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Sunday, January 2, 2011

All About iCap Part 2

Side track for a moment as I criticize the govt for declaring yet another public holiday, this time for winning the AFF Suzuki Cup 2010. This is mind boggling. How come no public holiday when Nicol David won the world title? Seems to me that this move is to exploit an opportunity to earn some brownies from the "rakyat". Hell yeah, not from ME. Declaring a sudden holiday is decremental to businesses and work schedules. How do we expect to pull more investments in when we have to pay workers twice the salary to work on that day in order to meet delivery deadlines. Win AFF get one day holiday, win the world cup and we will get one week holiday? Feel happy that you got time off for personal things but do feel sorry as our country again shows that this is truly Bolehland. 

Now back into business, if you missed out Part 1, you can read it here. If not, I will jump straight into the investments by iCap fund ( Berhad). For simplicity sake I will take the market value of holdings of iCap dated on 16th June 2010 and back track it from present date. 

By order from largest to smallest in value: 
Estimate cash at hand: RM116mil (32.5%) 
Parkson Holdings RM49mil (13.7%)
F&N Holdings RM37.5mil (10.5%)
Boustead RM35.2mil (9.85%)
Petronas Dagangan RM31.6mil (8.85%)
Padini Holdings Bhd RM24.7mil (6.9%)
Suria Capital RM16.1mil (4.5%)
Integrax RM15mil (4.2%)
PIE RM13.5mil (3.7%)
Tong Herr Resources RM9mil (2.5%)
Malaysia Smelting Corp RM8.5mil (2.4%)
Mieco Chipboard RM900k (0.4%)
Grand total or also known as total NAV: RM357mil 

It disposed off:
Astro All Asia Networks Plc
Kuala Lumper Kepong Berhad
Lion Diversified Holdings Bhd
Poh Kong Holdings Bhd
Swee Joo Berhad
Hai-O Enterprise
A handsome gain of RM32mil with a cost of RM53mil.

It is not surprising that iCap is holding a lot of cash (32.5%) as valuations are getting increasingly expensive against good returns or upside potential. iCap usually buys when the market is low (I remember their cash level at that time was in the 15% range) and sells it before they peak well sometimes I feel that they exit too early. Much of the strength in the portfolio comes from the top 5 holdings (49.8%), anything less than 3% is off little importance to me as they barely shake the total NAV even if the share price goes rock bottom. I buy and monitor iCap from their strategy with special attention on their top 5 holdings as well as the potential upside they have.
Below are my views on their top 5 holdings:
Parkson Holdings RM49mil (13.7%)
-Covered previously here. Even with the share price trading sideways in recent months, I am optimistic and believed it has the most upside potential in the long run. iCap will hold this long term.

F&N Holdings RM37.5mil (10.5%)
-Covered previously here. Robust consumer stock that has shown its capability to change and rewards shareholders. My views have not changed on F&N, I can't find a good value to load up on it sigh. iCap will hold this long term.

Boustead RM35.2mil (9.85%)
-This choice by Mr.Tan would probably be because of the anticipation of government patrol vessel deal at that time as Bstead is the only company having the expertise in this area. And recently it added two more govt land deals together with a RM1bil MTN programme. A trading buy move from iCap.

Petronas Dagangan RM31.6mil (8.85%)
-Covered previously here. A fairly good stock to own, has good dividend yield and always in an expansion mode. iCap will hold this long term.

Padini Holdings Bhd RM24.7mil (6.9%)
-Planning to cover this counter soon, was already in my short list. Padini's share price has grown three fold from its bottom during the subprime crisis. Padini basically does what I call "ladies industry" which is resilient during bad times. iCap will hold this long term.

It is not wrong to criticize iCap for holding some terrible shares at times, even I don't understand why they load those. But it is not right to say that each investment will turn out fruitful. There has never been a successful investor that never ends up with some rubbish holding and make mistakes. Even Warren Buffett made a recent mistake loading up on ConocoPhilips shares for Berkshire near the top of its run. It happens. The key thing is to gain more than you lose, call it a 80/20 rule. 2 bad counters is nothing compared to 8 good counters, you still gain from the other 6 counters and probably learn a lesson or two.

I bought iCap at RM1.76 and not even a year it has surge to RM2.09 a nice 18.76% return. My take is simple, do not treat iCap as a trading buy, it must be held long term, literally 3-5 years or more. Rest assured your money is well invested with the likes of Mr.Tan Teng Boo and his investment team.

"Investing is most intelligent when it is most business-like" - Benjamin Graham


Anonymous said...

how about losing money in axiata?

Intelligent Investor said...

this blog presents you an insight on mr.ttb's response on axiata during the EGM.

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