November 8, 2014 -#COL lecting Gifts That Grow (Philequity)

Good morning faceless traders,

I have an honest confession.  I suck at trading.  Sure I make some of those great trades now and then.  10% moves in 3 days, 20-50% in two days but I think it wasn’t skills.  Sometimes it’s just luck.  You buy it and another greater fool just buys it higher from you the next day or the next hour.  Sometimes you’re the greater fool and so you cut losses and that’s it. Truth is, the more I’m in the trading world, the more I know the market is always and forever wonderful for investors (or maybe it just so happens that’s what keeps me up at night, or in this case – day — either its the stock market (just generally coz I love it so much) or it’s those cups of coffee or it’s just money.  Nevertheless, okay so I’m awake and figured I had to blog this.

The reference of this post came about due to discussions of long term investments on fundamentally undervalued companies, whether illiquid or what.  Below was a post on #LR which was something I happily believed upon since 2012-2013.  Traded it during the 6-8 range (that time it was actually 7.20-9.60, coz there was still 20% stock dividends so the 15 strike is actually supposed to be 12.50 for those interested to knowing #LRW’s strike price.  This was confirmed in a clarification by LR management.  I remember that was told that #LRW’s strike price of 15 bucks for LR is effectively 12.5 after the stock dividend adjustment.)

Anyhow, so basically — it then became a Q&A on what’s the next possible long term investments that no one actually cared to talk about.  I kept talking about stocks and then I remembered just my long, lost, underappreciated employer which was #COL Financial.   So, let’s begin. ;D  (Don’t worry, this stock is really illiquid.)

Reference Thread on why this post actually came about: https://www.facebook.com/groups/facelesstrader/375406772625149/?comment_id=375442402621586&notif_t=like

***** Talking about #COL financial will definitely be a very biased post on my part.   I practically grew to learn and love about stock trading and investing because my dear uncle introduced me to the markets.  Of course, he (Mr. D. Ong) was a very avid fan of Mr. Edward K. Lee.  He loved visiting Mr. EKL’s office that I figured, maybe the guy is such a person I’d love to work for and with. There’s nothing I could actually foresee about what life would be had I not actually met Mr. Lee.  He was as much a second father than a mentor to me.  I have no bad words to say except that I know I was a lousy trader for him.  That is all. That much is true and I’m not being humble.  Oh you don’t even know how much I lost for him in such a span of time.  That he can just still celebrate investing, continue teaching millions of Filipinos about how stock markets can change lives is really something almost “vocation.”  He calls it distinctly “BETTER THAN SEX”.  That’s verbatim.  But sadly, I don’t have a recorder to have made that such a truthful anecdote.  He’s a very good man and I’m happy Philippines has guys like him to help propel masses of people to investing in the stock market.  That he partnered implicitly with Bo Sanchez on these peso cost averaging strategy is a stroke of genius and partly education that was remarkably not taught in Philippine classrooms.  Such a pity considering so many Filipinos need financial wisdom as early as a child.  How I got into Wealth Securities and into Mr. *Wilson Sy’s *Wealth Sec and Philequity* is also sheer acts of God na, or just fate.  I didn’t really super duper planned things out.  Anyhow, their recent partnership really rocked my world.  The fact that the stock price didn’t zoom up doesn’t matter to me.  I know just how great the partnership will be.

colfinancialphilequity

* I knew about this synergy play between COL Financial and Philequity for quite a long time.  In fact, I was so eager to have the marriage really conspire, I texted them and eagerly hoped they meet for possible win-win solutions for all fellow OFWs, Filipinos in making sure this peso cost strategy when applied to the best performing mutual fund in the Philippines will make significantly many Filipinos financially free and start a whole nation to learn and see investing and trading the way they’ve made me discover it.  It’s a great place to partner with the best businessmen in the country indeed.  All these people who didn’t know they can invest in the market , can now lazily park it to some mutual fund manager’s hands easily through an online platform and just regularly deposit like they do in their other banks and voila – I know it is indeed a “gift” they can give to themselves.  Such “preachy” thing is true when I see life changing stories.  One such story was this man *Mr. Cecilio Castro  who gave his real ledger to show to people, to make them know how investing can be done simply and hassle free and still return astoundingly.

disciplined investor

Read the entire article here:  http://www.philequity.net/uploadedfile/20140331073759400_Philequity%20Corner%20-%20033114%20-%20Example%20of%20a%20Real%20Life%20Investor.pdf

The table below shows how Mr. Cecilio’s gross investment grew each year. By the end of 2008, he had reached a gross investment of P899,000. Today, his gross investment of P1.28 million has a market value of P4.27 million as of last Friday, March 28, 2014.  And that all started with his P10,000 and P5,000 monthly deposits!

I super love the Philequity corners.  They are super easy to read.  Only 2 pages maximum because we know not all readers are highly attuned to the markets.  One article I specifically liked this year was the “Gift that Grows.”  You should go read Philequity corners.  Print them out.  Book Bind them. http://www.philequity.net/philequiCorner.php?screen=3&count=0

http://www.philequity.net/uploadedfile/20140616162648125_Philequity%20Corner%20-%20061614%20-%20The%20Gift%20That%20Grows.pdf

Many friends asked Wealth (specifically Mr. Sy) to give his market wisdom and this can be found in the Philstar Philequity Corner.  You will really learn a lot.

**** Gamechanging thunderstorm in the investing public: They both want YOU to be rich. http://www.philstar.com/business/2014/10/17/1381003/col-financial-adds-philequity-mutual-funds-product-portfolio

colpefi

Here’s a snapshot on #COL.  Stock traded with only 726,000 pesos last November 6.  It traded at a 52 week low of 13.80 and estimated by the market to be worth P6.5 Bil market cap.   There is an outstanding shares of 468 Mil shares.  44.4% is given as the free float level, so in theory there’s let’s say 40 * 500 or around 200 Mil shares.  P2.6 Bil pesos at 13 can buy almost all the float in #COL.  Is this basura?  Let’s see the financials. col snapshot

***** Citisec was incorporated 1999, that’s 15 years ago!  Philequity started 1994, 20 years ago.  😀

25 years

Management team are seasoned veterans in the markets.

management team

#COL is a highly cyclical business.  Compare 1H13 and 1H14.  The investing public has not traded during 1H14 versus 1H13 coz they felt the Yolanda effects still lingering.  Trading picked up 2Q and 3Q but anyhow, that’s how revenues and income goes.  It’s highly correlated with value traded of clients (no matter if you have 100,000 clients or 1,000 clients – it is whether the people are transacting or not) col numbers

Let’s take the average annual income in the past 5 years shall we?

VERY GENEROUS CASH DIVIDEND GIVEN – See the Pattern?  Not only #TEL is the generous cash giver.  #COL is my boss Edward’s cash dividend gift to all the shareholders every year.  His firm consistently gives practically 90% or all the earnings in a year.  I mean, do you have to retain anything?  Most of the expenditure on online trading is just bandwidth which is in the expenses tab already.

2014 –  P168M earned first half ,So far paid (60 cents for 2014)

2013 – P303Mil – 65 cents per share (Paid dividends 63 cents during 2013)

2012 – P306 Mil – 66 cents per share (Paid dividend 60 cents during 2012)

2011 –  (Paid 40 cents )

2010 – (Paid 20 cents)

***** Assets and Liabilities are basically people’s collateral. In a nutshell, 6.5 Bil peso company at 13.80, with the pending merger of mutual funds – your earnings can theoretically double because the mutual fund industry is at least going to add P50-100M peso on the top line (my estimate comes from the fact that mutual fund commissions charge 1% at the minimum on sales load fees so a P5-P10 Bil peso possible value traded in a single year can be estimated from 100,000 clients parking 50,000 pesos -100K pesos a year.

400M income for next year is around 1 peso EPS.  If I pay 13.80 and receive the 1 peso cash dividend alone, that’s still above 7%.  Paying 13X multiple to a company earning 30%-50% CAGR is unheard of.

***** – Even for just the cash dividends, I’m fine just investing.  Anyhow, the stock is too illiquid to trade to begin with.  Keep, accumulate.  You buy it at 10 pesos you get 10% yield.  And who’s to say if 400M pesos is the profit?  What if P500M pesos?  What if P600M ? –

When an 800,00 pesos becomes 5 Mil in a span of 6 years from 2008-2014 due to Philequity fund, you think COL Financial cannot harness that? Think about it.  😀 – Faceless Trader

P.s.

Their problem?

Competitors.  Philstocks is taking some of the traders due to better ease of their platform

Constant hang time, Constant problematic bandwidth problems have to be fixed.  Most of the clients are loyal but with so many brokerage firms around, offering good services, company has to step up the ladder especially on IT related bandwidth problems to make the stickiness factor of clients stay.  Still though, the mutual fund one stop shop is a step in the right direction that others still currently don’t have.

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