S'pore banks are top three safest banks in Asia: Global Finance magazine

SINGAPORE : Singapore banks are the top three safest banks in Asia, according to the Global Finance magazine in its October 2010 issue.


DBS Bank clinched the top spot for the second year. OCBC took the second while UOB ranked third.

Globally, DBS Bank was ranked the 23rd safest bank, up one notch from 24th place last year.

OCBC was 31st while UOB was 32nd.

Global Finance said the banks were selected through a comparison of their long-term credit ratings and total assets of the 500 largest banks around the world.

It used ratings from Moody's, Standard & Poor's and Fitch.

Global Finance publisher Joseph D Giarraputo said banks that have strengthened their liquidity positions and the quality and quantity of their capital are recognised in these rankings.

He added that more than ever, customers around the world are viewing long-term creditworthiness as the key feature of the banks with which they do business.

This is on the back of the sovereign debt crisis in Europe and renewed concerns about the global economic outlook, which once again put the spotlight on bank safety. - CNA/ms

Another Debate On Property Or Stocks Investing - Part 6

Read older post on? Another Debate On Property Or Stocks Investing - Part 5

Read older post on? Investing in Property is far safer than stocks?

"It is much harder to find multi-baggers in properties as the Government is always watching closely and likely to introduce cooling measures to clamp down property prices from rising too fast." - Createwealth8888


Govt introduces new measures to cool S'pore property market


By Joanne Chan
Posted: 30 August 2010 0824 hrs

SINGAPORE: The government on Monday introduced more measures to cool the buoyant property market.

These include raising the holding period for which a home seller must pay a stamp duty and reducing the maximum bank loan amount for existing home owners who want to buy another property.

The measures, which take immediate effect, came as a strong economy and low borrowing rates have continued to push property prices up, sparking concerns of a property bubble.

Private property prices shot up by some 11 per cent in the first half of this year and have now exceeded the previous peak in 1996.

National Development Minister Mah Bow Tan said prices are "on the high side".

He said: "If the current momentum in the market continues, what will likely happen is that a property bubble will form. And when the bubble burst, and not if, but when the bubble burst, there will be severe implications for individuals, as well as for the economy on the whole."

So the government has moved to curb speculation and also encourage financial prudence among buyers.

The holding period for the seller's stamp duty has been increased from one to three years to discourage home owners from flipping. The seller's stamp duty was first introduced in February this year.

Another measure will impact those who have one or more outstanding housing loan. Home buyers who already have at least one mortgage will have to pay more cash upfront when buying their next property.

The minimum cash payment has been doubled from five per cent to 10 per cent of the home's valuation, while the maximum bank loan amount has been reduced from 80 to 70 per cent.

The government said the objective of the measures is "to ensure a stable and sustainable property market where prices move in line with economic fundamentals".

The Housing and Development Board (HDB) has also introduced anti-speculative measures to its resale market. These include increasing the minimum occupation period for non-subsidised flats to 5 years.

Mr Mah stressed that HDB flats are meant for long-term occupation, and not for speculation. Home owners can no longer own both private property and an HDB flat at the same time during the minimum occupation period.

So those who buy a non-subsidised HDB flat must sell off their private property within six months. Similarly, home owners of non-subsidised HDB flats will not be allowed to own private property before the minimum occupation period is up.

These changes will only apply to those submitting flat applications from August 30 and will not be applied retrospectively.

Mr Mah also gave the assurance that there will be more help for first-time home buyers.

The HDB will raise the supply of flats. Up to 22,000 new Build-To-Order (BTO) flats will be made available next year.

Together with the 16,000 BTO flats released this year, HDB will be offering more new flats over the two years than all the flats in Toa Payoh town today.

In addition, the waiting time for a BTO flat will be reduced by six months to 2-1/2 years.

To help the sandwiched class, those earning between S$8,000 and S$10,000 will now be eligible for flats under the Design, Build and Sell Scheme (DBSS).

HDB will also release land for 4,000 DBSS flats and 4,000 Executive Condominiums next year.

It said new sites for DBSS projects in Bedok, Hougang and Jurong will be put up for tender later this year. Sites in Punggol, Pasir Ris, Bukit Panjang and Tampines will also be released for the development of executive condominiums

$100,000 above valuation - clever or crazy?

Read old posting on? Why Think Of Selling Dream Home?

Createwealth8888:

So is he crazy? I said no and I believe he could well afford it and knew how to live his life!


"Does everything in your life have a price tag and can be sold for a profit?" - Createwealth8888

----------------------------------------------

The Electric New Paper :


Despite friends' dissuasion, our journalist buys Choa Chu Kang HDB penthouse at whopping $755,000.

29 August 2010

Yes, I paid $100,000 in cash-over-valuation (COV) for my HDB flat. No, I did not mistakenly add an extra zero to that figure.

"Gila" (crazy in Malay), said one friend. Totally exorbitant, chided another.

But I have only one question: How much would you pay for the home of your dreams?

I felt it was worth paying $755,000 for the four-bedroom executive maisonette in Choa Chu Kang, even though I feel that property prices have hit ridiculously high levels.

The 12-year-old flat has 87 years left on its 99-year lease.

The Business Times reported last month that the median COV for executive flats and five-roomers in hot areas, such as Bishan, was $70,500 and $52,500 respectively.

Sure, the amount I paid was more than that. But it wasn't an impulse buy.

My wife and I considered many things before choosing this flat and finally signing on the dotted line.

So what happens when the property market cools and prices start dropping? Will I regret how much I have put into my new home?The answer is no.

I certainly don't plan to sell. Not even if someone dangles a $150,000 COV offer.

That's because I've found my dream home, where one day you'll find me relaxing in my roof garden, sipping a home-made teh tarik and watching the world go by from my 12th-floor perch.

By then, I hope I won't even remember how much of a hole I'd burnt in my pocket

Read more? Is Home For You to Retire Or to fund your Retirement?

New measures to cool property market

SINGAPORE: The government said Monday that it will increase the holding period for imposition of Seller's Stamp Duty (SSD).

The SSD will be raised from the current one year to three years.

Another measure will impact those who have more than one outstanding housing loan.

Property buyers who already have one or more outstanding housing loans at the time of the new housing purchase will have to pay more money upfront.

The government will increase the minimum cash payment from five per cent to 10 per cent of the valuation limit.

Those with more than one outstanding housing loan will also see a decrease in the Loan-to-Value (LTV) limit for housing loans granted by financial institutions regulated by MAS.

The LTV will be lowered from the current 80 per cent to 70 per cent.

The measures will take immediate effect on August 30.

The government said the objective of the measures is "to ensure a stable and sustainable property market where prices move in line with economic fundamentals".

It noted that the property market is currently very buoyant, with prices increasing by 11 per cent in the first half of this year.

It added that while Singapore has enjoyed strong economic growth in the first half, growth is expected to moderate in the second half of the year.

Should economic growth falter and the market correct, the government said property buyers could face capital losses.

It has thus decided to introduce additional measures now to temper sentiments and encourage greater financial prudence among property purchasers.

-CNA/wk

What did I share with a guy called Noobz on our first meeting?

Potential Multi-bagger or Touchstone

Read on? Opportunity In The Stock Market?

How does a touchstone in a stock market feel like?

After you have bought that stock; its stock price never look back but raced ahead. Even after several market corrections, its stock price has never pull back to the level near your last purchase price. Then congratulate yourself as you may have found a Touchstone so don't ever throw it back to the sea out of habits. 

If you really need to realize some profit, then only sell part of it.

Did that guy called noobz still remember his takeaway? 

I don't know!

On the trail of the smart money

By Goh Eng Yeow


Timing an investment right is everything, a successful investor will tell you. (Createwealth888: Don't listen to those nuts who tell you that you can't really time the market and profit from it.)

You may want to play it safe by hedging your bets by sticking to buying only blue chips.

But if you make your purchases just as the stock market is experiencing a bull run, you may find yourself staring at a loss when the market corrects, even though there is nothing wrong with the blue chips that you bought.

That is the unhappy experience confronting many investors who believed - rightly or not - that they could not go wrong by parking their nest eggs in a cache of blue chips.

Some of them had bought into household names such as DBS Group Holdings, Singapore Airlines and United Overseas Bank (UOB) when the great bull run of 2007 was in full swing.

But even after the rebound in the past six months that saw share prices gaining by more than 80 per cent, these investors are still sitting on losses.

So a pertinent question to ask is whether timing an investment right is really so difficult.

Take the global stock market collapse in October last year. The Dow Jones Industrial Average plunged 14 per cent within a month, while Singapore's benchmark Straits Times Index (STI) lost 24 per cent.

The resulting loss in market confidence was so immense that many jittery investors bailed out of stocks altogether.

But around this time, legendary investor Warren Buffett took a contrarian view, and spent more than US$20 billion (S$28 billion) investing in United States corporate giants such as General Electric and Goldman Sachs.

He explained his rationale: 'Let me be clear on one point. I can't predict the short-term movements of the stock market. I haven't the faintest idea as to whether stocks will be higher or lower a month - or a year - from now. What is likely is that the market will move higher, perhaps substantially so, before either sentiment or economy turns up. So if you wait for the robins, spring will be over.'

His advice to investors: Be fearful when others are greedy, and be greedy when others are fearful.

Events in the past six months bore him out. He made a paper gain of US$2.8 billion on his Goldman Sachs investment alone.

Still, if you think that Mr Buffett is too tough an act to follow, there are local corporate titans worth tracking, like UOB chairman Wee Cho Yaw.

After keeping his powder dry in the past two years when share prices rose to record levels, Mr Wee sprang into action in March when the STI sank to a six-year low of 1,456 points.

While market gloom kept most investors on the sidelines, he picked up 800,000 UOB shares for between $8.25 and $9.01 apiece that month. Since then, UOB shares have doubled in price.

That same month, Mr Wee bought 680,000 shares in Haw Par Corporation for between $3.35 and $3.41 apiece. Its price has now almost doubled as well.

To cap what had turned out to be a remarkably busy but fruitful month for him, he launched a takeover on property conglomerate United Industrial Corporation (UIC), whose share price was then languishing well below its break-up value.

Despite the relatively low price of $1.20 apiece he offered for the rest of UIC shares, big investors such as Morgan Stanley - which presumably wanted to get out at any cost - sold their shares to him.

This enabled him to raise his stake in UIC from 30 per cent to 45 per cent and he made a tidy paper profit of $180 million as its price recovered.

The moves made by Mr Buffett and Mr Wee provide valuable pointers on investment strategies for investors.

For one thing, take with a pinch of salt the advice given by your financial adviser or bank relationship manager about the need to make your hard-earned cash work harder to give you better returns.

Even though bank deposits attract a paltry return in the current near-zero interest rate environment, it is good to hold some cash.

Otherwise, you may find yourself in the same boat as other cash-strapped investors who wish they had the means to snap up blue chips at bargain basement prices, as when the stock market went into convulsions last year.

The other lesson for investors is not to let their emotions cloud their judgment, as they react to the daily share price movements.

Take events in the past six months. In March, when share prices sank to their lowest levels in seven years, investors were so fearful that nothing could convince them to even look at the stock market any more.

Then in the past two months, they were panicked into buying shares at far higher prices, for fear that they might miss out on the rally altogether.

Is that the right approach to take in making your investments?

Surely not. A prudent way to take emotion out of the equation is to compile a list of companies you would love to own for the long term and the prices that you would like to pay for them.

If, for whatever reason, they suddenly become available at these prices, you should revisit your investment thesis, check if it is still valid and make your decision accordingly.

If you think you do not have what it takes to make your investment decisions on your own, try tracking the moves made by a corporate chieftain like Mr Wee instead.

He has spent his life tracking the share prices of the various companies he owns - UOB, Haw Par, United Overseas Land and UIC - and the timing of his purchases reflects a deep understanding of when they offer great value as investments.

You can't go far wrong in timing your investment decisions by emulating the moves made by such canny investors.

Why the guy was so talented, he has to give seminars?

Borrow the idea from La Papillion

** "BIAS" is a special feature in my blog where I get to say whatever I want with scant regards for your feelings. I'm not politically correct in this feature, so go ahead, judge me."

I am going to do another BIAS!

Read older posting? Me, No multi-baggers :-( (Revisit)

Read more? Monitor courses by 'trading gurus' but you don't be the next Jack!

Singapore Stock Picker wrote in the comment..."hey which day's newspapers did you see the ad? I saw it too and I was quite curious as to why the guy was so talented, he has to give seminars.."

I also attended a few of such free preview seminars on how to make money on stocks or property and other money making stuff.

Most of these "Gurus" may claim that they or their founders have made millions of dollars for themselves using the less known secret strategies of  money making techniques. They may even say that actually there was no need for them to conduct training course as they were already so rich; but they felt it was time for them to "GIVE" back to the society and to help small investors to make money.

They may further say that they don't really earn much as compare to what they could make from their money making secrets so it was indeed a very BIG sacrifice of their precious time for them to "GIVE" back but it was worthwhile to do it.

What did you see in the picture below?

If you still don't see it. Let me know. I will tell you.

To charge $X,XXX for a 2-day seminar is giving back to the society? What a joke? It is actually another income stream to the seminar owner.

Watch out! These "Gurus" will tell you that one should not be cheapskate on their investment or financial education as the cost for not doing so is much higher when you lose badly in your investment due to lack of knowledge and skills in trading or investing.

Since these "Gurus" are already millionaires themselves why is there a need to try to make peanuts from investor's education. To really give back to the society, the "Gurus" should approach SIAS to organize seminars for small investors at $XX based on cost recovery basis and stop squeezing the blood money from small investors who are so poor thing as some of them may have lost years of their saving through bad investment.

Gut or Intuitive Investing

Someone said: "those that does not do and not like to do analysis and still can make good returns based on their practical experience with stocks market, how can we fault them and insist they must do it our way. So, I am more liberal with regards to the need to do analysis."

Why not? That "practical experience" is better known as gut or intuition.

Read more on what I have said? When picking stocks, keep it simple?

Record Sing-dollar bond sales in August

Banyan Tree's $50m three-year, Sing-dollar bond sale adds to a flurry of debt sales in recent weeks


By CONRAD TAN

AUGUST is turning out to be the month for record Singapore-dollar bond issuance, with some $4.6 billion in bonds sold so far this month - more than a quarter of the total this year.

Companies have sold Sing-dollar bonds on 13 of the 19 business days so far this month, according to data compiled by Bloomberg.

Yesterday, luxury resort developer Banyan Tree Holdings said it had sold $50 million in three-year, Sing-dollar bonds, adding to a flurry of debt sales in recent weeks that have been snapped up by investors.

Companies have sold Sing-dollar bonds on 13 of the 19 business days so far this month, according to data compiled by Bloomberg.

'We expect the market to continue to be active in the second half of the year, and that borrowers will continue to opportunistically tap the market to take advantage of the historically attractive interest rate environment,' said Jason Khoo, head of debt capital markets for South-east Asia at HSBC, which managed Banyan Tree's bond sale.

On Thursday, shipping group Neptune Orient Lines (NOL) sold $280 million worth of 10-year, Singapore-dollar bonds, paying interest of 4.65 per cent a year.

Banyan Tree increased its bond issue size to $50 million from a planned $30 million, after receiving orders worth $118 million - or nearly four times the original offer. It will pay interest of 6.25 per cent a year on the bonds.

The firm will use the funds raised as general working capital, for capital spending and investment, and to refinance existing debt, it said.

Insurers bought 40 per cent of the bonds, while rich individuals and private banks bought 35 per cent, and other banks bought the rest.

Most of the bonds were initially allocated to investors here, but some were quickly sold on in the secondary market to offshore investors, particularly offshore private banks, Mr Khoo said.

Private banks have become big buyers of Sing-dollar corporate bonds, bankers say. The relatively high yield on corporate bonds such as Banyan Tree's is attractive to private banks' rich clients, at a time when Sing-dollar fixed deposits here are paying interest of less than one per cent a year - though bank deposits carry almost no risk.

The annual yield on Singapore government securities ranges from 0.33 per cent for one-year treasury bills, to 2.92 per cent for 20-year bonds.

Big companies such as NOL, property developer CapitaLand or state-owned Temasek Holdings - seen as less likely to default on their debt - can afford to pay lower interest on their bonds than small companies, and still attract investors.

The search for extra returns by investors has allowed more companies to sell long-dated bonds to lock in relatively cheap borrowing costs for long periods of time.

Of the $17.3 billion in Sing-dollar bonds sold this year so far - the most ever - $9.6 billion, or more than half, had maturity lengths of seven years or more. That compares with just 14 per cent of Sing-dollar bond issuances last year, when investors were jittery, and 43 per cent in 2008.

Previously, fewer investors were willing to buy such long-dated Sing-dollar bonds for fear that the bonds would be difficult to re-sell without incurring a substantial loss, if investors needed to cash them in before maturity.

But as more such bonds are issued, and then actively traded after the initial sale, potential investors have become more confident that a liquid secondary market exists for bond investors, allowing them to re-sell the bonds easily if needed, Clifford Lee, head of fixed income at DBS Group, said earlier this week.

Similarly, the success of recent bond sales has spurred interest from other companies, who can see that investors' appetite for such bonds is strong, Mr Lee said.

Risk-Reward Concept

This is a general concept related to risk and reward. When you take risk, you expect reward. In theory, when the risk is higher, you will expect more reward in order to invest; but for lower risk, you can accept lower reward.

Most investors can easily understand and can accept that the concept of a low risk and high return does not exist in the real world of investing. If such rare opportunity does happen,  investors will quickly chase the investment and cause its yield to fall.

But when it comes to investing in the stock market, some investors may choose to ignore or  blind to the general acceptance of risk-reward concept. They can believe that high yield low risk does exist in the real world of open and easily accessible markets. They may not believe that high yield may be an indication of high risk and tend to believe that the open market is wrong. Yes, mispricing can happen in a panic market but when the calm is restored the market is seldom wrong for long.

REITs. Simply explained! (4)

Read older posting? REITs. Simply explained! (3)

Investing in REITs is like investing in properties?

Do you believe that investing in REIT is like investing in properties (DIY investing)?

REIT Managers and analysts covering REIT sectors like you to believe so. They claim that buying into REIT is like owning a tiny portion of a big pile of properties and DPU is like your rental income.

Really ah?

In DIY property investment, you take care of your own interests and look forward to fatten your own wallet; but it is not the same as REIT.

The REIT Managers will look after their own interests and flatten their wallets first before distributing whatever leftovers to you as DPU (your rental income).

So it is never quite the same!

Lastly, do you like mutual funds (unit trusts)?

REIT is like a mutual fund specialising in properties investment and management but their expertise can be too costly.

REITs. Simply explained! (3)

Read older posting? REITs. Simply explained! (2)

"If you are near the Temple of Cows and keep hearing a bunch of cowboys chanting the Sutra of Milk, soon you will become religious." - Createwealth8888

Before you become so enchanted by day and night of non-stop chanting of Sutra of Milk by the bunch of cowboys and then run out and put a load of money into these Cows, be sure you understand the risks that are involved. Milk can become sour. Cows may be infected by Mad Cow disease.
 
Rising Interest Rate Risk
 
There is only one way for interest rate to go now - UP!. It may not happen so soon but it will definitely happen - RISING interest rate is the way to go!
 
Most REITs will use leverage to maximize returns on their Cows. So it is degrees of leverages that make them different from each other. Like any other leveraged investment, rising interest means higher cost of borrowing for growth and higher refinancing cost for maturing debts. Rising interest rate will soon cause the milk to turn sour.

Rental Market Cycle Risk

Real estate property typically goes through a boom to bust cycle so there is a risk in using current rental income to value a REIT for its high yield.

What current tenants are paying may be more or less than current market rents. When the current leases expire, the company will have to negotiate current market rents.

When current rents are below market rents, that's known as embedded rent growth or loss to lease, because when the lease is renewed, rents will have to go up.

When current rents are above market rents, that's known as rental roll-down, because when the lease is renewed, rental income will have to go down.

So the current high yield for new buyers is never guaranteed but still depends on the rental market cycle. So there will be a period known as renters' market, and that is generally bad for REITs. Milk will turn sour or can even bad and cause their stock price to decline or plunge.

Potential Management Risks - Mad Cow Disease

What Ho Ching said at her speech on S-REITs?

First, I would like to reiterate the vital role that the boards play in protecting the collective interest of unit holders.


The importance of a strong and experienced board with a high level of integrity becomes even more critical, as more S-REITs venture abroad for more assets, or as more regional assets from different emerging economies and judicial regimes are listed here as S-REITs.

Normally, the role of a board is to guide and direct management, acting as an experienced guide, friend and mentor. To properly fulfill their fiduciary duty, it is wise for a board to keep a healthy distance from their management and not be held to ransom by their CEOs. It is crucial that boards have the courage to hire and fire CEOs. Their hardest test comes when they have to make hard choices between high CEO performance and core institutional values.

As the Chinese say, 居安思危 戒奢以俭 [ju an si wei, jie she yi jian]: “Watch for danger in times of peace, Be thrifty in times of plenty”. Without a culture of strong values and self restraint, success can lead to corporate hubris and CEO imperialism. Such hubris is often the seed of eventual disaster.

Next come the REIT managers. Apart from being real estate specialists with deep knowledge and experience in the market, trust managers must also be familiar with credit, financial, operational and regulatory as well as real estate and market risks. Financial transparency is especially important for REIT managers.

Fundamentally, the strength of any REIT lies not only in the physical and financial quality of its assets and tenants, but also the integrity and business acumen of its managers in extracting and enhancing embedded value from the properties. The greatest risks are the subsequent poor assets acquisitions. Individual managers may also change over time, and asset acquisition norms may deteriorate.

Without a sense of fiduciary duty and moral obligation to the unit holders, a trust manager may ramp up the portfolio size indiscriminately without due care or regard for quality and sustainable value of its portfolio. This agency problem is even more acute if the trust manager is paid based on a percentage of the value of the portfolio it manages, and the size of acquisitions it makes. An incompetent or negligent manager can also similarly store up future time bombs if they don’t understand the risks involved.

Let me illustrate with a few simple examples.

For instance, an irresponsible or incompetent trust manager could collude knowingly or unknowingly with financially troubled or desperate vendors. The latter needs cash and the trust manager needs more assets in order to earn more fees. The trust manager agrees to buy assets at highly inflated prices, and the vendor agrees to lease back the asset, also at inflated rents which are well above market rates. Prerequisite hurdle yields are technically met. And both the vendor and the manager walk away, happy to be “winners” in an apparently win-win transaction.

In such a situation, the losers are the unit holders. In substance, they would be sitting on a capital loss right from the start, as the purchase price consideration far exceeds the fair market or replacement value of the asset. They would also be unwittingly saddled with a much larger credit risk than appropriate.

Imagine what happens if the economy takes a nose dive, and the troubled vendor goes belly up. The trust manager would have to scramble to find replacement tenants. Rentals would realistically be much lower than the previously inflated level. The unit holders would be hit with a drop in distribution yield. The value of the asset in the trust will similarly take a serious beating.

Thus, in reality and substance, the trust manager would have destroyed value, through deliberate fraud or through incompetence, by poor asset acquisitions. In the worst case, poorly supervised REITs may even evolve into a nasty pyramid game for crooked managers.

Another potential way to circumvent short term investment hurdle rates is to defer issue of trust units to the future in an asset purchase. This may make the investment case look better initially. In reality, the pain will come later.

Such charades shore up short term performance indicators at the expense of longer term pain. Worse still, they leave little buffer for the REITs to weather future storms. If, for whatever reason, rental rates cannot improve or asset enhancements fail to raise operating income, such deferred financial burdens could become very painful for the unit holders.

It is therefore vital that unit holders are made aware of the possibility of subsequent dilution of distribution yield. They need to understand the true all-in economic cost of any acquisition, and not be taken in by the initial understated costs.

In substance, such deferred capital payments may be nothing more than a form of shareholder’s loan. If so, they should be captured in the trust’s gearing ratio at the point of purchase commitment. Not doing so allows a trust to circumvent the prevailing 35% gearing cap imposed by the regulators.

Monitor courses by 'trading gurus' but you don't be the next Jack!

Read older posting? Smart Money Grabbers over dummy investors - IV

Read older posting? Purchasing Property With No Money Down: My Personal Experience

"If someone really have Magical Goose that can lay $$$ so easily, why would they be selling at $X,XXX. They should have secretly passed on the Magical Goose to their family members to lay plenty of $$$ for themselves and become one of the richest families in Singapore for generations to come. So don't be the next Jack" - Createwealth8888

By businesstimes

THE proliferation of online trading 'academies' and self-styled 'trading gurus' claiming to be able to empower anybody to become profitable share and currency traders needs to be watched.

Anecdotal evidence suggests that a growing number of people seem to be falling for the enticing call of these so-called 'trading gurus', who promise 'massive wealth' in the 'shortest time possible' - as one outfit proclaims in its advertisements. Certainly, there is the need for investor education. And the market seems ready to provide such courses. Thus retail investors sign up for a whole plethora of seminars and coaching sessions hoping for a quick change of fortune. But what is being taught? Who are the teachers? How comprehensive is the course content?

None of this is to detract from the business schools and universities as well as the many respectable private educational institutions that provide sound and structured education in investment and financial management. But there is considerable evidence that retail investors do not think long-term and prefer to pick their investments based on their own, sometimes dubious, research. Such people are often the ones easily enticed by the short-term values of the 'trading gurus' who will find a hundred and one ways to convince them that they can create massive wealth in the shortest time possible with almost no effort. Such naive investors trade until they get their fingers badly burnt. This is not the outcome anybody desires for a class of Singapore's small-time investor community.

The government, through the vigilant eyes of the Monetary Authority of Singapore (MAS), has been tightening its regulatory framework to monitor the financial markets closely. The recent global financial meltdown has left scars everywhere and financial centres such as Singapore took a hit, though not with the calamitous consequences faced by many in the West. The government's relatively tight financial regime has played a decisive role, together with the prudence of the private sector, in maintaining the stability of financial markets. If Singapore is to maintain its well-earned status as a stable financial centre, this culture of vigilance and stringent supervision must continue.

It was welcome news that some brokerages among the 10 financial institutions that were banned for a year from selling structured notes by MAS have decided to shy away from selling new structured notes after the ban was lifted. MAS slapped on them the ban following a probe into the mis-selling of notes linked to Lehman Brothers to retail investors. The industry has learnt its lesson.

A close watch should now be kept on this new, booming sector of online traders and speculators, and dubious 'gurus' who seem to be leading them up the garden path. It's better to go for stringent accreditation of such 'financial advisers' now than wait for a painful fallout.

OLAM INTERNATIONAL REPORTS RECORD RESULTS

FY2010 Financial Highlights


􀂃 Sales Volume of 7.0 million tonnes, up 22.5%; Sales Revenue of S$10.5 billion, up 21.7%.

􀂃 Gross Contribution (GC) of S$1.1 billion, up 38%; GC per tonne up 12.6% from S$134 to S$151.

􀂃 Net Contribution (NC) of S$901.0 million, up 48.4%; NC per tonne up 21.7% from S$106 to S$129.

􀂃 Net Profit After Tax (NPAT) up 42.7% to S$359.7 million. Excluding exceptional items in FY2010 and FY2009, NPAT grew 49.3% to S$272.1 million. Net Profit Margin excluding exceptional items, up by 50 basis points to 2.6%.

􀂃 EPS up 21.8% to 17.92 cents. EPS up 33% to 14.58 cents excluding exceptional items (in both years).

􀂃 Board recommends final dividend of 2.5 cents per share. Full year dividend, including the declared interim dividend, amounts to 4.5 cents per share compared to 3.5 cents in FY2009.

REITs. Simply explained! (2)

Read older posting on? REITs. Simply explained!

"If you are near the Temple of Cows and keep hearing a bunch of cowboys chanting the Sutra of Milk, soon you will become religious." - Createwealth8888

Great Company

Some time I really wonder what so great and exciting about buying and milking cows?

Some cowboys may do it better than others by buying different types of cows - Singapore cows, Japanese cows, Chinese cows, Vietnamese cows, Indonesian cows, etc. BTW, they are still cows and squeezing milk.

Cows are not great companies.

Great companies are either global or regional market leaders with great products or services. They are also  innovative in developing new products or services to meet the future market needs. These are the hallmarks of great companies! Not too many cows please!

REITs. Simply explained!

This is how REIT works:

One: Investors looking for cow milk.

Two: REIT Manager buys a Cow

Three: REIT Manager milks the Cow

Four: Investors get most of the milk

Five: More milk please!
 
Do one of these or both
 

Fatten the cow (enhance asset)

Press harder the cow's ripples by using both hand!

However, there is limit to how hard you can press the cow's ripple before she kicks your ass.

Six: But investors want more milk!

Then buy more Cows.

Seven:  Where to find money to buy more cows?

• Go and borrow from banks
• Do right issues or private placement

Then what happened?

Some retail investors are forced to take out more money from their wallet or some no money.

Some retail investors will Cow Father Cow Mother (in hokkien) when they realize they actually lose out in the right issue exercise or private placement.

And this will happen again and again when investors cry for more and milk milk but may end up more and more Cow Father Cow Mother (in hokkien)  when they realize again they are actually losing out!

Unlike Other Businesses

They don't just buy cows and milk them. Some will buy cows and produce goats, sheeps, or chicken (new products or services) and milk them in different ways.

Don't you want more than just cows?

Sharp drop in net inflows into CPFIS in Q2

By Ryan Huang


SINGAPORE : Net inflows to investment products under the Central Provident Fund Investment Scheme (CPFIS) saw a sharp slowdown in the second quarter.

For the three months to June, net inflows totalled S$157 million, down by over 80 per cent from the previous quarter's S$947 million. For Q4 2010, net inflows were S$1.1 billion

The data is based on a study by research firm Lipper, which added that outflows increased in line with market uncertainty.

Bonds emerged as the best performing asset class among unit trusts under CPFIS, as the market moved towards safer assets.

Lipper said bonds gained 0.9 per cent on average.

In contrast, equity portfolios saw losses of 8.63 per cent.

That dragged down overall performance for Q2 which saw an average loss of 6.55 per cent.

This was on the back of average losses of 7.27 per cent and 5.89 per cent among CPFIS-included unit trusts and investment-linked policies respectively.

In terms of the flow of funds, bonds saw a net inflow of 5 per cent or about S$150 million, while equities saw the highest outflow of about 10 per cent, or S$90 million.

Bonds are expected to be a key performer for the rest of the year.

But there's some upside for certain sector-related funds.

Rajeev Baddepudi, senior research analyst (ASEAN) at Lipper said: "While equity outflows have been generally negative, there are definitely pockets of quality investments that investors are chasing.

"Some of the sectors that have done well in the late part of the first half include pharmaceuticals, healthcare and technology and telecommunications." - CNA /ls

Sembcorp Expands In New Growth Area Of Jurong Island

- New anchor customer JAC secured


- Sembcorp to develop new multi-utilities facility and cogeneration plant

SINGAPORE, August 25, 2010 – Sembcorp is pleased to announce that it has secured its first anchor multi-utilities customer in the new growth area in the west of Singapore’s Jurong Island petrochemical cluster.

It signed a 20-year long-term utilities services agreement with Jurong Aromatics Corporation (JAC) today for the supply of steam and other water and wastewater treatment services to JAC’s upcoming aromatics complex.

To provide these services to JAC, Sembcorp will build a multi-utilities facility adjacent to the JAC aromatics complex and a new gas-fired combined-cycle gas turbine cogeneration plant close to the JAC aromatics complex, to provide integrated supply of steam, water and wastewater treatment services.

With a total investment cost of approximately S$800 million, the new multi-utilities facility and cogeneration plant are expected to be completed by the third quarter of 2013, and are expected to be funded through a mix of bank borrowings and internal sources. Occupying a land area of around 5.3 hectares, the new multi-utilities facility will be similar to Sembcorp’s existing multi-utilities centre in Jurong Island’s Sakra district and will supply around 350 tonnes of steam per hour, as well as other water and wastewater treatment services.

The new combined-cycle gas turbine cogeneration plant will have a capacity of 400 megawatts of power and 200 tonnes per hour of process steam in its initial phase. The development of the cogeneration plant is subject to the approval of relevant authorities.

Sembcorp’s expansion in the upcoming growth area in the west of Jurong Island will complement its current operations in the Sakra and Seraya districts of the island. Earlier in June, Sembcorp had announced that it had secured a long-term wastewater treatment contract from Lanxess for its upcoming butyl rubber production facility in Tembusu.

Commented Sembcorp Group President & CEO Mr Tang Kin Fei, “Our new contract from JAC is a strong vote of confidence in Sembcorp as the global leader in the provision of energy, water and onsite logistics and services to industrial sites. We thank them for their support and confidence in us.
 
With Sembcorp’s expertise and unmatched track record on Jurong Island, we look forward to supporting JAC and other new companies in the area as a vital partner for their total energy, water and wastewater treatment requirements.”

The investment and contract are not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp Industries for the current financial year.

Purchasing Property With No Money Down: My Personal Experience

By Mark Barnes

Have you ever seen those infomercials about buying houses with "No Money Down?" They are really well done. They have all kinds of people offering great testimonials about how they have gotten rich, buying rental properties, with absolutely no money out of their pocket. You see this guy, standing on a street corner, talking to someone, and he says, "I own that one," pointing to a beautiful colonial. "I also own that one next to it, and the one two doors down, and I'll be closing on the one directly across the street from it, next week." He then assures us that he has purchased 17 homes in the last eight or ten months, with zero money down on the properties. Plus, in many cases he's also paid no closing costs.


And, let's not forget, this same guy is grossing tens of thousands of dollars monthly, and his net worth is nearly one million dollars. So, he says.

Now, all of this looks wonderful, so when the person selling the course that will teach you how to do this, at a nifty price of just $297.00, speaks, you are glued to his every word. "Real estate is the safest and fastest way to make money, today," the expert will tell you.

So, can this really be done? Can you purchase houses with no money down? Can you become a landlord in as little as one month's time and start raking in the cash from those rent payments? The answer is an absolute "Yes." It can be done, and I am proof positive, because I've done it. The question you should be asking yourself is not can I buy real estate with no money down, but should I?

You see, this is a question that the guy selling the No Money Down course, with all of his people and their great testimonials hopes you never ask. His advertising and marketing strategy would collapse, if he gave anyone a chance to ask this question, because he would be forced to lie if he answered it.

Rarely is the whole truth anywhere to be found in infomercials, especially when the advertising is about No Money Down real estate programs. The infomercial makes the idea and the program look so easy that any child could handle it. It makes it seem like every American should be doing it, and we'd all be millionaires. But every American is not doing it, and many of the ones who are doing it not only are not getting rich, they are actually going broke. The infomercial won't tell you this. That's why I'm here.

The Truth

Now, let's get started with the truth about buying real estate with no money down and the truth about being a landlord. The first thing you need to know is that they are both very bad ideas. Let me illustrate by using my own experience in these areas. I started buying rental property nearly 10 years ago. The first property I bought was a deal orchestrated by some real estate con artist, who told me I needed just $2,000 to take ownership of this home and, in the process, help out a woman who was about to be foreclosed upon.

In two years, she would clean up her credit, refinance the loan on the house, and I would make $10,000. Sounded good to someone who was quick to buy into anything that returned big dollars in a short time.

This worked for the first year, as the woman paid on time, and I pocketed an extra $100 monthly. Later, though, things began to collapse, as the house began to need repairs, all of which the woman couldn't afford, so I had to pay for them. I put nearly $5,000 into the house in a four-year period. When I was finally able to sell it, I didn't quite make back what I had put into it.

Meanwhile, I was eager to overcome this problem by adding many more. A slick mortgage broker got hooked up with an even slicker real estate prospector, and the two of them convinced me that they had a way I could buy houses rapidly, with absolutely no money out of my pocket. Although my experience will probably be enough to enlighten you to the pitfalls of this model and of being a landlord, let me say that I can't emphasize enough how dangerous buying property with no money down is.

In six months time, I had purchased eight houses - many with loans from the same wholesale lender. These lenders should have been concerned with all of the debt I was building, but they kept approving loans, based on my good credit and rents covering the mortgage payments. One of the biggest problems, which I was not experienced enough to detect, was that most of the rents were just $50 to $100 above the mortgage payment.

"Don't worry," the investor/ hustler would say. "You'll make all your money on volume. We'll get you into 30 or 40 houses, and you'll be pocketing $4,000 to $5,000 every month."

As you might imagine, my mind raced. I was making the huge deposits at that very moment. My bank account was fattening up at breakneck speed.

The Illusion

This is what people who buy houses, using the No Money Down plan envision happening. After all, if you can buy one house with no money down, why not five or ten or fifty? For some reason - the vision of the dollar sign, most likely - I failed to seriously consider the maintenance of these houses, the possibility of missed rent payments, and the chance that renters might actually stop paying, altogether, forcing me to evict them - a time-consuming and extremely costly undertaking.

As you may have already guessed, all of these things happened to me, after I had amassed 26 rental properties. In fact, oftentimes, all of these problems happened in the same month. Now, for awhile (when I had about 10 houses), if one person failed to pay rent, I could cover it with the nine other payments. But when two, three and sometimes even five tenants didn't pay in the same month, it was devastating to my business. I had to go to my business account and pay up to $3,000 at a time in mortgage payments, with no income to cover it. Plus, I had to pay a property management company to get my tenants to pay or to evict them.

Soon, this became the norm, not the exception. There were constant problems at my houses. Unhappy tenants led to poor upkeep of the property and even more maintenance problems. About one year, after I had amassed 26 houses, I was having problems with roughly 10-15 houses and/or tenants each week. I was evicting at least two tenants each month, and approximately four to seven tenants were either behind on rent or not paying at all. Promises were made, payment plans arranged and few, if any, ever followed through.

It didn't take long for me to realize that this was no way to make money in real estate. Consequently, I got rid of these houses as fast as I possibly could. There were plenty of buyers, willing to take over my headaches, because they had the ability to make it work, they believed.

In 10 years of being a landlord, I lost thousands of dollars and likely took some years away from my life with all the stress I had endured. So, whatever you do, avoid the No Money Down Trap. There are much better, still inexpensive ways to make money in real estate.

Read old posting on? Property Investing - doing the Math - Part 4

Right issue back again!

Read old posting on? Understanding Stock Market Risks - Updated

Dilution Risk

I heard loud chatting again on right issue!

Right issues are rarely good. It is either neutral, bad or suck!

Neutral

It is neutral if you have honestly already planned to increase your investment cost before the right issue announcement.

Bad

It is bad when you are forced to increase investment cost to prevent dilution.

Suck

No more money to subscribe for right issue. Suck Fingers liao!

Mortgage default rate in S'pore halved in 2 years: DP Credit Bureau

SINGAPORE : The number of mortgagors defaulting on their property loans has reduced over the last two years, according to DP Credit Bureau (DPCB).


It said in a report that the average default rate across all age groups fell to a low 0.43 per cent in March 2010, down from the 0.89 per cent in March 2008.

DPCB general manager Lincoln Teo said this represents an improvement in the property market, leading to more positive sentiment which indirectly drives better payment behaviour.

The bureau also noted that while the proportion of loans in default is trending lower, there are variations across different age groups.

It said the percentage of 21 to 29 year olds defaulting on their mortgages has steadily fallen to 0.42 per cent, from 2.2 per cent two years ago.

Notably, it said the 50 to 59 year olds have overtaken the 21 to 29 year olds as the age bracket with the highest percentage of loans in arrears, with 0.62 per cent behind in their payments.

However, Mr Teo said while younger people are more consistent in meeting their mortgage obligations, they may not be handling other credit responsibly.

He also warned that with increasing property prices and bigger mortgages, this group may be shouldering a larger debt burden which may not be sustainable in the long run.

In addition, the bureau said that over time, there has been a shift towards younger borrowers, with the percentage of loans given to 21 to 29 year olds increasing, while for people over 50, the percentage of loans is declining.

Meanwhile, the report showed that 49.7 per cent of all mortgage defaults take place between the third and the fifth year of the loan, while 31 per cent take place after the fifth year.

Olam in Gabon tie-up to develop timber SEZ

Group to put in US$12m equity for 60% in JV vehicle; Gabon govt to hold 40%


(BT Weekend Singapore)

OLAM International, a global integrated supply chain manager and processor of agricultural products and food ingredients, has entered into a strategic partnership agreement with the government of Gabon to jointly develop a special economic zone (SEZ) at Nkok for timber processing in Gabon.

Olam will invest US$12 million equity in the SEZ development project for a 60 per cent stake in a joint-venture vehicle. The government of Gabon holds the balance 40 per cent.

To encourage local processing of logs and export of high value-added wood products, the government of Gabon is setting up an SEZ that offers developed infrastructure and fiscal incentives for the timber industry to invest in timber processing activities in the country, said Olam.

As one of the participants in the proposed SEZ, Olam will be eligible for additional forestry concessions that are reserved for all participants.

'The strategic partnership between Olam and the government of Gabon also paves the way for Olam to tap into new agricultural investment opportunities that fit into its long term strategic growth plan in Gabon,' the company said.

Gabon is one of the key countries identified in Olam's wood products growth strategy for accessing forestry concessions and saw milling opportunities. Olam currently owns 400,000 hectares of forestry concessions for tropical hardwoods in Gabon. The joint venture with Gabon to develop an SEZ for timber processing supports the company's interest to expand its forestry concessions and timber processing activities there, it added.

Do you have respect for Market Wisdom and Crowd Behaviour?

The stock price movement is, in effect, more often or not conveying the collective wisdom (TA and FA) of the entire market; but some time this collective wisdom will be over-powered by the madness of crowd behaviour - forces of greed and fear.

'I can calculate the movement of the stars, but not the madness of men.' - Sir Isaac Newton

This madness of the crowd normally doesn't last long. Soon the market storm will be over and calm return to the market and once again the collective wisdom of the market will continue to drive stock price - either up, down or side-way for another period of time.

For a shorter while, yes, you may go against the madness of the crowd and benefit from it; but for a longer while it is still better to respect the collective wisdom (TA and FA). It is always worth asking yourself why you are right and the market is wrong? How come you seem know more than the market through publicly disclosed materials while smart money and big boys are not? In fact, most smart money and big boys have more access to non-publicly disclosed materials and they should be better informed than most retail investors.

We mustn't forget that these smart money and big boys have only one objective in the market - to make money for themselves and their investors. For a longer while, they are unlikely not to discover any market gems. So after 1 or 2 year of holding the stock, if the stock price still doesn't move in your favour, most likely you are wrong and the market is right.

High Dividend Yield Stocks? - Part 8

Read older post on? High Dividend Yield Stocks? - Part 7

I believe all investors will love high dividend yield unless you are a day trader who don't really need to care on dividend.

Imagine a high dividend yield bandwagon is rolling past you. A few people on the back of the wagon are partying and playing music of their lives and singing the song of high yield. You may be unable to resist the sweet sounds being played and run to join the party.

But, before you jump on the bandwagon, you may want to wonder a bit as there can be more than one way of looking at high yield; its associated risk of future dividend cut and impact to its stock price.

A. High Yield High Growth

I don't think you can find it now in the current market. If you can find it, don't tell anyone. Sell your car and mortgage your home and load it up! Just kidding. LOL

You are more likely to find high yield high growth stocks during big bear markets but you may not have courage at that time to load them up so it is pretty hard to load up high yield high growth stocks in your portfolio.

B. High Yield Low Growth

Even in the current market condition (STI at 2936 quite near to its recent high), you can still find some low hanging easy reach high yield stocks. How come?

Unless you believe that market is lack of smart money or big boys, otherwise there may be valid reasons why these big boys or smart money choose not to chase them up and naturally it will cause the yield to fall for new buyers.

High yield may be an indication of low growth and investors are expecting higher income to compensate for low growth so market may have priced in that expectation.

C. High Yield High Payout

High yield due to high payout e.g. company paying out 90% or more of its earning. Future dividend is never a sure thing and can be cut.

For companies that are paying too much of their earning as dividends will have less reserves and they are more likely to cut dividend when earning is hit.  How will market react to its dividend cut? Is this a risk worth taking for chasing recent high yield?

D. High Yield  Asset Light

High yield due to company changing strategy from asset heavy to asset light. This is not sustainable in the long run as there is a practical limit to how light asset can be.

E. Medium Yield High Growth

Medium yield due to lower payout e.g. company paying less than 50% of its earning and using the rest to fund its growth. There is more opportunity for the market to price in its capital appreciation in the long run; but less likely for dividend cut since its dividend payout ratio is not high so there is more room for earning hit. In the long run, a lower payout may actually provide a more steady yield even in bad economy.

This may be a better dividend yield strategy for a long-term investor.

In Conclusion

Dividend is a sub-set of earning so it is the future earning that counts. So don't fall into high yield trap! The attractiveness of RECENT high yield ALONE may not drive stock price. When the stock price increases, the yield decreases so the recent high yield can only drive the stock price to a certain level and become unattractive and stop there.

In the long run, it is high growth that drives higher earning which will then drive stock price and may  increase your personal purchase yield  but recent buyers will get lower yield.

Higher capital appreciation can mean that you have already collected multiple years of dividends well in advance. A multi-bagger with high yield is the dream of every investor who loves yield.

I love A and E more. How about you?


Read more? High-yield, low-payout stocks stand out

The Greatest Lesson that I have learnt from my losses!

Read old posting on? The Cruel Math of Big Losses - II

The greatest lesson that I have learnt from my losses is not either the need to further improve skills on technical or fundamental analysis but to keep LOSSES small and to cap the destructive power of the market against invested capital deployed in the market.

I have learnt that once your capital is invested in the market you have absolutely lost your control over it. The market will decide your fate. The only trusted and proven thing to do is to limit your losses to the lowest % of your invested capital as it is so much easier to recover with smaller losses as clearly shown in the older post.

CPL will sell 28 properties worth a total of S$969.6 million

CapitaLand''s unit the Ascott Ltd will sell 28 properties worth a total of S$969.6 million ($716.6 million) to Ascott Residence Trust

What may be waiting for a hardcore retail Value Investor?

"I look at technical situation as a summation of all the fundamental views available on a stock at that particular moment and it can sometimes be a warning signal of problems ahead. In the world where every professional fund managers knows that at least two out of five share picks will not work out as they hoped this is very useful." - Anthony Bolton

Read old posting on ? Why Do We Still Need To Read Charts? - Part 2
 
Read old posting on ? Analyst's Company Report or DIY analysis?

Hardcore retail value investors are stubborn on their view/belief that the market is wrong and they can believe that the market will prove them right in the long run. But in long run we are all dead and dead people can't know that they are wrong.

Since they believe market is wrong and they are right, they will tend to average down their position. They see falling price as higher margin of safety and don't see bigger position as exposure to higher risks. They better pray hard that they are not wrong. By averaging down more and more, they are in fact taking on more and more risks than initially expected. If a Black Swan happens, they will be in greater pain! Pray harder!

Keppel Shipyard secures contract to modify FPSO OSX-1

Keppel Shipyard Limited (Keppel Shipyard) has secured a contract for the modification of the Floating Production Storage and Offloading (FPSO) vessel OSX-1, worth approximately S$50 million.


The FPSO OSX-1 is owned by OSX 1 Leasing B.V., a subsidiary of OSX Brasil S/A. Commencing in the third quarter of 2010, Keppel Shipyard’s scope of work includes procurement, detailed engineering and the modification of the topside process modules. Keppel Shipyard will work with BW Offshore, which will provide project management, engineering services and technical guidance services to OSX 1 Leasing B.V..

Scheduled to leave Keppel Shipyard in the second quarter of 2011, the vessel will be deployed in the Campos Basin, offshore Brazil on a 20-year lease to OGX Petróleo e Gás.

Mr Nelson Yeo, Managing Director (Marine) of Keppel Offshore & Marine, said, “We are pleased to embark on this partnership with OSX. This contract is a result of the track record we have built up with our customers in the markets where we are present. Our ability to deliver to our customer’s satisfaction a complete range of solutions stands us in good stead to be the provider of choice for the offshore and marine industry. Having completed a significant number of projects successfully working in Brazil, we look forward to delivering another outstanding FPSO for the region.”

OSX Brasil S/A is a Brazil-based publicly traded company listed on the Brazilian Stock Exchange, which operates in the areas of shipbuilding, the chartering of exploration and production units (E&P), as well as operations and maintenance services (O&M). OSX belongs to the EBX Group, founded and chaired by the entrepreneur Mr Eike Batista, which has been developing and managing business activities for almost 30 years in fields such as mining, logistics, oil & gas, real estate, energy, renewable resources and entertainment.

Keppel Shipyard is a wholly owned subsidiary of Keppel Corporation, through Keppel Offshore & Marine (Keppel O&M), a leader in offshore rigs, FPSO/FSO/FSRU conversions, turret and mooring systems fabrication, ship repair, and specialised shipbuilding. Keppel O&M’s near market, near customer strategy is bolstered by a global network of more than 20 yards in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, the group aims to be the provider of choice and partner for solutions for the offshore and marine industry.

The contract is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.

BioMatrix™ Drug Eluting Stent System Approved for Sale in Taiwan

Singapore, 18 August 2010 – Biosensors International Group, Ltd. (“Biosensors”, “Company”, Bloomberg: BIG SP) today announced that it had received approval for its BioMatrix™ drug-eluting stent system from the Department of Health in Taiwan.

“We are delighted to have obtained regulatory approval for sale of BioMatrix in Taiwan, an important regional market with a high rate of coronary stent usage,” said Jeffrey B. Jump, President and CEO of Biosensors. “This is further confirmation of the proven safety and efficacy of our products, and reflects our ongoing commitment to expanding treatment options for physicians and improving quality of life for patients.”

The BioMatrix drug-eluting stent system received CE Mark approval in January 2008 and is currently commercially available in more than 70 markets around the world.

Warren Buffett Portfolio: Berkshire Holdings

Createwealth8888: Warren Buffet knows how to sell. He doesn't just invest. He also speculates but sometime he will lose money too. What about you?

---------------------------------------
By Eric Rosenbaum, TheStreet.com Staff Reporter , On Tuesday August 17, 2010, 8:00 am EDT


OMAHA, Neb. (TheStreet) -- The quarterly portfolio holdings revealed after the market close on Monday from Warren Buffett and Berkshire Hathaway show that the big Buffett train slowed down in the second quarter when it came to selling stocks.

In 2009 and earlier this year, to help fund the mega-acquisition of Burlington Northern Santa Fe railroad, Buffett was a big net seller of stocks held in his portfolio. It was notable for Mr. Buy and Hold to be a heavy seller of stocks in recent quarters, but in light of the Burlington Northern deal, the crowd of zealous Warren Buffett watchers downplayed the selling activity. The man who, among other famous sayings, once said that the best holding period for a stock is "forever," was entitled to some portfolio sales given the size of the Burlington Northern deal.

It was back to normal for Mr. Buy and Hold in the second quarter of 2010, which can be described as a period of overall tweaking the Berkshire Hathaway portfolio. There were some notable buys, sells and new additions. Yet most of the buys and sells were on the margins, and there was only one new company making it into the coveted list of public stocks held by Warren Buffett.




"Things quieted down," said Morningstar analyst Bill Bergman. Buffett was again a net buyer of stocks in the second quarter in marked contrast to the previous two quarters of heavy selling, at least heavy selling by Buffett standards.



It wasn't as if Buffett needed to raise cash in the quarter for continuing operations either. The recently released earnings from Berkshire Hathaway showed that outside a big decline in the value of derivatives, the operating companies owned by Berkshire -- which had been a drag on earnings in recent quarters and in the recession -- were recovering. The big derivatives loss in the second quarter of close to $2 billion has to be put in the proper perspective, too. Berkshire Hathaway's derivatives gain in the preceding four quarters was $5.5 billion. As the Oracle has always said, derivatives will go up and down in value quarter to quarter.

What follows is a breakdown of the most notable stocks to move up and down in Buffett's estimation in the second quarter. As the Burlington Northern train came into the Omaha station the portfolio activity went from a blaring whistle to a relative tweet, but the tweets were still notable. The real big Warren Buffett winner in the quarter was Johnson & Johnson. Warren Buffett added roughly 17 million shares of Johnson & Johnson in the second quarter, far and away the biggest addition to the Berkshire Hathaway portfolio.

Lots of Johnson & Johnson pills may have been trashed as part of the massive painkiller recall, but Buffett was loading up on shares of Johnson & Johnson. Morningstar analyst Bergman said that among all the recent selling activity from Warren Buffett, the one big sell that surprised him was Johnson & Johnson. Thus, to see a big move back into shares of J&J made sense.

From May 12 to May 28, Johnson & Johnson shares fell from over $64 to $58. J&J's 52-week low is $57, which it hit in July. On Monday, Johnson & Johnson shares closed at a level similar to it second quarter low, at $58.01.

While the Johnson & Johnson buying was the biggest in terms of total shares -- bigger than all the other buying combined for Warren Buffett in the second quarter -- looking more deeply into the details, health care was a favored sector.

Warren Buffett also added to positions in Becton Dickinson and Sanofi-Aventis.

None of these represented huge moves, but in the case of Becton Dickinson, Buffett's increase of close to 147,000 shares was a percentage increase of roughly 8%.

Buffett added 160,000 shares of Sanofi-Aventis in the second quarter, taking his overall stake up above the 4 million share mark. Buffett owned 3.9 million shares of Sanofi-Aventis previously.

Becton Dickinson shares went on a big slide in the second quarter, dropping from a share price close to $80 in mid-April, to as low as $67 near the end of June. On Monday, Becton Dickinson shares close at $70.63.

Some of the share deterioration in any of these stocks in the second quarter has to viewed within the perspective of the big market gyrations in June, and the quarter end date right ahead of the market rally in July. Buffett has always said to buy when you smell fear, and so, there may have been some sniffing going on amid the market carnage in the second quarter. The markets had reached a 2010 peak toward the end of April before the big selloff began. It's also safe to say of the Warren Buffett second quarter that the more things change, the more they stayed the same. In this case, some of the same related to the same selling made by the Oracle with some big portfolio names.

Among major Warren Buffett portfolio dogs, ConocoPhillips continued to be sold by Buffett in the most recent quarter, with more than 5 million shares of the integrated oil company exiting Berkshire Hathaway's portfolio.

Buffett also unloaded another 1.5 million shares of Kraft. Buffett had been a noted seller of Kraft earlier in the year, and his selling of Kraft was noted by the press as it coincided with the Kraft pursuit of Cadbury. Kraft's courtship of Cadbury, which it ultimately acquired, did not sit well in Omaha. Warren Buffett voiced his public displeasure about a Kraft plan to use shares to finance the deal, an aspect of the deal that Kraft did back away from.

While Buffett clearly returned to J&J in a big way after his big selling pattern over the past year, even with net selling no longer the Berkshire Hathaway trend, Kraft still seems to be in the doghouse.

Long-time holding Moody's Investor Service, a holding that indirectly led to Buffett being forced by subpoena to testify this year in front of the congressional Financial Crisis Inquiry Commission, was spared any selling by Buffett in the second quarter, for the first time in recent memory. Warren Buffett has never been shy about his affinity for the big bank stocks, from long-time Berkshire Hathaway favorite Wells Fargo to the recent Buffett bank holding of much controversy, Goldman Sachs.

In the second quarter, it was a stock that serves the banks that caught Warren Buffett's attention, and was in fact the only new position for the Oracle of Omaha.

Bank technology company Fiserv was the newest stock in the Warren Buffett stable as of the end of the second quarter, with Buffett adding 4.4 million Fiserv shares.

Fiserv is a natural for the Berkshire Hathaway stable of holdings, according to Morningstar analyst Brett Horne. The bank technology company has a stable earnings profile, offers a high return on capital, and has relatively safe customer relationships. Morningstar's Horne noted that once a bank implements the Fiserv platform, the relationships tend to be sticky. Buffett has never been a fan of go-go markets in which the opportunity for disruptive technology is significant. "It's a sedate business, " said the Morningstar analyst, who described the stock as being undervalued, but short of a level where he had the stock at a conviction buy.

Additionally, Buffett loves stocks that don't disappoint on the top line, noting in the past year that he didn't think Wells Fargo would ever disappoint him in regard to revenue. Even during the worst of the bank crisis, when the big banks like Wells Fargo and Goldman were seeking government bailout money, the biggest impact on Fiserv was a flat revenue line.

Fiserv may not be a big name, but Buffett loves his boring companies. The boring buy that saw the most Buffett love in the first quarter of 2010 was information storage company Iron Mountain. In the second quarter, the Buffett Iron Mountain stake was unchanged.

As far as the actual bank companies in which Warren Buffett invests, there was not much action of note in the quarter. Buffett's Wells Fargo and U.S. Bancorp stakes were unchanged. Buffett did shed a part of his stake in M&T Bank, selling just under 200,000 shares of the Buffalo, NY-based bank. In one notable area of Berkshire Hathaway investment, activity may soon be more muted, though it doesn't relate to the portfolio of publicly traded stocks bought and sold on a quarterly basis by the Oracle of Omaha.


On the same day that the quarterly moves made by Buffett were released, Berkshire Hathaway was in the press talking about its big derivatives portfolio. Buffett top lieutenant David Sokol -- who runs Berkshire Hathaway's energy and NetJets business -- was quoted as saying that the new dollar-for-dollar collateral requirements from Congress for derivatives holdings may lead to less focus from Buffett on the controversial securities.

Sokol was sent to Washington by Buffett to lobby Congress for an exemption from the derivatives requirements. Berkshire received the most important provision it wanted in Washington D.C., in that the collateral requirements for derivatives would not be retroactive.

However, Sokol now says that the dollar-for-dollar collateral requirements might make it impossible to sell derivatives at attractive pricing. Berkshire Hathaway has more than $60 billion in existing derivatives contracts and its second quarter derivatives loss of $1.8 billion was a one-time 40% hit to earnings.

Sokol told Bloomberg on Monday, "If you are now going to have to post dollar-for-dollar collateral, and you can't get a price in the market that we think reflects the value of the credit quality of the company, then we wouldn't take on that risk."

Sokol continued, "Ultimately what it will do is alter the pricing.... If one of our competitors is prepared to offer a similar instrument at a cheaper price, then there will probably be less of them," from Berkshire, Bloomberg quoted Sokol as saying of the new derivatives legislation.

Liabilities linked to Berkshire Hathaway equity derivative contracts and credit-default swaps were roughly $10.5 billion as of the end of the second quarter, while Berkshire's collateral provisions on June 30 were $173 million, according to Bloomberg data.

Olam to invest US$43.5 mln in Africa cocoa plant

SINGAPORE - Singapore commodities firm Olam International said on Tuesday that it will invest US$43.5 million in Cote d'Ivoire to set up a greenfield cocoa processing facility in Abidjan. -- REUTERS

U.S. Economy: Factories Lose Orders, Builders Lose Confidence

By Courtney Schlisserman and Timothy R. Homan

Orders and sales at New York manufacturers decreased in August for the first time in more than a year and U.S. homebuilders turned more pessimistic, indicating the economic slowdown is becoming broad-based.


The Federal Reserve Bank of New York’s so-called Empire State factory index today showed bookings dropped for the first time since June 2009, while sales fell at the fastest pace since March 2009. The National Association of Home Builders/Wells Fargo confidence index unexpectedly declined to a 17-month low.

Slower consumer spending and less inventory rebuilding may restrain manufacturing after the industry led the economy out of the worst recession in seven decades. Treasury securities climbed on growing concern the global expansion will cool in the second half of the year more than central bankers estimated.

The reports are showing “a truly weak recovery,” said Tom Porcelli, a senior economist at RBC Capital Markets Corp. in New York. “There’s no sustained driver. Sentiment is pretty weak in both of these rather large segments of the economy.”

The yield on the benchmark 10-year Treasury note dropped to 2.57 percent at 4:24 p.m. in New York from 2.67 percent late on Aug. 13. The Standard & Poor’s 500 Index was little changed at 1,079.38 at the 4 p.m. close in New York.

Less Than Forecast

The New York Fed’s general economic index, which is a separate question not tied to orders or sales, rose to 7.1 this month from 5.1 in July. Economists forecast the measure would rise to 8, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the area covering New York, northern New Jersey and southern Connecticut.

Estimates of the 48 economists surveyed by Bloomberg ranged from zero to 12.3. Manufacturers account for about 6 percent of New York’s economy.

The factory orders gauge decreased to minus 2.7 this month from 10.1 in July. A measure of shipments fell to minus 11.5 from 6.3.

The manufacturing executives’ outlook index retreated to the lowest level since July 2009. Growing concern about the future may prompt companies to rein in hiring, depressing one of the bright spots in employment.

Factories nationally have added 183,000 workers to payrolls since the start of the year, according to Labor Department data. In July, they boosted payrolls by 36,000, while the factory workweek increased to 41.1 hours from 41 hours a month earlier.

Economies in Disequilibrium

ITT Corp., a maker of night-vision goggles, last month reported revenue for the second quarter that was below the analyst estimates in a Bloomberg survey.

“This global economy is not in a steady state of equilibrium now,” ITT Chief Executive Officer Steven Loranger said on a conference call July 30. “We’ve seen a lot of short cycle volatility throughout our segments and throughout our geographies.”

Homebuilders are also more concerned. The National Association of Home Builders/Wells Fargo sentiment index dropped to 13 this month, the lowest level since March 2009, from 14 in July, data from the Washington-based group showed today. Economists forecast a reading of 15, according to the median estimate in a Bloomberg News survey. Readings lower than 50 mean more respondents said conditions were poor.

Demand has slumped since a government homebuyers tax incentive expired in April. With mounting foreclosures adding to inventory and unemployment forecast to end the year at 9.5 percent, a housing recovery will take time to develop.

Many ‘Challenges’

“The housing market still has many fundamental challenges that are likely to keep it depressed,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The problem continues to be oversupply. There are just far too many homes.”

The builders group’s indexes of current single-family home sales and expectations for purchases over the next six months decreased.

“Builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” NAHB Chairman Bob Jones, a homebuilder from Bloomfield Hills, Michigan, said today in a statement.

To be eligible for government’s tax incentive program, worth as much as $8,000, buyers had to sign contracts by the end of April and close on homes by June 30. The deadline for closings was extended until the end of September.

Global Asset Demand

Another report showed concern over slowing growth worldwide propelled global demand for long-term U.S. financial assets in June as investors abroad bought Treasuries and agency debt and sold stocks. Net buying of long-term equities, notes and bonds totaled $44.4 billion for the month, compared with net purchases of $35.3 billion in May, the Treasury Department reported.

Fed policy makers last week voted to keep the benchmark interest rate at a record low and said the recovery was likely to be “more modest” than earlier anticipated. The central bank decided to keep its bond holdings steady, taking an additional step to spur growth for the first time in more than a year.

The results of the Fed’s quarterly loan-officer survey, also issued today, showed banks eased credit standards and terms on loans in the second quarter, even as demand for business and consumer credit was little changed at the majority of lenders. It was the first survey since late 2006 that showed a loosening of guidelines on loans to small companies.

To contact the reporters on this story: Courtney Schlisserman in Washington