Monday, 1 January 2018

Making sense of Warrants

In my previous post, I mentioned that one of the investment vehicles I want to learn about is Warrant. My intention of buying warrant is to use it as a hedging tool for my existing holdings. I have read about Options and kind of know how they work. SGX has no options for trading, sg's version of options are Structured Warrants. I won't go into the details of its basic as you can go to SGX's website to find out more or simply Google it.


One notable draw back of structured warrant here is that it cannot be exercised to purchase or sell the underlying shares. It can only be exercised upon expiry (European style) if it is in-the-money (ITM). If it is out-of-money (OTM), that means you lose all your capital invested in the warrant aka the insurance premium paid for hedging.


For illustration, I used Macquarie's search tool to find the warrants and below is what I get.



Warrant does NOT have a clear cut relationship with its underlying shares, therefore there are all the statistics you see on the right e.g. delta, gearing etc. Last trading day is 5 days before its expiry date. In choosing a suitable warrant, first we need to understand what these statistics stand for and factor these into our buying decision.

I found these websites very useful in explaining those terms - http://www.thechinfamily.hk/web/en/financial-products/investment/warrants/basics/jargons.html
Macquarie Singapore Warrants education series


The warrants listed on SGX are quite limited. One interesting discovery while I was researching is that there are index warrants on SGX, which we could make use of to benefit from overseas markets' bull / bear without actually having to trade the actual index in that market (although some might say ETF could do the trick too). However, note that foreign index warrants might be riskier due to things like foreign currency exchange, market closing time difference...

I shall go and digest the information now. Too much mathematics haha.

Stay tune for more updates!

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Saturday, 30 December 2017

7 years of blogging - flashbacks

Blogging over the years has been a therapeutic hobby to me. It helped me to settle my ever-whirling thoughts, forced me to research whenever I am confused, made me reflect upon my actions and remember the knowledge and experiences over the years (whenever I look back at those archives).

7 years may seem a moderately long period, I have given up on a few other blogs but forged on for this one. Just sad to say, I have yet to receive the blogging's 'long service award' of... Google ad earnings. So blogging is not an alternative sustainable income source for me (yes, I can 'sumpah' there's not a single sponsored blog post here). I do not want to blog for the sake of earning or fighting for readership - that will be stress upon myself as though it's a job and take the fun out of blogging. As for content creation, I like to keep my contents short-and-sweet and to the point. So if you want to read theories or don't understand some technical terms, don't expect full explanations here, please read Investopedia. Blogging my style is just 随心所欲。


A quick flashbacks here on some posts that served as lessons to make me a better investor / trader.


1) How many times have I caught the falling knife?

My losers stock

Waiting for stabilization

(Ooh mr market, look what you made me do...)
Very early on in my blog I already told myself not to catch a falling knife but when impulsiveness rules, it became history...

2) Didn't know how to buy slowly and sell slowly

If only I could turn back time

Lessons from 2015

Quite a number of shares I ever owned was sold too early before huge gains appear (Comfort Delgro, DBS, Capitaretail China, Keppel, CDL). As for buying too early, see above on catching falling knife.

So maybe procrastination is not all that bad huh? In some of my selling decisions I actually procrastinated. But for manual stop loss, shouldn't procrastinate.

Another important point to note - position sizing is very important when executing any buy/sell.


3) Missed opportunities

Keppel Corp - signs of oversold?

Blue chips still in red sea

If only I could turn back time II

(真是个胆小鬼, 呜呜。。。 TT) Selling in greed, buying in fear. That summed it up.


All the above contributed to my fine-tuning of MIND, MONEY and METHOD.

What I am interested to explore next year is on hedging and warrants trading. I will blog about them when I learnt more. For a start, SGX has got some brilliant explanatory videos hosted on youtube with cute animations (I like!), click here to view them.


2017 has been a good bull year for many in the stock market if you have picked the right stocks. My total portfolio gained a modest 12% on paper and yielded dividends similar to last year.



Hope the coming year will bring joy, peace and happiness (more $ as bonus). 
Happy 2018!

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Update 4th Jan 2018

This year's bull has strong legs from the start! 2% gain in a week. :)




* ThaiBev only watch, not vested.

Sunday, 24 December 2017

My story of Aztech and Bakertech II

I have talked about my Aztech story in the previous post, now let's move on to the second story, which is BakerTech. The stock is still trading on SGX.


2. The Baker Technology story


Why I invested in it?

It's got an attractive dividend yield for its share price and the oil industry was doing very well back then in year 2010. I recalled there was a special dividend in 2013 of $0.085 per share.

If you searched around, quite a few finance bloggers / sites did cheer-leading for this stock till year 2014, which further boosted my conviction that this share will do well. Imagine those who bought in early 2014...


What happened?

After the oil crash in year 2015, its share price only seen the downward spiral, due to impacted earnings. This decline has not seen reversal to date.

(I missed subscribing to its warrants issue offer of 2 for 5 @ SGD 0.01 in year 2012 when its share price was still ok then.)




In May 2016, it consolidated its shares at 5-for-1 due to the minimum trading price requirement imposed by SGX (price was below $0.20).

I believed its ticker has changed to BTP that time but I am not sure why the chart for BTP can date back to way before consolidation time. Was its chart plotted from back-extrapolation, can someone enlighten?



Outcome

I divested my shares before the consolidation, sold price was at $0.183. The decision was made as I saw no signs of price trend reversal. That amounted to more than 50% loss in capital.
It's dividends over the previous years have kind of made up for part of the loses (some panadol better than none).

--

I won't give you my conclusions to the stories here so that you can draw your own conclusions. Do you have your own investment stories too?

Merry X'mas everyone! :)





Follow the wind, borrow its strength but don't fall asleep while sailing. Know where we are heading and when the thunderstorm comes remember to dock. Because we are just sailing on small boats. Don't blindly follow the Titanic!
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Saturday, 23 December 2017

My sad story of Aztech and Bakertech I

Today I am in a story-telling mood and decided to share my investment story of few years back to remind myself and young investors out there to be more prudent. In what way? You shall find out.



1. The Aztech story


Why I invested in Aztech?

Cos I chanced upon some juicy analysis post from a veteran finance blogger at that time on how wonderful are the company's producing and how good the potential earning of the company's going to be, why he chose to invest etc. So I decided to invest in the shares in year 2010.


What happened?

The share price of Aztech dropped over the years as business was not going well and its dividends had been negligible (no 'panadol' to ease my headache). There was a period when I thought that its earning was recovering (I recalled there was an article by Songsinger-ley Fool about it being a small conglomerate with good diversification) and bought in some more at $0.13.

#Diversification or Diworsification?

Foolish me indeed! That is epic of what we call 'throwing good money after bad money'.

Subsequently, the company underwent a price consolidation (10-for-1 in Mar 2015) but instead of sustaining, it's stock price just saw more room for plunge. Ticker name changed to AVZ.


Outcome

It got mandated to delist from SGX at the beginning of this year. I have cut my loses completely, albeit too late, in year 2015 and year 2016 at the price of $0.655 and $0.43 respectively. Average loss was about 70% from total purchase price.

Just now I happened to chance upon this in a forum - Help! Aztech Group



To be continued...

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