Friday, January 1, 2016

Strategic Investor 2015 Review

FTSE STI ended the year at 2,882.73, down 14.34% for 2015, capping a one of the worst performer in global market for the year.  Below is the review of my investment portfolio for 2015 vs portfolio for 2014.


20152014 Variant
Unrealized Gain/Loss              +31.97%         +42.54%      -24.85%
Realized Gain/Loss   +10.67%   +9.07%   +17.64%
Dividend Return   +41.15%   +36.58   +12.49%
Cash Holding   +30.83%   +8.44%   +265.28%   
Portfolio   +83.85%   +92.80%   -9.64%   
STI   2,882.73   3,365.15   -14.34%


As a whole, the investment portfolio overall declined 9.64% vs STI drop of 14.34%.  Unrealized Gain/Loss fell from +42.54% to +31.97%, Realized Gain/Loss moved up from +9.07% to +10.67%, Dividend Return rose from +36.58% to +41.15% and Cash Holding increased from +8.44% to +30.83%.  Despite the drop in overall return, the investment portfolio still outperformed the benchmark STI.  On individual stock basis, only 2 of the stocks managed to register a positive performance for 2015.

Kep DC Reit (+4.10%)
MapletreeInd Trust (+2.36%)
CapMallA3.8%b220112 (-1.17%)
SIA (-3.45%)
First Reit (-4.38%)
CapitaMall Trust (-5.39%)
SingPost (-14.58%)
SembMar (-20.25%)
Kep Corp (-26.44%)
Genting SP (-28.70%)

On annualized basis (inclusive of dividend return), the performance of individual stock is as followed :-

MapletreeInd Trust  --  +15.34%
CapitaMall Trust  --  +14.07%
First Reit  --  +13.20%
Kep DC Reit  --  +11.96%
SingPost  --  +10.27%
SembMar  --  +5.45%
CapMallA3.8%b220112  --  +5.03%
Genting SP  --  +4.75%
Kep Corp  --  +3.84%
SIA  --  +2.94%

As mentioned in the 2015 Annual Analysis at the beginning of the year (Recap 2014 & Looking Ahead 2015), a strategy that cater for the 3 scenarios (The Bull Marches On, Big Bear Strikes Back and The Lost Decade) was applied to my portfolio and hence there was some major changes to the portfolio as it restructures.  The strategy is to have stocks in my portfolio that will gain should the Bull rally resumes and sufficient cash in my portfolio to bargain hunt on quality stocks or further add to existing one should global economy goes into recession.  Another aspect of the strategy is to have the ability to accumulate or add new investment on weakness at 0 or very low cost in the case of the global economy in range bound state and yet still maintain sufficient cash to wait for recession to bargain hunt.  As a result of this restructuring, there were some divestment and investment to the portfolio for the year.  The strategy chosen might not be the best but was derived from the constraints (mainly financial constraint) that existed.

Divestment
Cambridge Industrial Trust was divested in February 2015 getting a total return of +49.02% (+6.92% of capital return and +42.08% of dividend return), annualized of +5.86%.  The reason for divestment was documented here.

SembMar was the second divestment for the year which happened in August 2015.  That resulted in a total return of +9.55% (-25.10% of capital loss and +34.65% of dividend gain), annualized of +1.84%.  The reason for divestment was documented here.  However, I made some strategic moves to recover some of the capital loss and the process still ongoing and as it stands at the end of 2015, the capital loss has reduced to -10.85%, dividend return adjusted to +41.25% and that made the overall realized gain to become +30.40%, annualized of +5.45%.  My aim is to eventually fully recover the capital loss in 2016.

Following the 2 divestment, that brought my Cash Holding up from +8.44% in 2014 to +30.83% in 2015 and Realized Gain/Loss up from +9.07% in 2014 to +10.67% in 2015.

Investment
Made some investment in 2015 but all was due to the requirement of the strategy.  These investment which I termed as Cashless/Strategic as they involved either investment at 0 cost or a very low cost.  These investment are my “奇兵” (extra-ordinary soldier) as according to Sun Tzu Art of War in which his belief is one needs “奇兵” to win the war and “正兵” to defend.  These “奇兵” will take time to build up and am setting a time frame of 5 years to eventually hit the target of this strategic move.  Despite it is still in the early stage, the impact can be felt already as the unrealized gain from these “奇兵” currently is able to more than enough offset the unrealized paper loss of Kep Corp.  The following stocks are the so-called “奇兵” in my investment portfolio at the moment.

Cambridge Industrial Trust
FrasersCom Trust
MapletreeCom Trust
Mapletreelog Trust
Kep Reit

As it stands in end of 2015, these “奇兵” is giving a +2.20% of unrealized gain to my portfolio while the cost is maintained at a mere 1.21% of the total capital of the portfolio or a cost of $0.323/share.  Going forwards, accumulation of these “奇兵” will continue (and not ruling out adding some more stock to it if opportunity arises) and at the same time by strategic mean, reducing the cost to eventually 0.

Further adjustment to my investment portfolio is the decision to opt for scrip dividend for MapletreeInd Trust instead of the norm of cash.  This is another strategic move as stated.

At the same time based on the same strategy, I also restructure the portfolio for CPFIS and SRS account.  The CPFIS portfolio as of end 2015 consists of the following stocks :-

1. First Reit (dividend return = 100% of initial capital, now opt for scrip dividend)
2. OCBC (collect scrip as dividend to build up the holding)
3. FrasersCom Trust (under the cashless/strategic investment scheme)

The SRS portfolio due to capital constraint only has 1 stock

1. FrasersCom Trust (under the cashless/strategic investment scheme)

As the strategic restructuring still ongoing, more changes to the portfolio could be expected for 2016.

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