My name is Justin Teo, and I’m an investor from Malaysia. I know it sounds cheesy, but I’m completely in love with the investing process. I’m here to talk about my ideas on investing, have some fun, build a list of potential clients for my future investment firm and maybe get a cut of some AdSense money.
Hey yo, it’s been a while. Since my last blog post, I have left my job as an investor relations consultant to focus on the final level of the CFA exam, play some PS4, and do some traveling. I also aim to set up my limited partnership similar to how OGs like Warren Buffett and David Einhorn did when they were starting out.
I got into the corporate game to get some experience on how to run a firm, and to be in the shoes of an employee to learn how to better motivate people in the future. Overall, I gained a lot from the 2 years at my previous job, but the rat race just isn’t for me. I am a motherfucking dragon, and I need the autonomy that is not afforded by most early stage jobs to do my best work.
On my goal to become a CFA charterholder, I got my hustle on preparing for the level 3 exam for the past few months, annnnnd… I fucked up the essay portion again this year. But at least I did my best this time around instead of just taking a nap like the last time, so yay for effort?
Anyway, in this article I will be doing a quick analysis of ZOZO, Inc. I purchased 100 shares in ZOZO a couple months ago at 1,859 Yen per share. For the financial year ended 31 March 2019, the bulk or 96.3% of the company’s gross merchandise value came from its ZOZOTOWN fashion e-commerce site.
Update on the Greedy Dragon portfolio: Since my last blog post, apart from my investment in ZOZO, I sold all my shares in Cloudpeak Energy at USD0.19 per share (fucking dumpster fire investment that one turned out to be). I also sold all my shares in Magni-tech at RM4.50 per share because I needed to fund something on the side, and of course the moment I sold it the stock kept going up to RM5.10 now. Sometimes I feel I'm destined to lose, but fuck fate.
The main reason I like ZOZO is its strong growth rate and its ridiculously good return on equity. Net sales grew by 20.3% to 118,405 million Yen in the financial year ended 31 March 2019. Despite the higher revenue, net profit declined 20.7% to 15,985 million Yen from 20,156 million Yen in the previous financial year. The decrease in net profit was due to higher advertising expenses related to free of charge distribution of the ZOZOSUIT, delivery fee hike by their carrier, higher payroll costs to hire staff for their private brand, and an increase in other expenses.
Even with the lower net profit, the company generated return on average equity (ROAE) of 50.4% which is A5 Wagyu beef teppanyaki level of awesome. ROAE would be even higher had the company not record extraordinary losses of 3,394 million Yen (4,323 million Yen extraordinary loss in the previous financial year).
At net income per share of 52.20 Yen, and at my purchase price of 1,859 Yen per share, the price/earnings ratio at which I acquired the stock would be 35.6 times which I think is aight given its growth and insane ROAE.
The company forecasts that it will register a 14.9% increase in net sales to 136,000 million Yen for the financial year ending 31 March 2020, with net profit rising 40.8% to 22,500 million Yen. Of course, actual results may differ from forecasts.
I would also like to give a shout out to ZOZO’s management team for their decision to withdraw from its overseas private brand operations. This should reduce the cost structure and allow ZOZO to focus on building its private brand in Japan to a substantial source of revenue and profits before bringing its private brand overseas. It seems that ZOZO is being run like an actual business, which is becoming something rare these days, especially amongst tech companies that care more about being “woke” and other dumb shit like that.
There is a possibility that ZOZO’s private brand business that seeks to provide custom made clothes for each person’s unique body shape could turn out to be something big. I’m investing for their e-commerce site, but this could be a nice little extra if it works out.
Aight my value investing homies, this concludes my quick analysis of ZOZO. Right now I’m waiting on my oil investments to stage a recovery so I can sell down those positions (I pretty much have been for the past 5 years, and I'm looking like a real mark-ass bitch), as there are some really interesting things that I want to do with the Greedy Dragon portfolio. Till then, I will be playing some Sekiro and just chillin. Thanks y'all for reading. Take care and stay rational.
Sup, value investing hombres. Welcome back to another article on how the Greedy Dragon gets bent over and fucked by Mr. Market. So, Cloud Peak Energy (CLD) released their annual report, which revealed that it now has “substantial doubt about its ability to continue as a going concern” a.k.a we might be filing for bankruptcy.
This especially hurts because I already saw my holdings in Alpha Natural Resources go to zero a few years back when it filed for bankruptcy back then. I just didn’t see bankruptcy happening for CLD. No doubt things were pretty rough, but I didn’t expect things to get so dire just after a few bad quarters.
Update on the Greedy Dragon Portfolio: Since my last article on January 6, I sold all 150 of my shares in Skechers at USD32.23 per share. I also bought 770 shares in Northern Oil & Gas at USD2.47 per share, as well as 350 shares in Oasis Petroleum at USD5.65 per share.
Now, I don’t know if CLD will definitely file for chapter 11 bankruptcy, they might get bought out or get new financing or something. But I have no intention of sticking around to find out. On Monday, I will try to sell my entire position in the stock and save what meager capital I can from this position. The company has been bleeding cash and may face a liquidity crisis forcing it to resort to bankruptcy and wiping out existing shareholders.
I will probably look back at this fuck up one day and analyze where it all turned to fucking ash. But here are some of the probable contributing factors to this clusterfuck:
Arrogance: I have held on to a number of investments that plunged precariously, only for them to rebound and for me to profit from dollar-cost averaging (including CLD a few years back). I was too optimistic in believing that things would always work out in the end, perhaps this optimism and complacency hampered my ability to see the situation for what it really was.
It is also likely I didn’t want to admit I made a mistake, and therefore dismissed CLD’s symptoms as a cold when it was actually stage 4 penis cancer.
Shitty Industry: The shutting down of significant coal-based power plants in the US has turned coal mining into a very challenging industry, especially considering the high fixed-costs of coal miners. I should have taken Warren Buffett’s advice to steer clear from industries with poor economics. It don’t matter how much I learn about investing if I don’t digest and apply the knowledge. I guess I’m still a moron after all these years.
Termination of credit facilities: I should have recognized it as a warning sign when CLD terminated its credit facility a few months back, and not replaced it with a new one. Either no one was willing to lend them money, or the facility would come with very high interest rates and covenants.
Use the fucking technology: While unrelated to CLD, I always just tell my remisier what I wanna buy and sell and he helps me make the trade. I therefore have no power to buy or sell once office hours is over in Malaysia. I wanted to sell all my CLD shares when I read their annual report Friday night Kuala Lumpur time (aka morning New York time), maybe I would have salvaged some capital if I sold early in the trading day. Now I’m afraid that I might get back close to nothing. I gotta sign up for an Interactive Brokers or something in future that lets me trade foreign markets anytime.
I guess I’m gonna go get some food now to try and make myself feel a little less like a pendejo. Thank you
Whaddup guys, this will be a short post on what I have been doing for the Greedy Dragon portfolio. 2019 seems to have started on good footing huh? I for one hope the market recovery continues as I am almost out of ammo. But then again this could be Mr. Market taking us out to dinner before giving us another fucking.
Anyway, the following are the stocks I bought/sold for the Greedy Dragon Portfolio since my last article:
Sold 200 or all the portfolio’s shares in Natural Resource Partners at USD37.92 per share. Didn’t want to sell it but I needed the cash to buy other stocks.
Bought 1,000 shares in Cloud Peak Energy at USD0.74 per share.
Bought 530 shares in Northern Oil & Gas at USD2.37 per share (only a part of my original order was filled).
Bought 500 shares in Oasis Petroleum, 200 shares at USD6.22 per share and 300 shares at USD4.95 per share.
If I had a sizable cash position, then I would be rooting for the market selloff to continue. But alas I don’t, and I’m forced to mostly sit out what could potentially be an attractive money-making opportunity.
Cash may seem like trash in the good times, but it could potentially be put to work in opportunities that could double, triple in value, maybe even more during market selloffs. Let this be a lesson to me to maintain at least 10% of my portfolio in cash at all times, except maybe in the depths of a crisis when I have invested all my cash. Preferably, I hope that I would have the fucking foresight to build a cash position of more than 20% of my portfolio when the market starts to get optimistic.
I exclude emergency cash reserves from the equation; that would be separate from my portfolio and maintained at all times just in case.
Of course before an investor slams his dick or her tits on the table and bet big during a downturn, he or she needs to make sure that they have a sound financial base. If you feel uncomfortable with your current debt situation then maybe you should reduce debt before buying more stocks. Sometimes the market just sells off because people are pussies, but it could also be because the economy is slowing. If that’s the case, income from your employment could be at risk and a high debt burden can really fuck you up.
I also think that investors, once they have built their portfolio up to a certain size, should allocate some of their portfolio to cash-producing assets such as dividend-paying stocks, bonds and rental properties. In the good times the cash flows build up you war chest, and in prolonged economic contractions it allows you to keep on investing even when your cash holdings run low.
Anyway this is just my take. But what the fuck do I know? I’m just an asshole who gets a hard-on for investing. Have a good 2019 y’all, or at least try to. Thank you for reading. Take care and stay rational.
Disclaimer: There may be errors in my calculations.The purpose of this article is to present the performance of my portfolio. This article does not represent advice to buy or sell any stocks. I may, at any time, sell some or all of the stocks that were presented or appeared in this article.
Hey guys, how have y’all been? Things got really fucked up, huh? And if you think that the selloff in the general market from fearful motherfuckers who can’t hold on to their 4 inch dicks (when fully erected) were bad, the oil sector is in the fucking toilet. I felt a bit pleased with myself when I finished calculating the returns on the Greedy Dragon portfolio as at 30 September 2018*, I mean an annual internal rate of return of approximately 8.2% over 5-years isn’t great or nothing as it still trailed behind the 12.2% return of the S&P 500. However,t it still was decent considering all my screw ups and painful lessons learned. As at 30 November 2018, the portfolio's 5-year annual internal rate of return plunged to around 4.4%.
Greedy Dragon Portfolio update: Since 30 September 2018, I sold 350 shares in Oasis Petroleum; 200 shares at US$14.26 and 150 shares at US$14.28. I also sold 1,200 shares in Northern Oil & Gas; 800 shares at US$4.02 and 400 shares at US$4.41. Finally, I sold 2,000 shares in Maybank at RM9.65. In terms of buys, I bought 900 shares in Cloud Peak Energy at US$1.50. I also bought 300 shares in Oasis Petroleum at US$7.30 per share.
However, just within two months everything went to shit as I saw RM40,000 in market value vanish. Anyway, please allow me to present my portfolio on 30 September 2018*, and on 30 November 2018 after some fuckery by Mr. Market (said fuckery may continue well into the future).
*30 September 2018 marked five years and a month since inception of the Greedy Dragon portfolio; I forgot a bought my first stock for the portfolio somewhere in early September or late July instead of late September.
Greedy Dragon portfolio as at 30 September 2018
Note on tables: Capital gains exclude forex gains/losses and transaction costs.
Average purchase price
Current value of holdings in MYR
National Resource Partners
Alpha Natural Resources
Northern Oil & Gas
Net portfolio value
I used to display total returns including dividends but won’t be doing that this time around as all the letters informing me of my dividends is in my hometown. It will also take too damn long to calculate it.
Shares sold since inception of portfolio
Average purchase price
Average price sold
National Bank of Greece
Banco De Chile
US$ 72.82 50
Mongolia Growth Group
Hong Leong Industries
First Republic Bank
Northern Oil & Gas
Natural Resource Partners
Greedy Dragon portfolio as at 30 November 2018 (when shit has hit the fan)
Average purchase price
Current value of holdings in MYR
National Resource Partners
Alpha Natural Resources
Northern Oil & Gas
Net portfolio value
You may have noticed a significant increase in cash. This is due to my recent purchase of a house in my attempt to appear as an adult. I'm not sure exactly how much I will be withdrawing from the portfolio though, but it will be close to RM50,000 to help pay for the down payment of my new house. I guess one good thing about having to raise cash for the down payment is that I trimmed some of my oil-related investments at close to the 52-week high. However, this has nothing to do with skill. It was a last minute decision to sell that happened at the right time.
Yeah, taking large paper losses is tough, especially when my liquidity is currently stretched. But I have been through much worse in my investing journey, like the great financial crisis or the third or fourth time oil stocks plunged in the past few years. This current bullshit is nothing. I just gotta suck it up and hustle to scrape together capital to keep investing when fear is running rampant in the markets.
It is in these tough times where the real money is made. And although I don’t feel it right now, I know that I should be excited that I have the opportunity to tap into my analytical skills and guts to navigate this chaotic period and emerge stronger at the other end. This is the chance to prove to myself that I am legit, and not some jerk off pretending to be a value investor. As Omar Devone Little, one of my favorite TV characters ever, once said: “How you expect to run with the wolves come night when you spend all day sparring with the puppies?”
Thank you for following me on my investing journey so far, and I hope you’ll check in from time to time. Take care and stay rational.
Whaddup, my fellow value investing aficionados. Welcome back to another stock analysis. It has been a long fucking time since I did one of these. Between studying for the CFA level III exam, work, and Netflix, I barely had the time (nor the motivation, frankly) to find new investment opportunities.
Speaking of the CFA, your boy got his bitch made ass handed to him. I had a hard time articulating the answers in my head for the essay session, I was fucking around writing and erasing the answers to the first four questions (there were 10 questions) for 2 hours before giving up and taking a nap like I used to do way back when I was a delinquent in high-school. I will go ahead and chalk up my first failure in the CFA programme as a “learning experience.” Anyway, y’all didn’t come here to hear me bitch, so let’s get down to business.
Bank of Georgia Group PLC is listed on the London Stock Exchange, and is recently trading around 17 Pounds per share with market capitalization of approximately 820 million Pounds. In this article I will attempt to analyze the country risk of Georgia and the fundamentals of Bank of Georgia Group.
Update on the Greedy Dragon portfolio: Since my last article, I bought 200 shares in Barclays at USD10.00 per share, 350 shares in Cloud Peak Energy at USD2.62 per share, 15,000 shares in Huayang at RM0.48 per share, and 200 shares in Qudian at USD6.11 per share. I also sold 1,000 shares of Northern Oil and Gas, 500 shares at USD2.88 per share and another 500 shares at USD3.65 per share.
Georgia is situated in the Caucasus, between Russia and Turkey. Not the best of neighborhoods if you ask me. A worrying trend is the continued seizure of territory by Russia, which now occupies 20% of Georgia’s internationally recognized territory (source: Business Insider). According to the article, Russia has also warned that the admittance of Georgia into NATO could provoke a terrible conflict. From an investor’s perspective, the political risk of investing in Georgia is substantial.
Georgia has a population of about 3.7 million and GDP per capita of around USD4,300. According to The World Bank, the Georgian economy expanded at a healthy pace of 4.8% in 2017. The services sector contributed 66.2% of GDP, while industry and agriculture contributed 23.4% and 9.6% respectively (source: Index Mundi). I think about half of the country’s labour force works in the agriculture sector.
The country is ranked as the 16th freest in Heritage’s 2018 Index of Economic Freedom.If y’all know anything about me, few things give me a hard-on like a country which strives for economic freedom.
According to the Ministry of Finance of Georgia, Government debt-to-GDP stood at 44.7% as at end-2017, which is manageable. However, investors need to pay attention to external Government debt-to-GDP, which stood at 35.3% as it could become significant in the event of a sharp depreciation in the Georgian Lari. Overall, I think that Government debt is at a manageable level.
Georgia had an estimated budget deficit of 3.9% in 2017 (source: Index Mundi), which is certainly something to keep an eye on going forward.
Georgia’s inflation rate stood at 6% in 2017 (source: Statista), but has moderated to below 3% in recent months (source: Trading Economics).To effectively compare investment opportunities from different countries, it is important to adjust revenue/profit growth, return on equity, and the earnings yield (inverse P/E) by the difference in inflation rates.
The unemployment rate is rather high, standing at 13.9% in 2017 (although it is improving, and is at the lowest point since 2004); the youth unemployment rate stood at 27.1% in 2017 and has also been improving (source: Trading Economics).
To summarize the country analysis for Georgia, it has significant potential for growth given its low GDP per capita. Its free market policies is also a breath of fresh air in a world mired by socialism a.k.a economic AIDS. If left alone, I’m confident that Georgia will thrive. However, I gotta be honest, the political risks and high unemployment rate are a turnoff.
The fundamentals and valuation of Bank of Georgia Group is like waking up at 11 am on a Saturday morning, lazing in bed for an hour or two, then going to grab a huge lunch. In other words, they are pretty damn good.
The banking business posted solid return on average equity of between 21.9%-25.2% in 2015-2017.
Net profit increased 19.3% yoy in 2017 with cumulative net profit of the retail banking and corporate banking businesses standing at GEL 355.6 million.
However, net profit for 1H18 decreased 13.4% to GEL 147.7 million due to net non-recurring items of GEL 47.0 million as well as higher taxes attributed to GEL 30.3 million one-off impact of re-measurement of deferred tax balances, partially offset by a GEL 8.0 million demerger related corporate income tax gain. Profit before non-recurring items and tax increased 27.8% to GEL 231.2 million.
Client deposits & notes rose 26.9% and 24.7% yoy in 1H18 and 2017 respectively to GEL 7.2 billion and GEL 6.7 billion respectively.
Net interest margin stood at between 7.3% and 7.7% in the past 3 years, while impairment charge on average loans to customers stood at between 2.1%-2.9%. Non-performing loans to gross loans to clients stood at 3%, and the Bank of Georgia Group had a non-performing loans coverage ratio of 110.5%.
As at 30 June 2018, the Bank of Georgia Group had a tier 1 capital adequacy ratio of 12.5%; the minimum required tier 1 capital adequacy ratio was 9.9%. Bank of Georgia Group’s liquidity coverage ratio stood at 129.8% as at 30 June 2018, which is above the minimum required liquidity coverage ratio of 100%.
Loans in local currency accounted for 41.7% of the total loan book as at 30 June 2018, while client deposits in local currency represented 37.9% of total client deposits. It is important for investors to monitor the gap between foreign currency assets and foreign currency liabilities; some really fucked up things can happen if the gap grows too wide on either side. Asset-liability matching, bitches.
According to my very rough calculations, trailing twelve months earnings per share stood at GEL 8.0 per share after adjusting for one-off items and the issuance of 9.8 million Bank of Georgia Group Shares to Georgia Capital in relation to the demerger exercise. At the time of writing, 8.0 GEL is about 2.36 Pounds. Given Bank of Georgia Group’s closing price of 17.07 Pounds on 28 September 2018, the stock will have a P/E ratio of around 7.2 times (according to my potentially flawed math anyway), which I find attractive.
Overall, I really like the prospects of both the country of Georgia and the Bank of Georgia Group, and I may take a position in the stock in the near future. However, it’s not a stock that I would bet the farm on. Alright, we have come to the end of the article. My next article will be a performance report for the Greedy Dragon portfolio. I can't believe five years have flown by just like that. Anyway, thank you for sticking around with me through these five years, all seven of you. Take care and stay rational.