Fundamental Positions II

[ducati916]

tech/a

I reckon your snaffoood.

Your plan is to prove that you can trade 30% or more each year over 3 yrs with your method.Pulling your trades out at 30 or so % leave you well short.
(You wouldnt be much better had you held them I worked it out--35%).
At the end of 3 yrs you will have to sell all losers---unless you dramatically increase your winning trades you have no hope!!
!

The current eight trades under; closed trades have returned on aggregate the 30%+/- in under the twelve month period, thus these results exceed the assertion originally stated.

The issue that you quite rightly raise has validity, however, you are raising it rather prematurely, based on the current evidence, as you posted a little ASX speccie that rose 400% in a couple of months. Therefore, market price can adjust very quickly based on sentiment.

Sentiment can change very quickly. Fundamentals can change quickly, but generally take a longer timeframe. Therefore, while evolving economic forces adjust the fundamentals of say, CQB, sentiment will be generally negative.
As the fundamentals improve, so the price [sentiment] can adjust very quickly.

The purpose of a fundamentally selected portfolio is to limit the losses. There are some six stocks showing currently circa 50% drawdown. This has without a doubt caused concern within the technical crowd. However, this is the point in which the time factor becomes important.

CAR provides a 25% dividend return on my purchase price, this approximates [without any capital gain] my requirement of 30% compounding, should I reinvest the dividends at the same price [or lower].
Therefore, on this stock, time, is less of a factor.

However, as we enter year two, [February 2007] I will need on closed trades an aggregate of 60% to maintain the stated 30%, and year three will require 90% on aggregate.

OR dramatically increase your % profit OR dramatically decrease your losses---currently all back to zero loss would do it

As first stated, there should be no losses.
From the trades taken initially, to the later trades, I have tightened three criteria. The result has been [so far] a very large reduction in drawdown [I dislike drawdown as much as anyone]. OFIX, WON, NAFC, CAR all suffered minimal drawdown. That said, there should be no losses, and an aggregate 30%+ after three years.

jog on
d998

 

[markrmau]

Sentiment can change very quickly.

eg. on asx TEN.

I bought it at $3.58 about a year ago, because there was a takeover possibility if media laws were relaxed.

I sat on massive losses (but received divs) - it got down to about $2.6 or so.

However, I don't use stop losses. I only sell if the reason I bought in the begining is no longer valid.

So at $2.6 I said to my self, 'are the reasons I bought it for still valid?'. 'Yes', I replied. So I hung on.

I am not saying this is an ideal way to trade, but this is what can happen. In the comming week, the market is going to become enamoured with the idea of 'private equity' buying both TEN and MMM (youth music station), and creating cross advertizing posibilities. I should be able to sell over $4.3 I think.

 

[ducati916]

Let's try a couple of charts;

 

[ducati916]

CALL......$4.76........................$2.67...... ...................(-43.2%)
SAFM......$26.45.....................$25.67....... . ................[-2.9%]
FORD......$10.74.....................$5.14....... .................(-52.1%)

CTT......$4.00.......................$2.60........ ..................(-34.5%)
CQB......$17.47.....................$13.40........ .................(-23.2%)
TOL......$29.78.....................$28.23........ .................(-5.2%)


SGTL....$10.30.....................$5.00...... .....................(-51.4%)
EVCI....$1.44.......................$0.52........ ...................(-63.8%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$43.08.......... ..................+15.1%
WON....$6.65.....................$7.92............ ..................+19.1%
NAFC...$20.52....................$26.16........... .................+27.5%
CAR....$18.48....................$19.46........... ..................+5.3%

Aggregate......................................... ....................[-16.1%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]

Aggregate..............+32.7%

jog on
d998

 

[ducati916]

Sold NAFC @ $26.48

 

[ducati916]

CALL......$4.76........................$2.82...... ...................(-40.7%)
SAFM......$26.45.....................$26.34....... . ................[0.0%]
FORD......$10.74.....................$5.08....... .................(-52.7%)

CTT......$4.00.......................$2.63........ ..................(-34.2%)
CQB......$17.47.....................$13.52........ .................(-22.6%)
TOL......$29.78.....................$27.41........ .................(-7.9%)


SGTL....$10.30.....................$4.65...... .....................(-54.8%)
EVCI....$1.44.......................$0.50........ ...................(-63.9%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$43.67.......... ..................+16.6%
WON....$6.65.....................$6.59............ ...................0.0%

CAR....$18.48....................$20.44........... ..................+10.6%

Aggregate......................................... ....................[-17.0%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998

 

[tech/a]

Total portfolio value if sold today.
+1.957%

 

[ducati916]

CALL......$4.76........................$2.80...... ...................(-40.9%)
SAFM......$26.45.....................$26.79....... . ................+1.3%
FORD......$10.74.....................$5.04....... .................(-52.9%)

CTT......$4.00.......................$2.44........ ..................(-39.0%)
CQB......$17.47.....................$14.04........ .................(-19.6%)
TOL......$29.78.....................$29.89........ .................(0.0%)


SGTL....$10.30.....................$4.68...... .....................(-54.2%)
EVCI....$1.44.......................$0.49........ ...................(-63.9%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$43.44.......... ..................+16.0%
WON....$6.65.....................$6.78............ ...................+1.9%

CAR....$18.48....................$20.92........... ..................+13.2%

Aggregate......................................... ....................[-19.8%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998

 

[ducati916]

CALL......$4.76........................$2.79...... ...................(-40.9%)
SAFM......$26.45.....................$27.12....... . ................+2.5%
FORD......$10.74.....................$4.84....... .................(-54.9%)

CTT......$4.00.......................$2.61........ ..................(-34.0%)
CQB......$17.47.....................$14.29........ .................(-18.2%)
TOL......$29.78.....................$30.98........ ..................+4.0%


SGTL....$10.30.....................$4.60...... .....................(-54.2%)
EVCI....$1.44.......................$0.49........ ...................(-63.9%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$45.19.......... ..................+20.7%
WON....$6.65.....................$6.56............ ...................+0.0%

CAR....$18.48....................$20.71........... ..................+12.0%

Aggregate......................................... ....................[-18.9%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998
http://grantmacdonald.blog.co.nz/

 

[nizar]

Duc,

How long will you hold Ford for?
When will you decide that perhaps you simply got it wrong?

 

[ducati916]

Duc,

How long will you hold Ford for?
When will you decide that perhaps you simply got it wrong?

As per the initial strategy;
*if the fundamentals change materially for the worse
*three years

Dependant on which criteria first presents, will mandate an exit.
jog on
d998
http://grantmacdonald.blog.co.nz/

 

[ducati916]

CALL......$4.76........................$2.75...... ...................(-42.2%)
SAFM......$26.45.....................$27.72....... . ................+4.8%
FORD......$10.74.....................$4.39....... .................(-59.1%)

CTT......$4.00.......................$2.65........ ..................(-33.0%)
CQB......$17.47.....................$14.65........ .................(-16.4%)
TOL......$29.78.....................$32.40........ ..................+8.7%


SGTL....$10.30.....................$4.48...... .....................(-56.5%)
EVCI....$1.44.......................$0.55........ ...................(-61.8%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$43.50.......... ..................+16.8%
WON....$6.65.....................$6.57............ ...................+0.0%

CAR....$18.48....................$21.35........... ..................+15.5%

Aggregate......................................... ....................[-18.6%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998
http://grantmacdonald.blog.co.nz/

 

[ducati916]

CALL......$4.76........................$2.86...... ...................(-39.9%)
SAFM......$26.45.....................$31.98....... . ................+20.9%
FORD......$10.74.....................$4.45....... .................(-58.5%)

CTT......$4.00.......................$2.69........ ..................(-32.7%)
CQB......$17.47.....................$15.13........ .................(-13.3%)
TOL......$29.78.....................$31.30........ ..................+5.1%


SGTL....$10.30.....................$4.25...... .....................(-58.7%)
EVCI....$1.44.......................$0.60........ ...................(-58.3%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$45.74.......... ..................+22.2%
WON....$6.65.....................$6.76............ ...................+1.6%

CAR....$18.48....................$22.13........... ..................+19.8%

Aggregate......................................... ....................[-15.9%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998

 

[ducati916]

Buy CHDW @ $0.32

jog on
d998

 

[ducati916]

Company Name: China Digital Wireless
Date: December 10, 2006
Current Price: $0.32
Code: CHDW.OB
Yield: 0.0%
Market Cap. $5.5 million
Tci price target: $1.50 - $2.12
Investment Sector: Communication Equipment
P/E Ratio 3.2
Recommendation: Buy

Business:

China Digital Wireless, Inc. is engaged in providing value-added information services, cellular phone distribution and advertising services through its Chinese operating subsidiaries. The Company conducts its business primarily through its wholly owned subsidiary, Sifang Holdings and its wholly owned subsidiary TCH Data Technology Co. Ltd. China Digital renders value-added information services in China by purchasing content from third-party providers and reformatting that content. It also provides entertainment-related services, including icons, screen savers, multiplayer games, Western horoscopes, jokes, and sports and entertainment news. China Digital distributes various mobile phone brands manufactured by SAMSUNG Electronics Co., Ltd. and NOKIA Corporation. The Company also provides digital advertising and other advertising services.

Holdings

With a market Capitalization currently of $5.5 million and a 100% common stock capitalization, it is interesting to note that three holders account for 69% of the total shares issued. This is without doubt an “insiders” stock. This could be both a good thing, and potentially dangerous in the longer run. In the short run, selling pressure can really go no further, as the holders are resolute. Into the future, if, and when the share price rises, their selling [if they sell] will certainly bring possibly substantial selling pressure to bear.

Holders
*Caihua [Tai] 9million shares
*Ying [Shi] 1.8million shares
*Chinamerica Fund 1.1million shares

Are they justified in their cornering of the common shares?
It would seem a fairly resounding positive at the current market price of $0.32. For that price you receive;
*$0.10 per share in cash
*$0.33 per share in Working Capital [thus Working Capital exceeds the market price]
*All liabilities are paid.
This therefore qualifies as a legitimate undervaluation

Balance Sheet

The Balance Sheet receives a clean bill of health. There are no hidden capitalized costs that should be expensed in the Income Statement.
There could be a query on Accounts Payable, as they have increased by 100%, this can in part be explained by increasing Revenues up 51%, but really this is a component of Cost of Goods & Selling General & Administration, which both need to be brought under control. Their business model is dependant upon purchasing content from third parties, and costs have obviously escalated, this does require watching.

Income Statement

The Margin of Profit decreased materially and quite alarmingly, and this has been due to the spiraling cost structure previously mentioned. If margins can be restored, and they should be in time, the increase in earnings will be leveraged tremendously by the tiny current market capitalization.
There are no discretionary cash-flows hidden in the cash-flow statements. The quality of earnings is good, only a small part is due to the selling of assets that pump up the earnings.

The very poor return on retained earnings to this point may also have influenced the downward slide in the share price. I would expect to see this improve going into the near term future [12mths] and be reflected accordingly in the share price.

I have a valuation of between $1.50 & $2.12 this; I feel is quite conservative if you believe in the growth potential of China in particular, and Asia in general. With such a large concentrated holding in place, I don’t see too much downside, and of course we can also track closely the insiders in their selling decisions.

jog on
d998

 

[ducati916]

CALL......$4.76........................$2.76...... ...................(-42%)
SAFM......$26.45.....................$31.28....... . ................+18.3%
FORD......$10.74.....................$4.11....... .................(-61.7%)

CTT......$4.00.......................$2.58........ ..................(-35.5%)
CQB......$17.47.....................$16.07........ .................(-8.0%)
TOL......$29.78.....................$32.44........ ..................+9.0%


SGTL....$10.30.....................$4.12...... .....................(-60.0%)
EVCI....$1.44.......................$0.58........ ...................(-58.3%)

SEPR....$92.50.................................... ..............................
OFIX....$37.44....................$47.44.......... ..................+26.7%
WON....$6.65.....................$6.97............ ...................+4.8%

CAR....$18.48....................$21.95........... ..................+18.7%
CHDW.$0.32.....................$0.35.................................+9.3%

Aggregate......................................... ....................[-13.7%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%

Aggregate..............+32.3%

jog on
d998

 

[ducati916]

Sell OFIX @ $47.85

 

[ducati916]

CALL......$4.76........................$2.56...... ...................(-46.0%)
SAFM......$26.45.....................$31.34....... . ................+18.5%
FORD......$10.74.....................$4.43....... .................(-58.7%)

CTT......$4.00.......................$2.51........ ..................(-35.9%)
CQB......$17.47.....................$15.81........ .................(-9.5%)
TOL......$29.78.....................$31.58........ ..................+6.0%


SGTL....$10.30.....................$4.43...... .....................(-56.9%)
EVCI....$1.44.......................$0.40........ ...................(-72.2%)

SEPR....$92.50.................................... ..............................

WON....$6.65.....................$6.99............ ...................+5.0%

CAR....$18.48....................$21.73........... ..................+17.5%
CHDW.$0.32.....................$0.34.............. ...................+6.2%

Aggregate......................................... ....................[-18.8%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%
OFIX..................+27.8%

Aggregate..............+32.3%

jog on
d998

 

[ducati916]

CALL......$4.76........................$2.61...... ...................(-45.0%)
SAFM......$26.45.....................$30.79....... . ................+16.5%
FORD......$10.74.....................$4.35....... ..................(-59.4%)

CTT......$4.00.......................$2.45........ ..................(-38.7%)
CQB......$17.47.....................$15.48........ .................(-11.3%)
TOL......$29.78.....................$31.06........ ..................+4.2%


SGTL....$10.30.....................$3.74...... .....................(-63.6%)
EVCI....$1.44.......................$0.44........ ...................(-69.4%)

SEPR....$92.50.................................... ..............................

WON....$6.65.....................$7.07............ ...................+6.3%

CAR....$18.48....................$22.25........... ..................+20.4%
CHDW.$0.32.....................$0.24.............. ..................[-29.4%]

Aggregate......................................... ....................[-20.7%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%
OFIX..................+27.8%

Aggregate..............+32.3%

 

[ducati916]

CALL......$4.76........................$3.01...... ...................(-36.7%)
SAFM......$26.45.....................$33.41....... . ................+26.3%
FORD......$10.74.....................$4.45....... ..................(-58.5%)

CTT......$4.00.......................$2.67........ ..................(-33.2%)
CQB......$17.47.....................$14.85........ .................(-14.9%)
TOL......$29.78.....................$31.60........ ..................+6.1%


SGTL....$10.30.....................$3.67...... .....................(-64.3%)
EVCI....$1.44.......................$0.40........ ...................(-69.4%)

SEPR....$92.50.................................... ..............................

WON....$6.65.....................$7.18............ ...................+7.9%

CAR....$18.48....................$27.40........... ..................+48.3%
CHDW.$0.32.....................$0.21.............. ..................[-34.3%]
LNX....$4.19.....................$5.17.................................+23.4%

Aggregate......................................... ....................[-15.3%]


Closed Trades

ISSC...................+8.1%
HNR....................+21.6%
EGY....................+61.8%
LRT....................+29.2%
KND....................+34.0%
GKIS..................+37.8%
DRYS..................+34.0%
UST...................+35.2% [not inc. dividends]
NAFC.................+29.0%
OFIX..................+27.8%

Aggregate..............+32.3%

jog on
d998