I wouldn't be too adverse to doing that with equity but I'd be careful doing so with leveraged LOC. No one position should take you out of the game (e.g. margin called).
Robusta,
Agree wholeheartedly on Forge. In my valuation tool I created in Excel it basically has Forge well under its intrinsic value and utilising an equation I put together has it at about 92% in terms of positive buying sentiment. (The higher the percentage, the more positive my system is in terms of buying the stock, Qantas for example gets about a 30% sentiment in my system).
If Forge can meet or better the consensus earnings estimates while at least maintaining their order book then, in my opinion, they must move back towards at least $7.
I'm very interested in following your portfolio Robusta as it seems to follow very closely in the strategy i'm developing.
Cheers
Thankyou for that Kermit, FGE is certainly one of my top picks. I think there are a few of us who follow the Graham, Buffet, Fisher, Montgomery style of investing.
The challenge for me is I see some value around and hear all the "bad" news (US debt ceiling, Greek debt...) and like a poker player I want to go "all in". The trouble with this strategy is the opportunity costs missing out on even better bargains if / when the Chinese miracle economy comes back to reality.
A handful of patience is worth more than a bushel of brains. - Dutch Proverb
Sometimes I am afraid I am short on both.
No worries there SKC it is a line of credit on my mortgage so no margin calls, only the chance of terrible losses or incredible profitsor more likely something inbetween.
Your thread title says "leveraged investments" so I thought the $30k LOC goes into a margin loan or something...I suppose it's good that's not the case.
I must admit I made that mistake and went 'all in' during the lows of last year and i'm paying for it a bit now with minimal funds to make some great purchases. I'm working towards finalising my strategy and my coded spreadsheets that will allow me to follow it. Would be interested in possibly sharing with you to get your thoughts once i've finalised it if your interested?
I'm basically working on 3 spreadsheets: Valuation, Portfolio, Trading.
Valuation - This excel file allows me to put in a stock code and instantly updates with current, historical and future valuations as wells as other data to allow me to make an investment decision.
Portfolio - This excel file tracks the portfolio I construct in terms of overall portfolio gains etc as well as individual stock gains, stops and price data.
Trading - Simply follows the buys/sells I make and provides statistics on the performance of my trades/portfolio.
Don't wish to hijack your thread, just thought you may be interested and happy to discuss further via PM.
Cheers
NEW INVESTMENT
SOO - Solco Ltd
This may seem like a strange decision when you look at the various State Goverments reduction in the Feed in Tariff schemes for residentual and small businesses. This may cause a tough year for this part of the business but with either a carbon tax or direct action in the long term I can see traditional electricity generation getting more expensive and solar getting cheaper, if current trends continue the price will quickly reach parity and not long after solar will be cheaper IMO.
SOO is much more than a importer of panels for your roof, they also have a profitable solar pumping division and are also involved in small to medium power generation projects for commercial and utilities as customers.
With no debt, about 1.8 x book value and a ROE of about 40% I think I will be happy to ride out the tough year to come and wait for the growth to take off.
Portfolio Position
Starting line of credit $30,000.00
Bought
7,142 x TSM @ $0.66 = $4713.72 (25/07/11)
546 x MCE @ $6.95 = $3797.70 (25/07/11)
853 x CCP @ $4.48 = $3821.44 (26/07/11)
385 x FGE @ $5.37 = $2067.45 (26/07/11)
291 x FGE @ $5.34 = $1553.94 (27/07/11)
29,524x SOO @$0.105 = $3100.02 (01/08/11)
Brokerage Paid = $79.95
Lenders Mortgage insurance $667.81 paid
Credit available $10,197.97
All ords @ 25/07/11 4603.80
Another one I've got.
I see this as more spec and haven't put much in at all. The industry as a whole is growing very fast, their topline revenue is growing fast but their bottomline is not growing anywhere near as quickly. It's hard to see a long run competitive advantage that they have. They essentially run a distribution business. Having said that I bought because the industry is growing so fast and the company has a decent bottomline growth rate.
maybe you should have followed me...??
TIGERBOI:
13th april 11,258 WPG @ $0.75 for $8443.....now $1.03 +37.33%
NEW INVESTMENT
ZGL - Zicom Group
Finally we disagree!
Sold my ZGL for 0.435 today. Even if earnings do increase over 12 - 18 months as projected...I just dont see this as undervalued anymore..IMO its about fair value...and when theres a whole host of companies going for MOS of 30%+ ive found it too tempting to switch...
Different views make a market however. My father still holds this stock so good luck to you both.
Have you look at their announcement and disect the numbers?
H1 NPAT was S$9.09m on S$71m revenue. The full year guidance are S$13-14m on S$146. That means in the second half they were busy (revenue $75m) but didn't make any money ($4-5m)..
Unless there are good seasonal reasons for changes between H1 and H2,
I tend to just pro-rate the latest half year for a yearly run rate. If you do that they are at a lower case of S$8m run rate (~A$6.3m, or ~3c EPS).
You are no longer buying value (you paid PE = 14). You are buying turnaround and putting faith in a fragile work economy...
I am looking forward to the annual report to really disect the numbers ,the fall in profit margin is a worry however ZGL in the half year has made a small acquisition PGH for $300,000 and is in a business that often has lumpy returns due to timing of payments for contracts and capital expenditure.
That is a good rule of thumb but sometimes you have to look past one good or bad half of growth.
I hesitate to bring this up but I do not look at PE at all when making investment decisions. The numbers I look at are ROE, equity/ share, debt/equity and cashflow. It is a long argument but when I am valueing a company why would I want to bring price into the equation, I want to value the business and then compare it to the price and buy or sell accordingly.
As for the fragile work economy I have no idea, boom, bust or muddleing through. I am however confident in the long term we need more oil and gas and ZGL will supply deck machinery to the ships.
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