Tong’s Value Investing Portfolio: Still a perfect 100% record

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THE FBM KLCI drifted slightly higher over the past week, closing at 1,812.2. Volume too saw some pickup as investors returned from the long Lunar New Year break. But as it turned out, there wasn’t much of a CNY rally, pre or post.

To be sure, our momentum algorithm (see accompanying article) has seen a sharp increase in the daily number of stocks picked up in the last two weeks of February, almost doubling that in the first two weeks of the month.

However, given that there was no clear increase in overall trading volume, it appears that interest is narrowing to select stocks. This also suggests that sentiment for the broader market remains one of caution.

Indeed, retail investors, collectively, are net sellers in the local bourse this year — as are foreigners. Local institutions have absorbed all of the selling pressure, so far. And this has held up the benchmark index — the FBM KLCI is up 3.4% for the year-to-date.

In overseas developments, Greece and the eurozone agreed to, once again, kick the can down the road with a 4-month extension to its bailout programme. The US Federal Reserve reiterated that it is in no rush to raise interest rates amid low inflationary pressure and slow wage growth despite strengthening labour market.

Stocks in my portfolio fared comparatively well for the period since February 13. Total value of my portfolio was up 2.36%, against the benchmark index’s 1.12% gain. My portfolio is now up 7.6% since inception, outperforming FBM KLCI, which has fallen by 0.5% over the same period.

Given prevailing uncertainties and somewhat tepid market performance over the past few weeks, I decided to lock in some gains.

I sold 39,000 shares in Willowglen at 78.5 sen per share, which I acquired for 74.5 sen. The investment netted a gain of about 5.4%, which is not a bad proposition for a holding period of about 6 weeks.

After the disposal I still own 20,000 shares in the company. I continue to like Willowglen (Fundamental 2.55/3, Valuation 0.9/3) for its growth prospects and asset-light business model that is highly scalable. With some 83% of revenue derived from Singapore, the company will benefit from the strengthening Singapore dollar.

I also disposed half of my holdings in Wellcall (Fundamental 3/3, Valuation 2.1/3). As with Willowglen, I like the company for its underlying business. However, after gaining 26.2% since I bought the shares in mid-January, I decided to take some profit. I made RM1,890 from this sale.

After the above transactions, my portfolio is now about 48% invested. I will be on the lookout for fresh acquisition as and when the opportunity arises.

Regulars of this column will know that I only buy stocks that are recommended by InsiderAsia after they are published on The Edge Markets at www.theedgemarkets.com and in The Edge Financial Daily.

In the December 22 issue of The Edge Malaysia, I highlighted the list of stocks that were recommended by InsiderAsia since The Edge Markets’ launch on October 3rd — and pointed out that every single one of the stocks have risen above the opening price on the day they were featured — even as the broader market was collapsing.

In this issue, I am reassured that this remarkable trend is still intact for all 20 stocks featured since then. For the majority of the stocks, their share prices remain above the opening prices on featured date — and about a third of them have chalked up double-digit gains within the two short months.

Best of all, the recommendations and write-ups about the companies are absolutely FREE.

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This article first appeared in The Edge Malaysia Weekly, on March 2 - 8, 2015.