Learning on 24 May 2018

On Risk Management  “My investment process usually starts and stops with 2 questions. What is my probability of being right? What is the consequence of being wrong?” On Looking Inside before Looking Outside A new addition to the portfolio needs to be better than what you already own. It needs to improve the quality of …

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The Power of Free Cash Flow

Often, what is value creation? It is the magic of an entrepreneurial mind and a commercially-viable business idea, mixed with the ability creating products/services that consumers desire. We measure that by a business’ free cash flow generation ability. Free cash flow (FCF) is simply “cash flow from operations MINUS capex” FCF allows a company to …

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Interesting MV for Asahi’s Cafe Latte Water!

Check this music video out... it is so entertaining and full of character! https://www.facebook.com/asahiinryo/videos/1714278225297608/ Straits Times covered Asahi Group in two separate articles: FairPrice to bring in more stocks of sold-out Japanese transparent milk tea. After clear milk tea, Asahi introduces transparent coffee in Japan. Will their milk tea be a fad or something more …

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Turnaround Stock: Auric Pacific (SGX:A23)

This is a stock that I previously bought because I managed to focus on the cash flow of the business, apart from its earnings. It was delisted via privatisation. Management and Business Model Auric Pacific (“Auric”) was previously a listed company on the Mainboard of Singapore Exchange. Its reach is in Singapore, Malaysia and Hong …

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Straco Corporation (SGX:S85)’s Q1 FY2018 Results

A reader asked me: "Kelvin, what do you think of Straco's latest results? Straco owns Singapore Flyer, Shanghai Ocean Aquarium, Underwater World Xiamen and others. It seems like what you've described, they have operational leverage. It dropped a lot this quarter..." Straco is a highly respectable tourism owner and operator, backed by China's state-owned group called …

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Operational Leverage for Exponential Effects to Compound Shareholder Value

Over the past few weeks, I have shifted my thinking towards companies with operating leverage coupled with network effects. Why Network Effects? In Morningstar's approach, the firm views economic moats as below: Generally, I do think moats are derived from the business model design, creation and offering a superior product/services that the end customers desire. …

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