- Disclaimer: Caveat Emptor. This is not meant as investing advise. Do your own due diligence.
The pictures used in this article are part of the platform available to students and graduates of the Intelligent Investors Immersive, which teaches Factor-Based Investing (Value,Growth). Factors are based on a study of what has worked in the stock markets for the past to the now.
This is a small portion of the full list of stocks I’m looking at right now which are;
- Undervalued significantly for well known reasons
- Have a dividend yield in the meantime that pays me while I wait for mean reversion to happen in share prices
- Have significant insider ownership
- Don’t have overwhelming amounts of debt
- Have no significant cash flow problems
Some current points to note;
Hong Kong stocks now are looking especially cheap with the dual whammy of HK protests + coronavirus wrecking most share prices, I expect protests to start up once virus bleeds off. This might take some time. If you’re buying into these counters, also be aware that land prices are especially inflated in HK since the government has not bothered to control it. what this means is that real gains might be lower than normal. However, I think even a fraction of the gains that are possible coupled with the yields make these investments very favorable.
The recovery might not happen for some time. For this reason, I’ve chosen to invest in companies with yields that can pay me while I wait. This is important. It’s also very difficult to fake yields if you have cash-flow problems. An in-depth guide on how to check for fraudulent accounting can be found here. Follow it if you can. If you can’t and you are unsure, simply don’t invest.
I expect significant risks in the instance of the virus spreading uncontrollably in HK, which is near to China. This might lead into an extended correction for the stock market, and may even precipitate worldwide markets collapsing (which will probably begin in the shale industry or whenever the Feds/China stops printing money). You must be prepared to withstand long term drops in prices if you want to buy in. That said, cheap is cheap, and you at least have yields to cover your backside should the prices not move or even drop slightly.
#1 – Regal Real Estate Investment Trust
- Country: HK
- Potential Profit: 194%
- Yielding: 8.29%
#2 – Tai Sang Land Development
- Country: HK
- Potential Profit 477%
- Yielding: 4.8%
#3 – Magnificent Hotel Investments Limited
- Country: HK
- Potential Profit: 187%
- Yielding: 4.6%
#4 – Hong Fok
- Country: SG
- Potential Profit: 260%
- Yielding: 1.7%
I’m not going to delve too deeply into these companies. From what I can see, there’s some extremely tasty valuations here.
Everything’s cheap for well-known reasons, and if those reasons go, we can expect things to get better. In the meantime, collect dividends and sit.
I’d recommend a holding period of three years because it takes about 2 to 2.5 years for mean reversion to occur.
Since we can’t tell if/when virus will go/protests will end, we can always just enjoy being paid in the meantime and enjoy having a further upside in/if the protest ends/virus ends.
Most of the companies listed have major insider holdings and real estate listed in HK/Singapore with real money being paid out from cash flow so I expect the chances of fraudulence to be very low since management will also be hurt in the process.
That said, go for it if you have the ability to detect fraud.
My full list is about 20-30 stocks, so I’ll really only zoom in harder if I’m looking to concentrate a huge portion of my portfolio.
We talk more about our investing methodology and techniques here, feel free to register for a seat. If not, be aware of the risks investing in this climate. Some stocks have been beaten down unreasonably, others are beaten down and for good reason. Invest wisely. Use a procedure. Use a checklist.
Be safe as well, all of you. These are troubled times, but there exists opportunities in trouble always.