Monday, March 3, 2014

2 misses- straco and UMS

Both companies were under my radar when they were some 30% to 45% lower than current price. That means I loss about 50% to 90% gains.

I was alerted to straco when it is trading at 28 cents, I owned UMS at 37.5 cents but sold early at 44 cents.

It is perhaps important to review why I give them a miss and learn some lessons.

Straco
It was a s-chip, I have doubts about its numbers, especially when another blogger highlight the low depreciation of bio assets. The yield then was rather weak, even when I project a 50% growth in dividend. But dividends more than double in 2 years. Now we know quite a bit of its cash is real, and its operations is real. ( anyone can visit shanghai)

My mistake: I used trailing dividends. More focus should be spent on its FCF generating capability, and the fact that it is growing. Too bad it is a s-chip.

UMS
Not a s-chip, with dividend at more than 10% when I bought it. Aware of its FCF strength and the cyclical sector it is in, also aware of its heavy reliance on AMAT for profits. But believe I got it with good MOS.

Why did I sell? Because the owners Andy and company is selling a significant stake in the company, and it is the second time that do it in a year. The first selling is what spark the low price which allow me to collect on the cheap. I still hang on to my shares when the news broke, then shortly they announced Andy's wife will ceased to be a director and reassigned a consultant role instead. This movement does not make sense to me as how effective can a insider be a consultant or is already not a consultant? So I finally decide to bail out.

Well, on hindsight, it was a wrong call.

I am fine with my decision as money not made is better than money lost. But I think I will really pay more attention to FCF growth, and if sell off is not too frequent or big, such that ownership of management come into question, I should have keep my steel. The FcF growth may or may not result in dividend growth, it will take 1-2 years to find out how friendly is management to shareholder, but there is a good chance of better dividends, especially in both cases, they are both relatively debt free.

11 comments:

  1. I missed straco too. Same reason as you coz it was a s-chip. Worry about whether its financials are legitimate. But too bad i guess i'm risk adverse.

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  2. Hi SGYI,

    As I journey in this investment journey, it is really a humbling exp.

    There are a few online forummers that I really respect, and many a times we held different views, and it turn out they are right and I am wrong, I am beginning to start to understand some of the things they are looking.

    But I think I have enough of prospecting for the time being. If I have enough time, I might look at property counters and wait for a good entry price since they are the outcasts now.

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  3. Initially I also thought Straco is S chip and did not make the purchase,watched it from $0.20 up until $0.495....bought at 0.31/0.320 but sold at 0.325 with tiny profit .....

    What a miss ..Sigh ....

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  4. It's ok KK, we all learn, and money not earned is still not money lost.

    It's a s-chip, it could go the other way too. Hindsight is the best sight.

    Lets hope we have better foresight as we learn.

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  5. Hi SillyInvestor,

    I also miss out on Straco, I sold off too early. I bought it at 0.30 and sold it at 0.34. Didn't expect it to explode and reach greater heights. Back then, resistant was so strong at 0.35 and it was so illiquid.

    Yes, definitely questionable with the huge cash pile they have and given its a s chip company, but the firm is own by majority Singaporeans. Seeing hit 0.5 now really made my heartache a little. But yup, money made is better than money lost.

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  6. Hi Little boy,

    It looks like we are not the only ones. If those that reply is any indicator, it is the tip if the iceberg, most of us are worried since it is a s-chip. So those with conviction and courage to hold, should be rewarded for their foresight. There will be other opportunities

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  7. Asking the new project,here is the reply

    We refer to your email enquiry. While we are not certain about the outcome, we expect to have more visibility during the first/second quarter period.

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  8. Thanks KK.

    It is a cool company, but I do not know why, I never like chasing after a hot company. It might still deliver and continue to grow, but it is just not in me anymore.

    Thanks for sharing your email with straco, sure appreciate it, and the fact that they reply means that have excellent IR too =)

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  9. Hi silly investor

    I actually get back in Straco in Jan with small position (only 12 lots @0.43)...it was even more illiquid compare to now

    I will consider to add once it pull back from current high price

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  10. Great, I wish u huat. Many "high profile" bloggers, forummers own it, one of them recently accumulate it. If the buy pans out well. It could be worth the but

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  11. On straco, I'm surprised you would have missed the fact that both China Poly Group and Sam Goi were large shareholders. That gave me significant comfort that this wasn't a dubious s chip.

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