in the counter back then. Months later, the share price has fallen off quite a bit.

My main concern is how are the acquisitions funded. Is it by debt, equity, or both? If equity, does that mean I have to prepare myself to subscribe to rights on a frequent basis, in order to prevent dilution of my holdings?

At IPO (year 2013), gross real estate investments were $124 mil. At 31 December 2014, the properties were valued at $819 mil. At 31 December 2015, the number was $1.6 bil. At 31 December 2016, the number was at $2.9 bil. From this trend, it could be inferred that Physicians Realty Trust has been aggressively acquiring medical office properties. This trend is still continuing. The REIT highlighted that it is on track to achieve its 2017 acquisition guidance to bring in $1.2 to $1.4 bil worth of assets (see here).

See below for Physicians Realty Trust's Balance sheet. The columns, from left to right, are for year 2016, 2015, 2014, and 2013, respectively.

Shareholder' equity has been growing over time. It grew from 204 mil in 2013 to 1.7 bil in 2016. This is corroborated by the increase in the weighted average number of shares outstanding (see below). The columns, from left to right, are for year 2016, 2015, and 2014, respectively.

I would like to highlight the quadrupling of shares outstanding along with the introduction of Operating Partnership units and other dilutive securities in year 2015. As a REIT investor, I would not like to see this ballooning.

What about dividend growth? With all the acquisitions, the top line has definitely grown. What about the investors' pocket?

Sorry to disappoint. It has been flat from 2014 to 2016. In 2017, the distribution for the latest quarter rose from 0.2250 to 0.2300 QoQ. Not much, but it is improving.

What am I going to do? Nothing.

Will I eventually buy it when its price drops further? Maybe, as some sort of bond proxy when there's an even greater margin of safety.

Not vested in Physicians Realty Trust

Friday, September 22, 2017

Emergency Fund and other Miscellaneous Updates

Since writing this post, I have been faithfully allocating a portion of my salary to our emergency fund. For the months of August and September, I contributed a total of $3000 to the emergency fund, bringing the total sum up to around $14000. Assuming a monthly contribution of $1500, our emergency fund will hit the target sum of $20000 in January 2018.

Well, I could accelerate the process though. I could consider bumping up the monthly contribution amount. But is this worth it? It will make me cash-strapped and miserable for the next few months, just to hit the target, at most, a month earlier?

Then there's also that small sum of money that will come in from the delisting of Croesus Retail Trust. Should it go into our emergency fund or to my war chest? As it stands, I'm going to allocate it equally between our emergency fund and my war chest.

The more I think, the more I question my own judgment. Is $20000 really sufficient to tie my mum and I over any setbacks that could arise from a recession? If that's the case, $25000 sounds like a better number. Wait! Why not $30000? The action that I will take from this realization is to continue contributing a smaller sum each month to the emergency fund once the target $20000 is hit. Therefore, I could scale up my contributions to my war chest while still maintaining some sort of contribution to our emergency fund. So, that's that.

Recently, I have also been thinking of plonking down my CPF monies into investment. For now, this is just a thought experiment. I transferred the entirety of my OA to my SA after my first year in the workforce, to aid in the compounding as well as to "try it out." Since that single occasion, I have done nothing to my CPF funds.

Sure, I could compound my CPF funds faster if I leave my OA at $0 perpetually. I'm glad that prudence won out and that there are still funds in my OA right now. I am currently trying to evaluate, from various angles, what are the drawbacks from investing with one's CPF monies during market crashes. After all, a veteran financial blogger once implied that market crashes provide sufficient margin of safety to invest your nest egg in quality, high-yielding companies that would be able to beat the OA (and, maybe, the SA) interest rate. Anyway, I can't do much. My OA is still underfunded and it will take some time for it to grow.

On the work front, my contract is renewed for the next two years. Similarly, my colleagues' contracts are also renewed. I am still cautious as it is not a funding issue but a data collection issue (see here). Soooooooo, if the numbers do not come in, the project would still fold. Oh yes! My colleagues are already celebrating (......and inflating their lifestyle). -.-

I am also on the lookout for a Critical Illness Insurance policy. That is one area where I am still lacking coverage. As there are some changes in the policy in my work place, I can no longer use my company's flexible benefits for education. Instead, I could use those same benefits for insurance instead. So, all is not too bad. I am thankful.

Tuesday, September 12, 2017

Eschew the too-good-to-be-true carrot

This post is inspired by one of Uncle CW's post (see here). In that post, Uncle CW highlighted that one of his friends (presumably holding a management post) has a subordinate whose mother-in-law paid for their HDB in cash.

Uncle CW then remarked to his friend that he/she should not push his/her subordinate too hard at work as he could quit anytime.

How true is this! Heavy financial commitments such as monthly mortgage payments are a good deterrent against worker bees from leaving their hives.

This reminded me of a conversation I had with one of my group mates from the Specialist Diploma programme I took. Halfway through the programme, she left her job for supposedly greener pastures. One of the main pulls, of course, was the great remuneration package. A couple of months into the job, she was dead exhausted. She had to work till the wee hours of the night, be on call, and had to report to work on weekends. And she got an unappreciative and unreasonable boss to boot. Her status as a high flyer is axiomatic though. Amidst all this, she still managed to score top grades in the Specialist Diploma programme.

Eventually, she was headhunted by another company and she left the high-paying firm. Through the conversations I had with her, I managed to glean that she has a strong financial defence. No heavy financial commitments, has some side businesses, financial assets, and a solid cashflow. Furthermore, there is demand for people of her calibre.

Her colleagues, however, were not that fortunate. Some of them had heavy financial commitments to attend to and are likely to acquiesce to whatever the boss dictates. The high pay also serves as a strong deterrent to resigning. Must pay for condo, car, family, etc, how to resign?!?!

What piqued my curiosity was how the company selects its potential employees. As they have the means to pay, they are very deliberate in selecting individuals who fall within a certain profile (hint: people with heavy financial commitments). Well, that ended quickly. She is an outlier that operates from a position of strength. :)

Too demeaning to chase after the carrot? Turn your attention elsewhere then! (but before you do that, please build up your defence first........)

Friday, September 8, 2017

Dividend yield trend during GFC using R

Done with writing another R script! Instead of correlating different counters together, this time round my script will be used to visualize the trend in dividend yield across time. I'm particularly curious as to the yield of some counters during the great financial crisis (GFC). It's more for planning how I could prioritize my available funds.

The function takes in three arguments: (a) the counter symbol, (b) the start date, and (c) the end date.

The function consists of the following steps:
1). Use quantmod to import the historical data for a given counter into R, with the start date and the end date specified by the user.
2). Retain only the closing price for said counter
3). Use quantmod to download the dividend data, and their corresponding payout dates, into R. The start date and the end date are the same as that in step 1.
4). Sum up the dividends received across the time period.
5). For each day, divide the sum of dividends received by the closing price to produce the daily dividend yield.
6). Plot the data as a line graph using ggplot, where the x-axis and y-axis are date and daily dividend yield, respectively.
7). As a cautionary measure, produce a data frame of the data. If there is any error in the data manipulation/data presentation, I will be able to drill-down to the source of the error rapidly.

The good thing about writing your own functions is that you know what goes into it. Different firms adopt different fiscal years in their reporting. To simplify comparisons across counters, I defined total annual dividends in my function as the total amount received when the counter goes ex-dividend (because Yahoo Finance tracks the ex-dividend date, and not the payment date) during the calendar year. To better illustrate what I am saying, please refer to the visualization below.

Consider a company that ends their fiscal year in June. By right, annual dividends are computed based on total dividends paid out between Q3 2007 to Q2 2008. However, my function will only consider total dividends, for the same counter, based on the counter going ex-dividend between Q1 2008 to Q4 2008.

I'll reserve my thoughts to the end of the post.

Let's start with some STI constituents k?



Capitaland Mall Trust

Capitaland Commercial Trust

Ascendas REIT



ST Engineering


Hong Kong Land

Thai Beverage

Enough with STI constituents. Let's take a look at other equally interesting counters.

Dairy Farm

Frasers Commercial Trust

Fraser and Neave

AIMS AMP Capital Industrial REIT

Parkway Life REIT

Hong Leong Finance

Lippo Malls Trust

1). Thai Beverage yielded more than 100% during the GFC?!?!?!? Is that accurate? The raw data looks fine when I checked it though. However, according to SGX's Corporate Action section, the dividends paid during the 2008 calendar year was in thai baht while the stock price was in Singapore Dollars. Okay, that explains the supposed crazy results.

2). On the internet, I have encountered a particular type of hearsay stating that ST Engineering would yield 7% during recessions. Apparently, my chart does not corroborate that particular hearsay. When I created another chart (not shown above) for ST Engineering from 01 January 2009 to 31 December 2009, the maximum yield is still around 3.5%.

I initiated my position in ST Engineering on February 2016. According to other online yield trackers, I got into the counter at 5+% yield. When I tried to compute the yield at around February 2016 with my function, the result showed that I got the counter at around 3.60% yield.

I shall attribute this to the difference between calendar year and ST Engineering's fiscal year.

3). When I look at these yield charts, it clearly reminded me of my inexperience in the market. How was a particular company like in, let's say, 2007? What direction was the management taking then? What was their attitude towards cheap money? Name some major corporate actions that the company took. What could be gleaned from these actions, their pros and their cons? How are their competitors faring? What about the overall shape of the industry? Is there a structural decline in the industry? What were investors' sentiment back then? Obviously, I can't even provide a comprehensive enough answer to the questions I have set for myself.

Experience is built up through time spent as an investor, coupled with active reflection on the ins and outs of the market, their various industries, and the individual companies that make up those industries. At this juncture, I have but only 2.5 years' worth of experience in the market. Textbook-learning aside, I just have to progress, open my eyes wide, and breathe in the "feel" of the markets.

Friday, September 1, 2017

My Experience with Specialist Diplomas (Part 2)

This is a continuation of my previous post on Specialist Diplomas (see here).

Course Content (continuation)
Normally, lectures and tutorials are conducted in the same session. The lectures will be conducted in the first half, followed by the tutorials (or labs) in the second half.

Besides learning in class, the lecturers also provide additional materials for out-of-class-learning/e-learning. This is more for self-interest though. Despite being a nerd, I don't touch these materials. What? No time lah! Holding a full-time job and studying the main syllabus already saps up my time considerably.

Generally, there are no final exams. You may now breathe a sigh of relief.

However, there are quite a few assessment components. Normally, you have a mid-term test and an end-of-module test, with the end-of-module test comprising a larger percentage of your module grades. In addition, there will be group project work and some individual assignments to complete as well.

Let me digress for a moment. In 1 year, you have 2 semesters. In 1 semester, you have 2 terms. Depending on the polytechnic and/or SD programme, the length of each module and the academic load you take each semester differs. Normally, you are required to complete 4 to 6 modules in a SD programme. In my case, I had to take 4 modules for each SD.

For my first SD, the programme was structured such that I took one module per term. In contrast, I had to take 2 modules concurrently in my second SD, with both modules lasting a semester. If you don't understand, nevermind. Just see the visualization below.

There are both pros and cons to each. If the SD you are considering to take is structured like my first SD, be prepared to rush like mad. The mid-term test will hit you in like week 4 or 5 when the term commences. There's no time for slacking. You have to revise consistently.

At first glance, you have "more time" if the SD is structured like my second SD. Don't be deceived though. Remember, there is still project work and individual assignments to complete. Most likely, you will even have to meet up with your group mates outside class time during your term break to cheong your project. Also, you will perceive time to crawl in this format.

For those that are curious, yes, there is bell curve grading. For my first SD, one of my lecturers implied that there is. In my second SD, it was quite obvious. In one of the modules, there was a difficult lab test and 3/4 of the class failed it. I was one of the studious lucky ones who managed to solve the lab in time. Therefore, I got slightly better than a passing grade. When I received back my grades, my results were clearly bumped up. The others who actually failed were given a passing grade. That's how I knew.

Mid-term tests and end-of-module tests could be paper-based or online. Similarly, tests could be either open-book or close-book (open-book tests are generally harder). Interestingly, for one of the polytechnics, the questions you get from online-based tests are randomly sampled from a pool of questions. Hence, the difficulty of the set of questions you get is heng/suay one. Some of my classmates who studied a lot sian jik pua when they got a set of questions which were considerably harder than the rest. (Ironically, the top student of my cohort had one of the easiest set of questions LOL).

That's all for now. If I do remember any other pertinent stuff, I would do an "addendum" post on Specialist Diplomas.

Can't wait for my 3rd Specialist Diploma programme to commence this coming October! Woohoo!