BBR Holdings

Hi Karlmarx,



if you're keen, take a quick look at TTI's blog on BBR.
it's an eye opener.

same weight class to Keith.

(12-10-2017, 06:30 PM)chialc88 Wrote: just to add another point...

one must invest in a sum that's meaningful to your portfolio.

anyone can claims the number of multi-baggers he "discovered" 
simply by buying a large number of different counters.

this will inflate one ego but not THE wallet.

EXCELLENT call by buying at its low and amazing amount.
Specially for you, my dear:

Hi chialc88, now you've sufficiently piqued my interest to go watch this movie.

On a different note...
Cao Cao gets all the attention for unifying china, supposedly.
But the true hero that made this possible is actually the 1st ever Queen Dowager, Dowager Xuan.
Without her, the state of Qin would've ceased to exist in BC times, several hundred years before Cao Cao was even born.

*Always been fascinated by China's warring states period

(12-10-2017, 09:25 PM)chialc88 Wrote: Hi Karlmarx,



if you're keen, take a quick look at TTI's blog on BBR.
it's an eye opener.

same weight class to Keith.

Since you brought it up...
in my post, I showed (partially) management's lawyer-crafted reply in response to my question about what steps would be taken to limit future losses from project bids.
They mentioned that they recruited 2 senior personnel to work on project bidding in future, but understandably so, wouldn't say who are the new personnel or where they came from.

I wrote in my investing thesis then:

"On a side note, and there’s no official announcement on this so don’t bother looking up SGX announcements, but one of the “2 new senior personnel”, is Dr Jeremy Wu, who joined the company as Executive Director and director of corporate development in May 2016."

At that time, I investigated by trawling through LinkedIn and managed to find this. Thank god, Dr Jeremy Wu updates his LinkedIn:

https://sg.linkedin.com/in/dr-jeremy-wu-0288b424

Keong Hong has always been very conservative in their project bidding, and knowing that Dr Jeremy Wu is coming over to BBR and playing a major role in future project bids was comforting to me. At Keong Hong, he was playing a similar role, from project bidding all the way to execution and completion.
Since he came on, the future projects have been done on what I think are reasonably good terms, with acceptable margins priced in.
In one of the bids for a gov land parcel, BBR was even the 2nd lowest bidder. 
Knowing the history, I actually found it a good thing to be the 2nd lowest bidder despite losing out.
So I'd say there's been a clear improvement since he came on.

(12-10-2017, 06:03 PM)TTTI Wrote: And in reply to the earlier comments...
Yep, the layman wouldn't know or have conviction.
And that's the gist of the whole game isn't it?

The layman needs to "invest based only on a company's merits" in order to "sleep well at night."
The problem is, when a company's merits are apparent, guess what, the share price reflects it. Unless it is only apparent to you only, and nobody else sees it or believes in it. In which case, you wouldn't be "the layman"

If the share price reflects the company's apparent merits, then the best you can hope for as a shareholder, is to participate in the future growth of the company (that's not been realized yet, and is not factored into the share price, and in which case, you wouldn't anticipate it either, but can only hope for it)
So at any 1 point, you're paying what is deemed as fair value based on the "apparent merits" that presumably everyone knows about already, and hoping that future news are favorable and participating in that growth.

And if that's your sole modus operandi, i.e. your investment is based on participation in just future growth, and paying a fair value for the current "apparent merits", (vs taking up positions when there is a gap between the price and what you personally deem to be the intrinsic value) then I'd think there's a strong case for just indexing and passive investing, instead of active.


If one is actively investing, surely the ultimate goal is to beat a passive instrument, usually some broad based index. If not that, then what else?

And if the goal is to beat a passive instrument, then you surely have to rely on something to find things that are not apparent merits yet. (superior due diligence? More intense effort? Better judgement? More accurate interpretation of widely available data? Competitive advantage by having experience in the industry? <Gasp> insider information? whatever) and take up positions which are unpopular and/or neglected, and hope that in time to come, or in the presence of a catalyst, the market recognizes what you've been saying all this while, and accords a much higher fair value to it.

You can do various variants of this, by being activist (creating the catalyst yourself), or by being the traditional passive investor (believing that someday the catalyst would come as long as you buy at substantially below the intrinsic value), but ultimately, it still means that you'd need to take up positions when the merits are not widely obvious yet.

Hi TTTI,


It seems like you are saying the market is efficient. And I assume that your reason for this is because of the wide availability of information. My opinion is that the market is not always efficient.

1) It is true that information is easily available, but this does not mean that information is being used effectively by everyone, or at all. One only has to look at the failed s-chips to see that people generally do not bother to check if whatever was reported makes sense (consistently rising receivables vs payables, consistently paying tiny dividends vs profits, consistently selling shares to raise cash when cash balances are high, etc). The availability of information does not simply result in a company's merits to be apparent, and therefore, share price to reflect so. 

2) When they bother to look, what most people do is focus on certain particular information, and assess a company's merit based on that. For example, accounting profits. Or, if it is a commodity trading business, they will focus on the commodity price. But today we know not all commodity trading businesses are built the same. Noble has sunk while most of its global peers soared.

3) Even when information is released, the market does not always immediately revalue a company's stock price, sometimes even after months. During the second half of 2015, 800 Super was trading at about a P/E of 5 and dividend yield of 5%, and then for another quarter or so into 2016. During the first half of 2015, this same company was trading at a P/E of close to 10. The vast improvement in profitability of this defensive business was for all to see for a good 9 months before the stock price moved. Another example is Hupsteel, which was a widely discussed stock in the past years. The merits were clearly laid out for all to see; cash, bonds, freehold properties, all selling at only a fraction of share price, without including the steel trading business. Yet the share price fell by half for 4-5 months, a year after these merits were laid out. I believe you need not be a fund manager in these two cases to know you are looking at bargains.

4) Most of the time, companies are fairly valued, but only if we consider their financial metrics solely when assessing their merits. WB bought See's Candies which had $4.2m profit for $25m in 1972. In 2014, See's Candies earned $82m, which makes the original purchase price a bargain. Did WB simply hoped for the best? Or was he aware of See's non-financial (qualitative) merits? After all, there must have been numerous companies selling at $25m with earnings of $4m or more.

Numbers alone cannot tell us if a company will thrive in the future. We need to know its qualitative merits such as management behaviour, business model, and the risks the business is exposed to; information which are available from the IPO prospectus and ARs. But a business does not operate in a vacuum so an understanding of its (future) environment is also required. Knowledge about present trends, culture, and human nature and motivations. All these are information available for anyone willing to work through.

I'm not sure how you would define a layman, but I think that one need not be a professional to be able to see both qualitative and quantitative merits in a company. Some work to learn the skills and effort to put lessons into practice is necessary, but these are not beyond the abilities of an average tertiary-educated person. Many such persons can be found here.

The game isn't about participating in what you don't know. It is about participating in things you know (more). For me, at least.

(12-10-2017, 10:22 PM)karlmarx Wrote:

(12-10-2017, 06:03 PM)TTTI Wrote: And in reply to the earlier comments...
Yep, the layman wouldn't know or have conviction.
And that's the gist of the whole game isn't it?

The layman needs to "invest based only on a company's merits" in order to "sleep well at night."
The problem is, when a company's merits are apparent, guess what, the share price reflects it. Unless it is only apparent to you only, and nobody else sees it or believes in it. In which case, you wouldn't be "the layman"

If the share price reflects the company's apparent merits, then the best you can hope for as a shareholder, is to participate in the future growth of the company (that's not been realized yet, and is not factored into the share price, and in which case, you wouldn't anticipate it either, but can only hope for it)
So at any 1 point, you're paying what is deemed as fair value based on the "apparent merits" that presumably everyone knows about already, and hoping that future news are favorable and participating in that growth.

And if that's your sole modus operandi, i.e. your investment is based on participation in just future growth, and paying a fair value for the current "apparent merits", (vs taking up positions when there is a gap between the price and what you personally deem to be the intrinsic value) then I'd think there's a strong case for just indexing and passive investing, instead of active.


If one is actively investing, surely the ultimate goal is to beat a passive instrument, usually some broad based index. If not that, then what else?

And if the goal is to beat a passive instrument, then you surely have to rely on something to find things that are not apparent merits yet. (superior due diligence? More intense effort? Better judgement? More accurate interpretation of widely available data? Competitive advantage by having experience in the industry? <Gasp> insider information? whatever) and take up positions which are unpopular and/or neglected, and hope that in time to come, or in the presence of a catalyst, the market recognizes what you've been saying all this while, and accords a much higher fair value to it.

You can do various variants of this, by being activist (creating the catalyst yourself), or by being the traditional passive investor (believing that someday the catalyst would come as long as you buy at substantially below the intrinsic value), but ultimately, it still means that you'd need to take up positions when the merits are not widely obvious yet.

Hi TTTI,


It seems like you are saying the market is efficient. And I assume that your reason for this is because of the wide availability of information. My opinion is that the market is not always efficient.

1) It is true that information is easily available, but this does not mean that information is being used effectively by everyone, or at all. One only has to look at the failed s-chips to see that people generally do not bother to check if whatever was reported makes sense (consistently rising receivables vs payables, consistently paying tiny dividends vs profits, consistently selling shares to raise cash when cash balances are high, etc). The availability of information does not simply result in a company's merits to be apparent, and therefore, share price to reflect so. 

2) When they bother to look, what most people do is focus on certain particular information, and assess a company's merit based on that. For example, accounting profits. Or, if it is a commodity trading business, they will focus on the commodity price. But today we know not all commodity trading businesses are built the same. Noble has sunk while most of its global peers soared.

3) Even when information is released, the market does not always immediately revalue a company's stock price, sometimes even after months. During the second half of 2015, 800 Super was trading at about a P/E of 5 and dividend yield of 5%, and then for another quarter or so into 2016. During the first half of 2015, this same company was trading at a P/E of close to 10. The vast improvement in profitability of this defensive business was for all to see for a good 9 months before the stock price moved. Another example is Hupsteel, which was a widely discussed stock in the past years. The merits were clearly laid out for all to see; cash, bonds, freehold properties, all selling at only a fraction of share price, without including the steel trading business. Yet the share price fell by half for 4-5 months, a year after these merits were laid out. I believe you need not be a fund manager in these two cases to know you are looking at bargains.

4) Most of the time, companies are fairly valued, but only if we consider their financial metrics solely when assessing their merits. WB bought See's Candies which had $4.2m profit for $25m in 1972. In 2014, See's Candies earned $82m, which makes the original purchase price a bargain. Did WB simply hoped for the best? Or was he aware of See's non-financial (qualitative) merits? After all, there must have been numerous companies selling at $25m with earnings of $4m or more.

Numbers alone cannot tell us if a company will thrive in the future. We need to know its qualitative merits such as management behaviour, business model, and the risks the business is exposed to; information which are available from the IPO prospectus and ARs. But a business does not operate in a vacuum so an understanding of its (future) environment is also required. Knowledge about present trends, culture, and human nature and motivations. All these are information available for anyone willing to work through.

I'm not sure how you would define a layman, but I think that one need not be a professional to be able to see both qualitative and quantitative merits in a company. Some work to learn the skills and effort to put lessons into practice is necessary, but these are not beyond the abilities of an average tertiary-educated person. Many such persons can be found here.

The game isn't about participating in what you don't know. It is about participating in things you know (more). For me, at least.

No, I am not saying the markets are always efficient. If so, then I think I'm screwed. And if so, I think valuebuddies.com should shut down.

I am saying that the market constantly reflects the current SENTIMENT of the widely available, apparent information.

To that extent, your cited examples are actually substantiating my point.

1) Isn't that precisely my point? The information is available, so the market knows this information, and processes the sentiment towards this information. The way to get a competitive advantage, is if one processes it differently, or knows something everyone else doesn't etc. 
So using your example, the widely available information at that time, supported S-chips, or at least, didn't point to fraud or defaults.
If one had the ability to process the information differently, or if you were in a position to find out these were frauds, you could've shorted it.
But at that time, the widely available information that's apparent, is that these are legit companies with legit financials. Which is why the markets accorded it the valuation they did at that time.
So to just act on widely available information would mean you'd possibly be one of these guys (that got screwed).

2), 3) and 4) are all substantiating what I'm saying:

"And if the goal is to beat a passive instrument, then you surely have to rely on something to find things that are not apparent merits yet. (superior due diligence? More intense effort? Better judgement? More accurate interpretation of widely available data? Competitive advantage by having experience in the industry? <Gasp> insider information? whatever) and take up positions which are unpopular and/or neglected, and hope that in time to come, or in the presence of a catalyst, the market recognizes what you've been saying all this while, and accords a much higher fair value to it."

2) Noble's apparent merits which are demerits in reality (prob needed either experience in the industry, or some superior better judgement to determine at that point in time, when the world thinks Noble's great)

3) Disagree with this. The markets will revalue any widely available information quickly unless there is no liquidity. You cannot say that there's a "vast improvement of profitability" and yet the valuations didn't reflect that for X number of months, simply cos that's only 1 dimension of it. The price takes into account every single thing, not just 1 single metric (profitability, in your cited example) 
Perhaps there were other "worries" at that point in time such that your mentioned "vast improvement" didn't move the share price? 
Perhaps the global sentiment then was poor and everything happened to be depressed during that period of time?
So in this cited example, just 1 single metric may not be reflective. The weightage given to the improved profitability would be reflected in the share price.

Only exception is if there's poor liquidity.
Or if it's trading in some unknown markets with zero coverage.
Something along those lines.

4) Again, isn't your example supporting what I said to begin with? The apparent information here is all the available financial data. WB viewed the branding and the future earnings to be far superior. That's his interpretation of the business's strengths. So he applied his knowledge when everyone else couldn't see it.

(12-10-2017, 09:17 PM)TTTI Wrote: This is really just something technical and prob unimportant, but since you brought it up, just want to comment that the name doesn't mean it's the "parent company"
You could technically, incorporate a "ksirownsBBR Pte Ltd" company and buy 0.00001% of the company. Don't think "ksirownsBBR" will be the parent company. Anyhow, that's not really important.

As for the 2nd point about shareholder alignment with the interests of management, that's up for interpretation.
I don't think one can tell whether there's alignment of interests JUST by looking at the dividends, or the personal stake of the CEO.

I do agree with you though, that the fates of the management and the shareholders are not perfectly aligned.
Just that I don't think you can tell from looking at the div payout or Andrew Tan's stake.
(My conclusion is derived from my personal interactions with the CEO and Chairman)

That's a pretty non-optimized way of concluding that Mgt's interests are not NOT aligned with shareholders. I realize (including myself making such mistakes) that we tend to overweigh personal interactions with Mgt - maybe because impressions are easier to create via memories and one might deem such "privileged" interactions as been scarce and hence become more important - all these are behavioral heuristics that we suffer. It would be gold to hear good coming from their competitors or independently sourced suppliers, but if from Mgt's own mouth - the discount factor has to be really large and generally I found it is better to underweigh rather than over weigh it.

I am more towards ksir's stance of seeing the structure and what they do. Of course, there is no perfect alignment that we are discussing. We are just focusing on the borderline between "sufficient alignment" vs "not enough alignment" for the OPMI.

That said, i think personal interaction with Mgt still has a place for fundamental analysis. Been in a corporate place, i am sick of all the Mgt mambo jumbo....So what i like to throw to Mgt generally - (1) I ask about their problems, (2) I act like a difficult shareholder (effectively asking d**b questions and see how they respond (observe closely for "face change"), (3) I point out their prior mistakes and see whether they explain it away......Actually, i think the way President Trump questioned those associates in The Apprentice has some points we can adopt

(12-10-2017, 07:41 PM)karlmarx Wrote:

(12-10-2017, 02:45 PM)sgmystique Wrote: In this case it seems very obvious that somebody seems to know what is happening behind the scenes and is buying in anticipation. 

Very difficult for the layman to have conviction in such a story till the story is out!!!

Maybe they do, or maybe they don't. Regardless, I personally think it is not a good habit to buy when you do not understand what is going on.

Such occurrences are not uncommon in the market. I have missed out on all of such opportunities, especially those that lead to a buy out or large dividend. But I don't expect myself to be able to pick the winning stock of the day/week/month all the time. I only hope that I am correct in those I have chosen.

Can only agree with you karlmarx 

(13-10-2017, 09:24 AM)weijian Wrote:

(12-10-2017, 09:17 PM)TTTI Wrote: This is really just something technical and prob unimportant, but since you brought it up, just want to comment that the name doesn't mean it's the "parent company"
You could technically, incorporate a "ksirownsBBR Pte Ltd" company and buy 0.00001% of the company. Don't think "ksirownsBBR" will be the parent company. Anyhow, that's not really important.

As for the 2nd point about shareholder alignment with the interests of management, that's up for interpretation.
I don't think one can tell whether there's alignment of interests JUST by looking at the dividends, or the personal stake of the CEO.

I do agree with you though, that the fates of the management and the shareholders are not perfectly aligned.
Just that I don't think you can tell from looking at the div payout or Andrew Tan's stake.
(My conclusion is derived from my personal interactions with the CEO and Chairman)

That's a pretty non-optimized way of concluding that Mgt's interests are not NOT aligned with shareholders. I realize (including myself making such mistakes) that we tend to overweigh personal interactions with Mgt - maybe because impressions are easier to create via memories and one might deem such "privileged" interactions as been scarce and hence become more important - all these are behavioral heuristics that we suffer. It would be gold to hear good coming from their competitors or independently sourced suppliers, but if from Mgt's own mouth - the discount factor has to be really large and generally I found it is better to underweigh rather than over weigh it.

I am more towards ksir's stance of seeing the structure and what they do. Of course, there is no perfect alignment that we are discussing. We are just focusing on the borderline between "sufficient alignment" vs "not enough alignment" for the OPMI.

That said, i think personal interaction with Mgt still has a place for fundamental analysis. Been in a corporate place, i am sick of all the Mgt mambo jumbo....So what i like to throw to Mgt generally - (1) I ask about their problems, (2) I act like a difficult shareholder (effectively asking d**b questions and see how they respond (observe closely for "face change"), (3) I point out their prior mistakes and see whether they explain it away......Actually, i think the way President Trump questioned those associates in The Apprentice has some points we can adopt

well.
hmmm. Not sure if I can be any more subtle about this. 
And I didn't really wanna bring this up in a public forum.

But seeing that management threatened, in writing, to sue me if I sent the media our correspondence, nope, i sure as hell don't think i was "overweighing personal interactions with Mgt" like u said. (their threat was without merit, but that's beside the point)

So I believe your impression of "personal interaction" is a tad different from mine.

honestly, 1), 2), 3) that you mentioned are all pretty generic and basic. Which shareholder wouldn't know to ask that? And how much headway would you get with these questions? Zilch. Nothing.
I could probably give you their answers right here right now. In fact, that's what IR consultancy outfits like Waterbrooks are for. They represent so many companies (generically!) that those 2 individuals know TTI by now. And not in a fond way, mind you.


There are only a few management teams which would not only bother to answer you, as a puny minority shareholder, honestly and truthfully. And guess what? Those that would, I find that I never really needed to ask them anything to begin with. 
I just stay out of the way and let them run their show.

To be clear, neither am I saying that looking at the structure and data doesn't tell us anything about shareholder alignment. It does. Particularly so for the remuneration structure.
I was replying specifically to the points about looking at the dividend and the CEO's shareholdings.
I think I would be able to find many companies whereby the dividend payout is relatively low, and the CEO owns minimal shares.
We can't say just by looking at these 2 parameters, that the management is not aligned with the common shareholders.

(13-10-2017, 12:03 PM)TTTI Wrote:

(13-10-2017, 09:24 AM)weijian Wrote: That's a pretty non-optimized way of concluding that Mgt's interests are not NOT aligned with shareholders. I realize (including myself making such mistakes) that we tend to overweigh personal interactions with Mgt - maybe because impressions are easier to create via memories and one might deem such "privileged" interactions as been scarce and hence become more important - all these are behavioral heuristics that we suffer. It would be gold to hear good coming from their competitors or independently sourced suppliers, but if from Mgt's own mouth - the discount factor has to be really large and generally I found it is better to underweigh rather than over weigh it.

I am more towards ksir's stance of seeing the structure and what they do. Of course, there is no perfect alignment that we are discussing. We are just focusing on the borderline between "sufficient alignment" vs "not enough alignment" for the OPMI.

That said, i think personal interaction with Mgt still has a place for fundamental analysis. Been in a corporate place, i am sick of all the Mgt mambo jumbo....So what i like to throw to Mgt generally - (1) I ask about their problems, (2) I act like a difficult shareholder (effectively asking d**b questions and see how they respond (observe closely for "face change"), (3) I point out their prior mistakes and see whether they explain it away......Actually, i think the way President Trump questioned those associates in The Apprentice has some points we can adopt

well.
hmmm. Not sure if I can be any more subtle about this. 
And I didn't really wanna bring this up in a public forum.

But seeing that management threatened, in writing, to sue me if I sent the media our correspondence, nope, i sure as hell don't think i was "overweighing personal interactions with Mgt" like u said. (their threat was without merit, but that's beside the point)

So I believe your impression of "personal interaction" is a tad different from mine.

honestly, 1), 2), 3) that you mentioned are all pretty generic and basic. Which shareholder wouldn't know to ask that? And how much headway would you get with these questions? Zilch. Nothing.
I could probably give you their answers right here right now. In fact, that's what IR consultancy outfits like Waterbrooks are for. They represent so many companies (generically!) that those 2 individuals know TTI by now. And not in a fond way, mind you.


There are only a few management teams which would not only bother to answer you, as a puny minority shareholder, honestly and truthfully. And guess what? Those that would, I find that I never really needed to ask them anything to begin with. 
I just stay out of the way and let them run their show.

To be clear, neither am I saying that looking at the structure and data doesn't tell us anything about shareholder alignment. It does. Particularly so for the remuneration structure.
I was replying specifically to the points about looking at the dividend and the CEO's shareholdings.
I think I would be able to find many companies whereby the dividend payout is relatively low, and the CEO owns minimal shares.
We can't say just by looking at these 2 parameters, that the management is not aligned with the common shareholders.

I see, thanks for clarifying the "personal interaction" - it was too subtle for me to pick it up.

As for (1), (2) and (3) - you would be surprised that alot of OPMI don't ask such kind of questions - or they simply pick up literally what is been said, without thinking the reason/s behind themselves asking such questions and the intent/bias of the person who is answering. These are simple questions (maybe to you), but the complexity is in deciphering what they imply based on the answers.

The 2 parameters are just to point 2 out of the MANY.
To invert, why do you think the Management interest is aligned with Opmi?

To me, to point out few more what they have done:
1. Take “exciting” construction projects with tiny or negative margin, guess you can name a few of them better than i could.
I’d say Management interest is in “enriching” their “boast” list and not optimising profit or sustainable business for OPMI (study on TTJ as compared to Yongnam points out which is more aligned with opmi).
2. Get into hype (greentech, ppvc etc)
Those could be “future” but first mover don’t necessary have the advantage but surely have to bear the cost.
Independently, those decisions are NOT bad to opmi but if we compared to the alternative of buying back shares at S$0.16 (at the time when they made those decision), the result is damaging to all shareholders.
Management with interest alignment with shareholder would compare the return of buying back shares (which is ridiculously high bar) as compared to any projects that they are trying to venture into.

I reduced my stakes once it’s clear that the interest of management is not aligned with opmi.
I kept some of my stakes because it is damn undervalued and hoping that some outside parties will have the same view and come in to disrupt the status quo! Which probably is currently wip.