Samudera Shipping

[Yoyo]

Hi Squirrel

Thanks for your response and sharing.  Based on my investing experience, I had much more misses than hits.  Samudera turns up as a hit, and I am reluctant to kill the would-be goose that lay the golden eggs (though its eggs may be fast exhausting).  

Based on my reading and monitoring of the shipping updates, slowly but surely I learned the containership industry better.  In my opinion, Samudera is trading at less than 1x Forward PE, making nearly USD 1m daily (assuming no sharp drop in shipments, highly unlikely as Samudera Indonesia raised its revenue target).  In the face of the various headwinds, I believe it will still make USD 0.4m - 0.5m in FY 2023.  If I am right, at the current price of S$0.765 Samudera pretty much pay for itself with the FY 2022 n 2023 dividend payout + net cash.  Thereafter, get the business for free. (I may be wrong, but that is my line of reasoning/justification).
   
I did not had the earlier conviction for a sizeable position in Samudera prior to its bull run, and had liquidated some along the way, only to find myself amassing more over time. As highlighted by specuvestor, high conviction and high allocation plays a big part. I certainly hope that my conviction and allocation is placed in the right context (Samudera shipping business environment). 
   
I hereby wish both you and myself a successful and enriching investment journey.

Vested core.

PS: my nick - Yoyo (up and down, shake shake, not steadfast) means that I cannot control my emotion well, and am not good in any industries, investment methodologies.

[weijian]

@Squirrel,
It is probably dumb to dump all "tech" stocks into the same basket, as much as it is dumb to dump all "value" stocks into the same basket. As you have demonstrated clearly in YZJFH thread, 2nd level thinking is about questioning the mood of the Market and its biases, and asking questions like "What if XXX.....?"

In general, the curse of value investors is that they are "too early to buy and sell". Of course, I don't think you are a "value investor" per say - as in, value investing doesn't define you as much as I believe it doesn't define me. The adoption of its principles (of value investing) is more important than its methods.

@Yoyo,
You are our resident accountant in VB, willing to share accounting concepts that allowed us to improve as an OPMI swimming with the sharks. I for one, as an accounting noob, would frequently post accounting concepts wrongly and be assured that you would help to correct them. Somehow been embarrassed in a public forum allows me to learn better.

I looked back at my investing records and saw that I had much more success (and peace) buying on the way up (ie. averaging up) than down. Cyclical stocks peak at low P/Es and bottom at high P/Es, counterintuitive to most other sectors. For cyclical stocks, I will be wary when Mr Market price their P/Es are amazingly low levels.....I mean, Mr Market could be wrong (and in general, the local SGX market is more inefficient than the US market) but I always feel that when one goes against Mr Market, he jolly well have a good reason.

I think there is much more nuances to "high conviction". Over the past few years, I have seen this 2 words been abused on blogs many times. Their high conviction is been developed from psychological biases - ie. confirmation biases and group think. Go and listen to someone who supports your views, and one will have higher conviction. Stay around homogenous groups and their similar views will give comfort.

So what is true "high conviction"? I think true "high conviction" is a tall order and hence rare. Inverting what I said earlier (about "mistaken" high conviction), I believe true high conviction is only developed when we intentionally seek disconfirming evidence and views and synthesize them against our default views. In general, I notice traders are more apt than investors in doing so. I for one, know this theory but struggle to put it into practice. As such, I have never had much "high conviction" but I am fine with it. Till the day when I truly internalize the trader's mentality into my long term investing behavior, I reckon I will stay out of "high conviction" because if not so, I would probably have fallen into the trap of confirmation bias/group think.

[ghchua]

I have been shoring up cash by selling positions such as Samudera. My view was that a recession is coming and I want to have the cash to pick up bargains along the way. That is why I sold Samudera even though I was of the view that I am leaving money on the table. (Alas that was a lot of money… haha). I won’t want to be “stuck” with the position if it falls.

Hi Squirrel,

It is always difficult to do market timing and I am not a fan of it. Yes, you might have a view that recession is coming, but what makes you think that the market isn't pricing in some of the recession risks at current levels? You mean you are waiting for governments in the world or economists to declare that - "Hey, we are now in a recession!" and then you start buying? By the time, you might be too late and markets might have gone up on the news of recession.

Markets are forward looking. Time in the markets is better than timing the markets.

[donmihaihai]

Based on my reading and monitoring of the shipping updates, slowly but surely I learned the containership industry better.  In my opinion, Samudera is trading at less than 1x Forward PE, making nearly USD 1m daily (assuming no sharp drop in shipments, highly unlikely as Samudera Indonesia raised its revenue target).  In the face of the various headwinds, I believe it will still make USD 0.4m - 0.5m in FY 2023.  If I am right, at the current price of S$0.765 Samudera pretty much pay for itself with the FY 2022 n 2023 dividend payout + net cash.  Thereafter, get the business for free. (I may be wrong, but that is my line of reasoning/justification).
   

If market cap is 1 X PE then earnings about SGD410M or USD300M. 
If market cap is 2 X PE then earnings about SGD205M or USD150M.

These are like 50% to 100% ROE base on 2021 end equity and on the b/s date, Samudera was sitting with lot of cash. 

Samudera vessels ROU and fixed assets on the same day was about higher than USD150M but way lower than USD300M depending on looking at cost or NBV. And Samudera added quite a some vessels in 2021

I don't know if shipping rate peaked, but do you see the elephant in the room? 

I remember seeing the same type of return in maybe 2006/7, and many shipping companies got listed in SGX then and most are not around now. Those years, beside container, rates for bulk and offshore shoot to the sky as well.

[Squirrel]

I have been shoring up cash by selling positions such as Samudera. My view was that a recession is coming and I want to have the cash to pick up bargains along the way. That is why I sold Samudera even though I was of the view that I am leaving money on the table. (Alas that was a lot of money… haha). I won’t want to be “stuck” with the position if it falls.

Hi Squirrel,

It is always difficult to do market timing and I am not a fan of it. Yes, you might have a view that recession is coming, but what makes you think that the market isn't pricing in some of the recession risks at current levels? You mean you are waiting for governments in the world or economists to declare that - "Hey, we are now in a recession!" and then you start buying? By the time, you might be too late and markets might have gone up on the news of recession.

Markets are forward looking. Time in the markets is better than timing the markets.

Hi ghchua,

I am not good at timing the market. I have only been seriously investing for the past 8 years or so (keeping track records and writing my own investment thesis for each investment etc) while dabbling for a longer period than that. I have never been able to time the market. Capitulated in the GFC at the exact wrong time. Held my maxed out portfolio throughout all the subsequent bear markets including the Covid induced crash. At the risk of looking arrogant, in my humble opinion, this has been the most obvious bear market in the making throughout my history of investing. This is a critical juncture for my personal portfolio at its current sizing. Handling the crisis appropriately would go a long way.

And I did not exit 100% of my portfolio. I pivoted my portfolio and at the peak of shoring up cash had 40% cash in my investible assets. So I won’t call myself a full market timer either. To each his own. So far I have plowed back part of  the warchest into those on my shopping list. I used to disregard market cycles as well but this time I chose to navigate the market differently.

And another issue I had was I couldn’t find anything cheap to buy. I took that to be the sign of a peak, and didn’t force myself to pick up stocks that didn’t seem cheap in order to have “time in the market”.

Again, everyone chooses to do differently and should do what they are most comfortable with. I hope all these comments doesn’t turn out to look like flaunting. I have been trying to be transparent in my postings here and on my blog, and will continue to do the same. Including sharing of why to buy into Samudera and my methodology of reversing out from Indonesia listed entity’s reporting. I could have not shared but I chose to do so.

[ghchua]

At the risk of looking arrogant, in my humble opinion, this has been the most obvious bear market in the making throughout my history of investing. This is a critical juncture for my personal portfolio at its current sizing. Handling the crisis appropriately would go a long way.

On hindsight, everything looks obvious. In your view, if this had been the most obvious bear market in the making, why did you hold 40% cash in the first place? I mean you should sell out everything and hold 100% cash. You can even short the market on its way down.

Having a long term perspective is important in investing. You cannot depend on one crisis alone to make or break your portfolio. Obviously, I also went through many crisis as well, be it dot com crash, GFC, 911, SARS, Covid, trade war etc. In every crisis, I remain almost fully invested at all times. I don't know what makes you choose to navigate the market differently this time round, but we should not change our investment process just because, you know, "This Time its Different".

There is no different. Every crisis will come and go. But our investment process should not differ from crisis to crisis.

[Squirrel]

At the risk of looking arrogant, in my humble opinion, this has been the most obvious bear market in the making throughout my history of investing. This is a critical juncture for my personal portfolio at its current sizing. Handling the crisis appropriately would go a long way.

On hindsight, everything looks obvious. In your view, if this had been the most obvious bear market in the making, why did you hold 40% cash in the first place? I mean you should sell out everything and hold 100% cash.

Having a long term perspective is important in investing. You cannot depend on one crisis alone to make or break your portfolio. Obviously, I also went through many crisis as well, be it dot com crash, GFC, 911, SARS, Covid, trade war etc. In every crisis, I remain almost fully invested at all times. I don't know what makes you choose to navigate the market differently this time round, but we should not change our investment process just because, you know, "This Time its Different".

There is no different. Every crisis will come and go. But our investment process should not differ from crisis to crisis.

As I have said, I am not good at timing markets and I am used to riding out the bear cycles by “time in the market”. By going 40% cash was a big deal to me. I still stand by my words that this time was obvious. People could see that inflation was coming and fed would have no choice but to raise rates. If you insist that was hindsight, then I have nothing to say. I don’t insist my approach is right, and I don’t insist your approach is wrong. However you seem very keen to insist my approach is wrong. I am not sure what your motivation is for the tirade against me. And I have never said “This time is different”. I said my approach is different because of my personal situation. My portfolio is at a critical sizing juncture that getting one bear market right would go a long way.

So what’s your motivation? Is it to extract a “you are right, I am wrong” from me?

Every crisis is different and I choose to handle it differently. You choose to do the same with every crisis that’s up to you. I have my personal goals to meet and my own opinions to follow. Mutual respect is important. There are a multitude of examples of people who treats every bear market differently but I shall not go into them, since my market timing is definitely not as good as theirs. I hope you have done well going through every crisis fully invested. I know for the time being I am better off having timed the market. Who knows what is in store in the future.

[BRT]

imho, this time is always different. to paraphrase one of the best descriptions ive heard somewhere - personal finance is 90% personal and 10% finance. mad respect to those who go against popular advice and make decisions they deem best under personal circumstances. your life, your money, your rules. just dont be wrong.

[specuvestor]

Hi Yo-yo

Since I saw my name being mentioned I thought I share with you this thread almost 8 years ago. The following discussions are good read as well

https://www.valuebuddies.com/thread-5579...l#pid98858

The purpose is not to dig old threads but to learn from each other and the suggestion remains consistent. There’s such thing as too much of a good thing. Focus on a few high convictions but I don’t think having an initial position of more than 10% is prudent (it can appreciate to ¼ of port is fine without further investment. Notice Berkshire as well) Case in point to study is Sequoia Fund on Valeant. Up to a point it is not averaging on a good stock anymore; there’s a difference adding to a 5% position to adding to a 25% position

Especially if invested in a very cyclical sector. You can correctly buy the right alpha stock and lose big. Just my 2cents to a fellow VB

PS as to asset allocate 100% or 0% is a non starter. Investing is not a binary buy sell decision. You could have bought 10% sell 3% today 4% later add 5% next year. And you have different asset classes to choose from. Or hold 40% cash if that makes you comfortable. Different people has different risk profile or temperament. Some ok to buy and hold; people like me don’t believe that and it’s ok cause it all depends on the timeline; both can be right. Timeline is the most underrated variable in investing

I’ve said many times that it’s free to be spectator and you don’t need to buy a ticket to watch and learn. But it’s also not exactly “free” cause you also spend some time and effort. It’s not binary either. My 1ct only

In both cases 中庸之道

Hi Squirrel

Thanks for your response and sharing.  Based on my investing experience, I had much more misses than hits.  Samudera turns up as a hit, and I am reluctant to kill the would-be goose that lay the golden eggs (though its eggs may be fast exhausting).  

Based on my reading and monitoring of the shipping updates, slowly but surely I learned the containership industry better.  In my opinion, Samudera is trading at less than 1x Forward PE, making nearly USD 1m daily (assuming no sharp drop in shipments, highly unlikely as Samudera Indonesia raised its revenue target).  In the face of the various headwinds, I believe it will still make USD 0.4m - 0.5m in FY 2023.  If I am right, at the current price of S$0.765 Samudera pretty much pay for itself with the FY 2022 n 2023 dividend payout + net cash.  Thereafter, get the business for free. (I may be wrong, but that is my line of reasoning/justification).
   
I did not had the earlier conviction for a sizeable position in Samudera prior to its bull run, and had liquidated some along the way, only to find myself amassing more over time. As highlighted by specuvestor, high conviction and high allocation plays a big part. I certainly hope that my conviction and allocation is placed in the right context (Samudera shipping business environment). 
   
I hereby wish both you and myself a successful and enriching investment journey.

Vested core.

PS: my nick - Yoyo (up and down, shake shake, not steadfast) means that I cannot control my emotion well, and am not good in any industries, investment methodologies.

[ghchua]

So what’s your motivation? Is it to extract a “you are right, I am wrong” from me?

To answer your question, definitely no. I am not here to determine or say who is right or wrong. That is not my intention at all. I am sorry if I made you feel that way.

I am just curious about your change in approach in this crisis, since you have said that you are not good in timing, and you are basically a "buy and hold" investor riding out bear markets.

Because I have seen investors who are very sure about a crisis, they hold 100% cash based on their opinion and short the market on the way down.

So, I guess for you, holding 40% cash is a big deal in anticipation of a crisis. And you did mention because of your personal situation, you have adopt a change in approach this time round.

This discussion is going nowhere and if you are uncomfortable, we can stop here. I respect your views but I am also very firm about mine. That is, one should not change their investment approach along the way in order to be consistent with their process. Stick to it in order to have a good outcome.

You have chosen to modify your process and I wish you all the best and have a good outcome as well at the end of it.