The PLDT Ownership

I lose interest in the stock market every couple of months.  Once in a while though, something tickles me back.  Lately, it was the PLDT ownership issue.  Despite MVP's panicked predictions, I'm not sure why the decision is being questioned.   To a non-lawyer, it seems simple to me.  The Constitution lays out the onwership requirements.  The spirit of the law is for locals to retain ownership of crucial industries.   So even if PLDT's structure has been like that for decades, it's still questionable.  The only possible interpretation is that voting shares should be considered in computing for the ownership ratio.  It's not about source of capital at all; it's about control.  Anyone who claims that it's not (like MVP) is just trying to run circles around the law.  It's pilosopo.   Control will be with common share holders, preferred shareholders with voting rights and preferred shareholders or debtors with an option to convert to common stocks (or similar instruments). 

Is the constitution outdated?  I've no judgment about that, but it's simply irrelevant for this case.  That's it!  See you in a few months!

Oh speaking of preferred shares, I got a couple of few months back (Petron Preferred and AC Preferred).  They yield over 7% at the time so it's cool. 

Two Year High

Since my post just over a week ago, the market has performed well.  Most shares have since hit their two year highs.  On my part, I sold almost all my shares already. 

MEG  at P1.74
HLCIM at P7.78
BDO at P48.85
ABS at P45.15
JGS at 18.28

Was selling a wise choice?  We'll see.  But I know when I see RSIs over 65, I'll be selling.  I'm giving myself until end of September to buy back most of the shares I want in time for the year end window dressing.  I was too late for it last year.  If not, that's fine too.  I'm shifting most of my shares to fixed income securities for now.

Assessing Past Picks

If you recall a couple of months ago, I chose my personal Phisix and called it Nisix.   Today, I decided to check out how it has done over the past eight months versus the real index.  I won't bother to fix the table (I'm low on aesthetics you see), but it would seem that 4/7 of the stocks in my index outperformed the Phisix.    If I had placed equal weights on each stock, the next appreciation (including dividends) is 28% compared to the Phisix' 18%.  Note though that I've not been able to place dividend gains on the Phisix stocks so let's assume a 3% improvement for the Phisix at 21%.  Not bad.  My index would still be competitive.  I really got hit with the property stocks though as they sorely underperformed. 

As for my technical and fundamental picks, it's about half and half.  My fundamental calls were quite accurate, but my technical calls were a bit "optimistic".  I was hoping for a major correction in October in preparation for the traditional end of year window dressing but it didn't really happen.  Tsk.  Well, I think it's time to play again (I get bored for long stretches).  Let's see what's going on with this market, shall we?

 Nov 4 Open    July 31 Open    Gain    Dividend    Gain with Dividend
JFC    49.5    76.9    155%    1.43    158%
SMB    8.9    9.8    110%    0.27    113%
UBP    35    46.5    133%    2.2    139%
BDO    34    42.5    125%    0    125%
MEG    1.48    1.56    105%    0.019    107%
SMPH    9.8    10.76    110%    0.25    112%
ABS    30    40.5    135%    1.11    139%
Phisix    2908.5    3426.96    118%       

Pag-IBIG Bonds - Pro-Bank? Anti-Small Investor?

Hey, why isn't there any indication that the Pag-IBIG bonds will be issued to small investors?  Tsk tsk

In March 2009, the bicameral conference committee amended the Pag-IBIG Fund Charter which includes a key provision for Pag-IBIG to invest no less than 70% of its investible funds to housing.  According to principal sponsor Sen. Miguel Zubiri, “The new Pag-IBIG Fund Law provides for an integrated nationwide mutual provident savings system primarily for shelter finance.” I'm not sure what that means.  I think in essence that means improving real estate financing to poor people.  Economists?

Investing in the Philippine Stock Market Seminar

I'm thinking of conducting an "Investing in the Philippine Stock Market" Seminar. I'm just not convinced that there are enough people aware of the stock market. I'd probably focus on basic How To (process wise), Fundamental Analysis and very little Technical Analysis (since that's not my gig). I guess the market is more for people who want to be long term investors rather than daily traders.

If you think this is to your liking, please e-mail me at cianoy@yahoo.com so I can provide you with updates.

Just to be OC about it, make your e-mail subject header, "Philippine Stock Market Seminar".

See you soon!

Investment Performance Measurement (Frank J. Fabozzi Series) (Hardcover)

No, I haven't read this, but it's very highly rated in Amazon so I figured I'd share it with all of you.

Investment performance measurement is the quantification of the results achieved by an investment program. Understanding performance measurement is vital for anyone who participates in the investment process. Investment Performance Measurement is a comprehensive and integrated survey of the steps taken to measure performance as well as a reference guide to the calculation and interpretation of the various risk and return statistics commonly encountered by anyone responsible for selecting, monitoring, and evaluating the performance of investment managers.
Written in a clear and accessible style, with each concept developed through fully worked examples, this book is a valuable guide that provides you with critical insights into many areas of this important step in the investment management cycle.

This straightforward and well-rounded resource provides a step-by-step guide to the processes used by practitioners to analyze the performance of an investment portfolio.

Topics include:

Calculation of the returns earned by portfolios and portfolio managers
Measurement of the risks taken to earn these returns
Measurement of the risk and return efficiency of a portfolio
Attribution of value added over the benchmark to management decisions
Presentation and interpretation of returns calculated using industry standards
Filled with in-depth spreadsheet examples, Investment Performance Measurement gives you all the information you’ll need to understand and implement the techniques used to measure the performance of an investment.

Fixed Income Securities for the Retail Filipino Investor 2.0

Wow! I've been really busy with my new store. I missed the market action again. Anyway, as of the last episode, I've been cashing out a bit since the market's been on the rise for most part of 2009. And I talked about the concept of corporate bonds. So where do you get them?

I called RCBC since they're my stock broker and got a few referrals to RCBC Capital and eventually to the Investment Banking Group. Well the banker was friendly enough and he provided me with the information about the three listings (JG Summit, EDC and FLI).

I wanted to get FLI since it had the highest effective interest rate but he told me that he wasn't sure about the allocation. Apparently, BDO was prepared to take on the entire issuance. So much for retail customers. So I had myself lined up for FLI, but then I also reserved JG Summit.

I have to apologize to the banker though since I opted not to take JG Summit anyway. It's not because of the rate or my hesitation with the company. I got turned off by the forms! When I buy stocks, I just call my broker and tell him what I want. For bonds, there are like five different forms that you need to fill out. I'm just not fond of admin stuff. So I let it go.

I talked to my local BDO branch in Congressional avenue at about the same time, but I got the usual response that they didn't have any. So I'll scratch off that branch from my corporate bond suppliers.

About a week ago, I also got to talk to one of the managers of BPI Visayas. Well, she said she could hook me up with EDC. However, I was tentative since I had another soure from another BDO (I'm not sure if it was from a branch).

Oh by the way, from what I hear, the corporate bonds are not insured. Well, higher risk, higher rate. Right?

Where does this take us? There are different possible routes to getting your hands on corporate bonds. Explore all of them. Try branches, banks' capital groups, and investment banking groups. Someone's bound to know.

Note: I read earlier that the FLI bonds were 3x oversubscribed. Wow.

Any questions?

Globe Telecom - Pre 3Q09 Look

GLO, at P920, is technically providing mixed signals. RSI indicates that the shares are already oversold, but then again history has shown a prolonged period of being oversold. MACD and the lack of a formation leaves GLO shares still bearish. It looks like we need a couple more days to see where it goes.

The Globe site is not really helpful. Unless I'm searching blind, the reports are still from 2008. Are they lacking people from investor relations or what? Tsk. I could only find the press briefing, but not the SEC submission.

The PSE website indicates that GLO PER is at 10.8x. And since 2008, Wireless revenues have really flattened out. While income has been improving, that upside is limited if revenues don't improve. It remains to be seen if wireline and wireless broadband can carry the growth load. In such a case, Globe becomes more a dividend play than a growth one. For 2007 and 2008, the company has given over P100 / year in terms of dividends. For 2009, the company has given out P64. Could that be an indicator of a coming declaration? Maybe. Maybe not. The company's dividend policy is to pay out 75% of its net income.

Wait a couple of days before buying. 3Q09 results will be out on the 9th. Maybe that will coincide with an MACD turnaround.


Here's the financial info from Reuters:

(in billion pesos unless stated)
Q2 YR-AGO
Net income 3.25 vs 2.79
Core net income 3.23 vs 3.17
Service revenue 15.73 vs 15.58
EBITDA 9.34 vs 9.38


(in billion pesos unless stated) (Q1)
Net income 3.99 vs 3.42
Core net income 3.67 vs 3.51
Service revenue 15.96 vs 15.54
EBITDA 9.75 vs 9.89

Fixed Income Securities for the Retail Filipino Investor

Are you familiar with debt securities? From my own interactions with people, what are usually discussed as investments? Survey says! Stocks, Time Deposit and Real Estate. Once in a while, someone will talk about a business or a franchise. Is this true for you and your friends too? If so, then you are the market for this post.

Inevitably in my circles, when we talk stocks, either someone will ask me what is good to buy (since I was in the industry) or some noisy guy will talk the entire night (babangka) about this stock and the gossip related to it. If we do end up talking about time deposits, naturally we'll complain about the interest rate (did someone say 2%?).

Now, I'm not sure if I have blinders on but I really think debt securities are not being given enough airtime / advertising. I don't feel like we talk about it enough. Why not? The push from the government or corporations is not there I guess. Why not? It's only a guess and I've read it somewhere too; if you can borrow wholesale, why borrow retail? The latter has much more administrative costs.

Every week, the government auctions off billions of Pesos of T-bills / bonds that have rates better than time deposits. As small investors, it would be great to get a slice of the action, right? A slice of what exactly? In essence T-bills and T-bonds are like bank deposits. The bank borrows your money and pays you for interest. In the case of T-bills, it's the government that borrows your money. To answer the question, it's a slice of the government-borrowing-money-from-consumers.

In some cases, companies borrow money from investors. We usually call these corporate bonds.

Are Treasury & corporate bonds exactly the same as bank deposits? Not really. With deposits, you can demand payment (demand deposits); bonds are like stocks in the sense that they can be bought or sold. The old retail treasury bonds (RTBs) were listed in the Stock Exchange and can be traded there. And like stocks, they also have a market price (although not as volatile).

Anyway, what can we gather so far? Treasury or corporate bonds usually have higher interest rates than bank deposits, their prices fluctuate somewhat and can be bought and sold.

How is it different from stocks? With stocks, you own the company. The value of your investment is very directly related to the value of the company. With bonds, you are a creditor. You have a defined claim (how much you paid for and the interest). Your investment, while less exciting, is more secure. If everything goes awry, the bond holder will get paid ahead of the stock owners.

For my next post, I'll talk a little about how and where to get government or corporate bonds...

Fund Strategy - My Personal PHISIX

As a small investor, it's hard to keep track of all the different stocks. To be true to my investment philosophy, my trades need to have fundamental and technical backing. For that to happen, I need to define my own basket of stocks and follow their performance. I then foresee trading them during the technical cycles (months to years).

As an aside, I'm also planning to pull out some funds from equities and shift them to fixed income. I'm still looking for fixed income investment outlets.

What is my own little index? Any suggestions guys? Instead of Philippine Stock Index (PHISIX), I'll call my Nonoy Index, NISIX ;-) . These are the ones I penciled in because of my own biases, but I still have to study a couple of them:

- Banking - UBP & BDO
- Property - MEG & SMPH
- Telecom - GLO
- Food - JFC & SMB
- Power - None yet
- Media - ABS

I was checking the stock market page on the Philippine Star. Their table includes PERs of the stocks. It doesn't say what year the earnings are, but it's cool to have an indicator.