Once a while I will check on the price movement of stocks in my portfolio to see if there is something unusual happening. The price and volume in Daibochi last Friday triggered my curiosity who is buying or selling.
Daibochi has shown good progress in financial performance after Scientex acquired a controlling stake in it and has gone on expansion mode. After the latest quarterly results, the price has spiked but selling pressure were mounting when approaching Rm3. Profit taking is expected when price moved up fast but when I checked on the announcement, I noted a substantial shareholder ( Samarang Asian Prosperity Fund) is off loading slowly. It has bought the stake in 2017 at around 2.10 to 2.20.
While searching for more info about this fund, it surprised me when I saw the fund keep accumulating shares in Coastal Contract, Latitude and Chinwell, all with substantial shareholdings ( eg it already has position in Coastal few years back and now keep accumulating more). I noted these few companies have something in common.
1. Profit on downtrend and most recent quarter is loss making or insignificant profit (Latitude is small profit)
2. Net cash position (cash + short term investment more than debts)
3. Share price at least 50% discount to NTA
Is this contrarian investing strategy?? I am so keen to find out more about this fund- its holdings, past performance so as to evaluate if it has been very successful in this approach and may be I could learn about this approach more. I tried to search online but could not find the answer I am hoping for.
We all know that contrarian investing will bring very impressive return if we are right, but it needs lots of gut to be contrarian. To me, the confidence lies in our knowledge and insights about the company and industry. If you know these companies well, you are in a better position to see if this is an opportunity or just another value trap (big discount to NTA!!). Dont assume the big fellow is always right.
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