Portfolio Entry - Celestial, China Sky, Sinotech

2Y Capital entered 3 positions in China stocks today in anticipation of the "Olympic rally". The China stocks have been in correction mode for almost 2-3 months and i think we are in time for a technical rebound that could possibly have some 'meat'. As this is a counter trend rally, it would pay to be nimble and to cut loss if the initial views are wrong.

Sinotechfibre



Enter some positions at 56c. Cut loss around 50 cents. Possible targets are 60c -> 70c -> 80c.

China Sky



Enter some positions at 78c. Cut loss around 74 cents. Possible targets are 85c -> 95c -> 105c.

Celestial Nutrifoods



Enter some positions at 78c. Cut loss around 74 cents.
Possible targets are 83c -> 93c -> breakout .

Commodities run coming to an end?

I havent been updating this blog for a while and to be honest, i am plain lazy. In addition, with the stock market in a bearish mood, I have no buy trades to share as well except perhaps to take a short position in the market occassionally. Frankly i really admire those who have the discipline and passion to share their lives to the world. I have no wish to let the world know who i am, that i had crab bee hoon for lunch today and who i had lunch with....

Anyway back to my topic for today, is the commodities bull run coming to an end soon? Let me share with you my experience with the 'tech bubble' back in year 2000. I remember in 2000, the technology sector in US was extremely hot and everyone is talking about how much money they made from the tech stocks on NASDAQ. Suddenly all the banks start to offer unit trust that invest in the US technology sector and these funds were in great demand and oversubcribed. I remember putting a few thousand in the United Global Internet Fund at its launch but I sold off the unit trust at >50% loss after a few years. These are some of the initial school fees which i pay to the market and luckily, they came at a point when I dont have much cash to lose. I will share my views on unit trust another day (when i have the mood to write) but dont expect me to say anything nice about it. :) I am not saying that unit trust is totally that bad but you will need to know its advantages and disadvantages and the mechanism of it.

Anyway, back to my story of unit trust, usually they will be launched only when there is demand for it. As such, you dont see new unit trusts being launched when the market is 'cold' and you will also see a certain 'themed' unit trust launched only when there is demand for it. With such a background understanding, you will understand why the Global Internet Unit Trust was very hot when it was launched back in year 2000 and it was just one of the many unit trusts relating to the tech sector launched by Asset management firms that year. You can see what happened after that, the market went down and was in doldrums for many years. As of todate, many of the funds are still barely above water since its inception.

I can see a uncanny similarity in the commodities market right now (versus the tech bubble in year 2000). Many special themed commodities funds are being launched by asset management firms this year and frankly, while i am not sure about the global dynamics of demand and supply of commodities, it just gives me some strong vibes that the commodities bull run cycle may be coming to an end soon. Of course, i may be wrong so just take it as one of the indicators that is flashing red right now. As in all bubbles, the masses must rush in before the bubble will pop and you will see the same things happening in property bubble, stock market bubble...

Back from Holidays

Sorry i didnt had time to update my IPO blog as I had a short vacation last week and came back only on Monday. I had sold off my Tat Hong at $2.28 prior to my holidays last week and surprisingly Tat Hong closed below my entry price today and looked rather weak. Let's see if there is a chance to get into this counter again.

Pre-IPO deals

I received a few emails on how to 'get into' the pre-ipo deals and i am actually evaluating one pre-IPO deal right now and is doing a book-building exercise for this deal. Since i am on this topic of pre-ipo deal, i will first explain what a pre-ipo deal is and why companies do a pre-ipo round instead of going directly to IPO.

Pre-IPO investments are usually the 'fund raising' round just before the Company goes for an IPO. The IPO will usually occur 6 to 18 months after the Company receives the pre-IPO financing. You may wonder why Companies bother to do a "pre-IPO" round and not a "IPO" immediately. Well, the key reasons are as follow:

The Company usually needs cash urgently for expansion and for working capital, however, it is too time consuming to raise funds from an IPO and the Company can raise money quickly via a Pre-IPO round to help ease the cash flow.

In addition, by raising a pre-IPO round, the Company is raising the minimal amount that it needs to ramp up its sales and profitability. If it manages to ramp up its sales and profits by using the pre-ipo funds, it will be able to command a better valuation at the time of the IPO and that will be even better for the Company and its owners.

In some situations where the IPO market is 'dead' (like what Singapore IPO market is in right now), it is difficult to raise funds from the public due to weak sentiments. The Company may opt to do a pre-ipo round now to meet its needs and then try to go for a listing again when the sentiments turn better and when IPO valuation are higher (i.e. they can list at a higher valuation).

There are many technical terms in a pre-IPO deals which i will not elaborate further. I will discuss more on 'how to get into a pre-ipo deal' on another day.

Adios.

Tat Hong

Today i entered Tat Hong at around 2.18. My entry could have been better at 2.14 but i was busy the whole morning and was able to look at the market only after lunch. Tat Hong is poised to announce its results for the Financial Year ending 31 March 2008 on May 28. With the Bollinger Band tightening and all the indicators cutting up, the first target is around $2.40-$2.50, followed by $2.80-$3 if the price breaks above the $2.50 resistance. The target prices of the investment houses are as follow:

5 May 08 Citigroup $3.15
23 Mar 08 Goldman $2.80
17 Mar 08 UBS $3.38
13 Mar 08 Credit Suisse $3.50
22 Feb 08 CIMB $4.43
14 Feb 08 DBS Vickers $2.70

CH Offshore - I missed this counter today although i wrote it down in my trading journal. :)

Biosensors - Hit my first target today.

Biosensors

Biosensors seemed to be showing interesting signs of a potential rebound. First target is 78c-80c and second target is 85c-90c and the cut loss is around 67c. Results will be out on 26 May and based on the UBS report, the results for year ended 31 March 2008 is likely to be a loss of US$28 million. There are 4 analysts that issued reports in 2008:

13 May 08 Citigroup $1.13
23 Apr 08 OCBC $1.23
22 Apr 08 UBS $1.25
4 Apr 08 Credit Suisse $1.20

While i have never like the Fundamentals of this Company, the Technicals are actually looking quite good.

Urgggh...

Last week was an extremely frustrating week for me. The new OCBC platform wasnt 'ready' and i missed 2 trades which i had wanted to buy and even "alerted" my trading group to look at it. First it was Celestial at 77.5 cents on last Thursday and KS Energy at 1.87 on last Friday. Urggh... in any case, i have resolved my log-in issues and managed to log into the new OCBC platform with the new user ID and passwords over the weekend and i am all ready to start trading and investing again.

I had lunch with a "semi-retired" remisier on Friday. He made a few millions last year investing in just a few stocks and he is only in his early 40s. Seems like i have a long way to go but i am working towards it.... He told me that his secret is to 'whack big big' in that few stocks which he has confidence in the management and has done thorough due diligence on the Company.

One good news that i have received in May was that the pre-ipo "J" investment which i have made in early Jan this year has submitted to SGX for listing approval. Hopefully, it will receives the "ETL" letter soon. "ETL" stands for Eligibility to List.... My plan is that once "J" is listed in June on SGX, i will be investing in another pre-IPO company.