Master Rider Blog

This is Beautiful!

August 20th, 2007 NW Teong

Congratulations to those who have read and took action on my blog on last Friday (17 Aug 2007), “Ignore This @ Your Own Risk!”. As I have said many times before, missing good investment opportunities is also a risk in itself. I have also cautioned readers not to under-estimate the strength of this rebound in that article.

Again, at this juncture we must have the right perspective of the markets. In term of market actions: What happen now is that by the action of the central banker in US to lower the interest rates, those hedge funds managers who use to short the markets from US to Thailand would be scare stiff to short the markets now. On the contrary, some of them need to cover back their short positions now. The impact of lower interest rates have been described before (please refer to my e-publication: The Essence of Stock Investment) and hedge fund managers are well aware of this impact.

You see, other than normal gyration of the markets, these hedge fund managers are there to amplify these market actions be it up or down. Mind you, these guys other than having a good understanding of investment and market knowledge, they know very well the investors psychology. They can short the shit out of you (scare to death) that you have to join in to sell your holdings, on the contrary when they are bullish, they can push up the stocks sky high at an incredible rate. Of course, all of these are achieved with the help of the leverage extended by the financial institutions such as investment bankers. Some of these investment bankers are also hedge fund managers themselves. It was indeed ironical that some hedge funds were forced to close or seek for rescue packages in the midst of sub-prime loans saga. Aren’t hedge funds supposed to be hedged? Well, in real life, you know that a perfectly hedged fund will earn you almost nothing after deducting the management fees. Hence, hedge funds are never fully hedged but to take extreme positions is really contradictory to the essence of the hedge funds!

Well, readers are again reminded that markets are still volatile, you would be alright if you have bought some good stocks on 17 Aug 2007.

Today, I have a stock to share with you. If you have bought this stock on 17 Aug 07, you are already making close to 30% today at current price, i.e. 30% in less than two trading days! I have reached my investment objective, while I do understand the short term volatility, I have decided to hold on for a while as I also like its fundamental! Mind you, we cannot have this type of opportunity every day, it really depends on many factors (please refer to my e-publication)

At this juncture, I guess readers are eager to know what stock is this, right? Well, this stock is BRC Asia.

My rationale is based on the following:- 1) It is in construction sector, as I mentioned before this is a sector that will enjoy an uptrend for at least the next 2-3 years in Singapore, 2) Fundamentally solid: This is a rare company in construction sector that makes money even in difficult years. Ask yourself how many construction firms that make money very year in the last 5 years? I know I can sleep well at night even when something severe happen, this company is not going to disappear. Do you know how many years this company has been around? You will be surprise when you find out. Please find this out yourself (hint: this is one of the oldest construction related companies that you can find in Singapore!) 3) Valuation is decent and the added bonus is that it is giving you a dividend yield of about 4.3% even at current share price of S$0.175/share!

On last Friday, this stock was trading between S$0.15 to as low as $0.12 per share, hence if you bought at (say not at the lowest, at the mean price) S$0.135. Your return is about 30% with current share price of $0.175. Check this out yourself!

Again, please read disclaimer as usual.

Cheers! Master of Your Own Destiny!

Entry Filed under: Stocks, Singapore