This is a multiple part article. For the previous article, please refer to this article: What we can learn from Warren Buffett? Part 1 Having a diversified portfolio As at end of 2017, SEC 13F filing showed that Berkshire Hathaway held 40 listed companies. It also had 63 subsidiaries. With such a large number of businesses and companies it invest in, Berkshire Hathaway’s portfolio is truly … [Read more...]
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What we can learn from Warren Buffett? Part 1
BYD Co Ltd was listed on the Hong Kong exchange in 2002. It was one of China’s biggest rechargeable batteries maker. Berkshire Hathaway - the holding company which Warren Buffett is the largest shareholder - bought 9.9% of BYD in 2008. Soon after his purchase, the share price surged by a whopping 501% in less than two years. However, at its peak it dropped by a whopping 83% due to various bad … [Read more...]
Share Repurchase vs dividends
Many investors understand what dividends are. However, not many realized that there is another type of invisible dividends that is called the share repurchase. Both shares repurchase and dividends have its advantages and disadvantages. What is share repurchase? When a company decides to purchase its own shares, it is called a share repurchase. Normally this is done by buying shares from the … [Read more...]
Why this company’s stock price plunged despite large profit announcement?
Q: Wilfred, Company X5 announced on 8th March 2018 that its full year results for 2017 was US$163 million in earnings. This was significantly larger than that in 2016 of only $6.7 million. However, its stock price plunge by –17.2% since then even taking into account of dividends. Why is this so? The S&P 500 total return during the same period was -2.33%. Answer: There could be many … [Read more...]
Human capital and investing in employee stock benefits
Today I would like to introduce the concept of human capital and briefly touch on employee stock purchase program. What is human capital? Human capital is simply the ability to earn money by working. If you earn $5000 a month and has 30 more years of working life, the human capital is 5000 x 12 x 30 = $1.8 million assuming no pay increment and inflation is zero. Because the human capital is … [Read more...]
Investors always buy high and sell low regardless of asset classes
Do you know that most investors buy high and sell low? The following are some evidence to show that investors always buy high and sell low. The bar chart shows the net equity cash flow (in USD) into mutual funds. On the other hand, the line chart is the year-on-year returns of MSCI AC World USD. The pattern shows that when the stock market was rising, many investors would buy equity funds. But … [Read more...]
7 real reasons why most investors are not successful
Long time ago, the only way people can invest was by investing in stocks. However, not everybody had the expertise to pick stocks. Moreover, most people were busy working. So, they did not have time to monitor their stocks. As a result, stock picking was based on rumors, hearsay. When times were good, investors borrow money (leverage) to invest more thinking that the stock market would continue to … [Read more...]
$300m company’s share price sliding down like a falling knife (not referring to Noble)
By now, everybody is aware that Noble’s share has been on a decline by a large magnitude. In fact, its share price is down by a whopping 98.43% compared to 5 years ago Like Noble, there is another company’s share price that has been sliding down. Unlike Noble, we do not hear much in the news of its dismay stock price performance. is a well-known company that is worth $300 million in terms … [Read more...]
Share price plunged despite good cash conversion cycle
is a technology company listed in Hong Kong. It is a highly efficient company in terms of its cash conversion cycle but it has caused shareholders to lose huge amount of money over the past few years. The share price has plunged by more than 60% although the Hang Seng Index is up by 20%. I will provide a possible reason for the large decline in share price. The following are the … [Read more...]
Why this company has high profitability but still lose money?
One of my client asked me about a particular company that is listed in Hong Kong and Shenzhen. She wanted to buy this company. is not a small company. It has a market capitalization of HKD 173 billion or about SGD 30 billion. (For reference, the average market capitalization of the STI is 34 billion.) More than 90% of its customers are from China. Recently, the share price surged like … [Read more...]
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