Deep Value – 

Watched a Google Talk on Deep Value by Tobias Carlisle on YouTube:


  • Models perform better consistently than human judgement
  • Graham Net-nets still work


  • Apply Graham’s net current assets method to a basket of Chinese companies over a period of two years.

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Greek banks

Couldn’t resist the temptation, bought into two Greek banks, alpha and national, on low p/tbv at 1% of the portfolio each.

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Australia thoughts

Australian elections won’t be until 2017. The way Abbott/Cormann deals with the Australian economy will determine how extended the bubble becomes.

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Lesson in patience & Due Diligence

Losses taken on Want Want 151 hk.

The call position was bought for exposure to Chinese consumers, but no fundamental research was done on the company and I failed to identify the key drivers to its underperformance, namely disappointing earnings in its milk and snacks businesses.

Thankfully the position was sized to be under 1% of the portfolio.

But even so, I should have researched the position first and not allow it to run and lead to a loss on the entire position.

Other positions to be reviewed and monitored similarly.
Stop losses to be set up.

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Financial history

Food for thought: why is it that 1965 seems like an ancient time – to the point of irrelevance – in the collective memory of the financial industry while it is seen as relatively recent for political history – and still constitutes a fruitful source of study?

Does this reflect the short-termism of the financial industry or is the short-termism a consequence of the pace of change in the financial industry?

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Questions on China

Questions I will seek a view on for China:

China’s property sector:
– how scary is overcapacity?
– how leveraged are the companies?
– how expensive are the homes being built?

China’s banking sector:
– why are they valued at low price to books?
– how exposed are they to bad debt, wealth management products, local government projects?
– understand different types of shadow financing: entrusted loans, wealth management products, commodity-backed lending, LGFVs

China’s consumers:
– how will the New Economy look?
– how strong are Chinese households and what will they buy?
– which companies will be the beneficiaries of the change in the Chinese economy?

China’s economy: the current administration seems less intent on reported top line growth and is trying to tackle fundamental problems in the economy. What form will further “easing” take in China and how will they affect i) the Chinese economy, and ii) Chinese companies?

General questions:
– how likely is it for China A-shares to decline by another 10-20%?

Action: research needed on Chinese real estate, banks, consumers and economy

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Preparing for European QE

Lots of speculation that Draghi will announce QE this week, eurusd is down at 1.15 and the Swiss National Bank last week decided that it won’t defend the euro peg.

European QE should be a net positive for European households and corporates. As such, consider loading up on related stocks once QE announcement is made.

Trade idea: park cash in the Hong Kong index on sell-off of the FXI.
Then selectively buy European exporters.

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