Sunday, November 19, 2017

IPO Hit and Run Calculator

KPO is sharing more spreadsheet! Hahahaha.

We have a few IPO upcoming and the latest one is RE&S Holdings Limited (closes on tomorrow/19th November 12pm) followed closely by MindChamps (closes on 22 November 12pm).

This post is not about my analysis of the company. You can refer to these analyses:
- Singapore IPOs: RE&S Holdings Limited
- sginvestors.io: Phillip Securities IPO Note
- Singapore IPOs: MindCamps Preschool Limited

I did a 3 years analysis a few months back on IPOs - Will IPO Make Money - IPO Analysis for the Last 3 Years. Do take a look if you have not :) I jokingly concluded that we should participate in all the IPOs and sell on its opening day! While I was reading Mr. IPO's summary on RE&S Holdings, he mentioned that this IPO will be a hit and run and I thought of coming up with this spreadsheet.

A quick way to tell if a company is trading at fair value is to compare its PE against that of its peers. In the above analysis, we can be sure that RE&S Holdings is trading below the industry average PE. Do note PE comparison is a quick way to compare stocks, not the best way. Is there even a best way? lol.


Using RE&S Holdings as an example, the following highlighted fields can be modified/configured with the relevant numbers. Based on the budget/cash you have, it will automatically compute the number of units that can be applied. One can apply for IPO either through the public tranche (ATM or ibanking) with a $2 application fee or through placement where the brokerage fee is at 1% with 7% GST.


Assuming that we were allocated X number of units and we sell the stock at around industry PE which is $0.255. Regardless of the number of units allocated, we will definitely profit from it including all the fees!


However, if we were to sell the stock slightly higher than IPO price at $0.225, depending on the number of units allocated, we may/may not lose money after deducting the initial cost and the commission from selling the stock. This spreadsheet will also be helpful in determining a trailing stop loss for your IPO stock.

Google spreadsheet can be accessed here - IPO Hit and Run Calculator. Have fun!

On a side note, we will be applying for 101,000 units of RE&S Holdings Limited. Huat ah!

Friday, November 17, 2017

StashAway Clarifications - Reward-to-Risk Ratio

I received an email titled as above from Freddy Lim (Co-Founder & Chief Investment Officer of StashAway) a few days ago regarding my previous blog post - StashAway - October 2017.


In the monthly update, there is a section "StashAway VS STI ETF" where I attempt to track and compare the performance of our StashAway investment with that of either STI ETF through different platforms. The rationale is that I have no way to compare the performance of the different robo-advisors but I can certainly compare it with both the STI ETF. The difference in performance would be the opportunity cost one would be experiencing for choosing any of the 3 investment options.

Below is a screenshot of his email:


Freddy states that a better comparison is to include risk/volatility of the asset using Reward-to-Risk Ratio. In his calculations, he provided the annual volatility for each asset, pro-rated them based on the holding period to arrive at the Holding Period Volatility and divided the returns I have computed (Holding Period Returns) with his figures.

Reward-to-Risk Ratio = Holding Period Returns / Holding Period Volatility

I quote, "For a given dollar of risk taken by investors, StashAway's P28 has produced 1.7 times the amount in returns. This is significantly higher than the two STI tracking ETFs which returned 1.25 and 1.27 times of risk taken". That certainly sounds logical but the question is how do I get/compute the annual volatility of each asset. So I responded to his email and Freddy was kind enough to provide the following explanations:


Unfortunately, KPO is not rich enough to subscribe to Bloomberg to get such information and his Maths is not good. Fortunately, I am a Friend of StocksCafe, so I shall try my luck by submitting a new feature request to Ph.D. Evan. Hahahaha.


Meanwhile, I have updated the spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF to include the Reward-to-Risk Ratio using the above values provided by Freddy.


I would like to emphasize that the returns computed in the spreadsheet are too short (3 months) to be meaningful. I would say the same even 1 year later. 10 years later would be ideal but who knows if I will still be blogging then. lol. We know that in theory asset diversification will provide a higher return in the long run. Even a simple, 60% stocks 40% bonds would beat a 100% stocks allocation in the long run. The question is how long is considered long? We also know that high risk gives a higher return and vice versa but can we have the best of both worlds (minimum risk and maximum return)? This is what I hope StashAway will be able to help us achieve.

At the end of the day, I am doing this for 2 reasons - out of interest/hobby to track and see our investment grows and to report to my boss (CZM) since I am the one that persuaded her to invest our mutual fund (KPO Investment Fund) into StashAway.

Monday, November 13, 2017

StashAway - October 2017

October has been an excellent month for stocks, high gets higher! Our portfolio benefited from it - Portfolio Update - October 2017. StashAway is no different, we had a much better return compared to the previous month - StashAway - September 2017.

One thing to note is that StashAway has changed their web interface and introduced mobile application - StashAway Just Got Better! (Mobile App + New Interface). The change can also be seen in the monthly statement.

1. ACCOUNT SUMMARY (as of the last day of the month)


Returns have been broken down into "Portfolio Returns" and "Currency Impact". Exchange Rates are captured for both "Opening Balance" and "Closing Balance" giving investors much more visibility into their money/investment. Our capital is $2,000 so there is a $20.14 gain.

2. PORTFOLIO DETAILS 


We can finally see the P&L for the underlying ETFs!

3. TRANSACTIONS



Dividends!

4. FEE CALCULATIONS


I recommended/referred a friend to invest and will be enjoying fee waiver for the next 6 months :) Technically, it is only $10,000 managed for free but I do not foresee us reaching/exceeding that in the next 6 months.


In my opinion, these are all welcome changes and a testament to StashAway's commitment in providing the best platform by listening to feedback from their users/bloggers - A Coffee Session with Michele Ferrario - CEO of StashAway and Finance Smiths: StashAway Open Discussion. We were invited too but decided not to attend. We might attend if it is a masquerade ball. lol.

StashAway VS STI ETF
Since there is no way to compare the performances among the robo-advisors, I came out with a spreadsheet to track our StashAway portfolio performance (General Investing - Risk Level 28) against that of STI ETF which I will be updating on a monthly basis. For simplicity, I shall assume that one can either invest in Nikko STI ETF using POSB Invest-Saver or invest in SPDR STI ETF using SCB Priority Online Trading (no minimum commission). These would be the opportunity costs while we continue to invest in StashAway.


This month commentary: Interestingly, both STI ETFs are generating a much higher return than StashAway after fees. Although our StashAway account will not be incurring any fees till next year April, I will continue to add fees (estimated by taking the monthly-averaged assets x 0.8%/12 months) to the spreadsheet for better comparison. It is worth noting that the fees incurred by StashAway will probably exceed that of SCB Priority Online Trading soon.

Which is the best? Only time will tell :)

This is the link to our spreadsheet - KPO & CZM StashAway Portfolio VS STI ETF which I have also added to Our Portfolio page.