Saturday, April 26, 2008

Did iCapital walk the talk?

Moola posted an interesting topic for discussion: did iCapital walk the talk? iCapital calling himself absolutely bullish while selling out stocks? Since I have quoted iCapital several times and iCapital is on my buy list, it is about time I express my views.

Facts: iCapital raised RM 38 million cash by selling stocks in 9 months ended February 2008, TTB also bought RM 19 million of shares at the same time. I am in opinion he is just doing some house keeping. This lead to a question, is he a short-term trader or long-term investor? Generally, one should sell when you see another much more undervalued stocks or if you think sentiments are going much worse despite of very exciting fundamentals. It is not wrong to take advantage of Mr. Market. Holding time is a rough guide, no sacred cow in the world of investing. Turtle will not hessitate to sell MUI if Parkson drops to RM 3/share on Monday.

Cash/total asset ratio is 35% 9 months ended 2008 vs. 35% 9 months ended May 2007. One needs to understand that he is always sitting on a big pile of cash to exploit on cheap sales. That is the way he operates since day one, pretty consistent here. He always say that his approach is Top-Down especially comes to emerging market investing, no way you can do bottom up approach. The other observation I have: he is not a pure Graham or Buffet, he will buy technology stocks, small caps, big caps, growth, workout, etc. He will just continue to buy and sell as long as a stock is undervalued in his perspective.

I guess the only issue left is definition of bullish, does it mean one need to be 100% invested and not selling stocks?!. He knows the major open-ended funds weakness is funds need to be long all the time and force the fund managers sell out at the wrong timing, hence he came out with closed-end fund to give him that flexibility.

However, this is the most important point I want to make, we all need to use our own judgment no matter who says what, we all are human, we can screw up, could screw up big time. Having a good investment adviser will reduce the chances of avoiding accidents but no guarantee of not losing our own money. He also has many anchor bolt stocks calls that you can see in his 2nd chance portfolio. All his mistakes are right there.

Have a nice weekend!


AC said...

I think we should always take comments by these poeple "on top" with pinch of salt. They can always say one thing but act differently.

By the way, who is moolah?

Turtleinvestor said...

You can click on the link, where is Ze Moola

Anonymous said...

I don't think there is anything wrong in selling out after making public statements that he is bullish. Things change everyday and he might see some new factors in certain stocks or certain sectors and do some housekeeping like you said.