Investing is all about having an opinion and you back that opinion with a wager. If you’re right, you make money. If you’re wrong, you lose money. That’s how the game is played. It makes you confident and humble at the same time.
I don’t hide the fact that I make mistakes. I’m just human after all. But if I could be right 6 out of 10, then I know the odds are in my favor. Especially if some of it would be a bagger.
The past few years, I made a lot of mistakes. Most of it are mistakes of omission that I won’t cover. What I would discuss however are the mistakes of commission. Those that happened and I experienced with the loss of money. I would also discuss what went right just so its balanced.
What Went Wrong
ABS CBN Franchise Renewal Investment
I made a post that I will be investing in ABS CBN’s franchise renewal hearing. The investment is not that much, since I am not certain about its outcome. I was betting that the government would grant ABS of the renewal of the franchise. But they didn’t. The stock went down 30% from my buying point. I didn’t sell as it goes down, might be my first mistake, I even bought some, second mistake, because I trust the management, third mistake.
After a few months, banks came knocking at their door demanding collateral for the loans that will come due. They offered most of their properties for collateral. This properties are supposed to be the margin of safety for investing in ABS. Then, news broke out that the top management increased their compensation even after losing the franchise and losing billions of money and firing a lot of people. It’s the nail in the coffin and I sold my stake losing 30%.
But since the odds of this as a success is low, I only put small amount of money. But still I lost money.
ACEN – AC Energy Investment
We bought ACEN for 1.47. Its a bigger stake than ABS but a smaller stake than MWC (we will talk later). It is now around P8 up more than 400% so why is it in the “What Went Wrong” portion? Well because I sold some of it.
My rule has always been to not sell a great company. ACEN rings all the bells. To find it before anyone else does is another matter. And I found a better investment when ACEN went up to 50%. I sold some of it and put it in the other stock that went to 130%. Good, I thought. But it was actually better if I just stayed.
Selling is actually harder. I still own some of ACEN but I lost money because I sold some of it. Taking profit… So stupid of me.
What Went Wrong Then Right
SCC – Semirara Mining Investment
This investment is in the “What went wrong” category. The reason that its a mistake was because I forgot to classify SCC as a cyclical company. Majority of their revenues is from coal. I bought the company when it crashed from 40 to 20. But the crashing didn’t stop there.
When I ran out of cash, my SCC is down 40%. Just then I realized that I bought a commodity and cyclical business at the top of the cycle. Coal was at an all time high when I bought. And when coal price went down, down also the stock. Then bad things started happening to the company, storms, power plant shutdowns, miners dying, management dying, cease and desist, everything.
It went down to 8. Knowing that no possible bad news could probably make the stock go any further down, I kept buying. This is where it began to turnaround and start in the “What went right” category. That was the bottom of the coal price. My average is in the 8 to 10 range now, as of this writing SCC’s current stock price is in the 14/share. With inflation and coal prices as a tailwind and power in demand, I think SCC will perform well into the future.
I’m not sure if SCC would survive the renewable energy push. But at this point, its looking good. It might turn out to be “What went wrong” again, so as the nature of cyclical stocks.
What Went Right
MWC – Manila Water Saga
Christmas 2019 is near, while I saved up cash to use for the holiday, an opportunity presented itself. MWC was threatened to be taken over by the government. I made a post analyzing the situation back then on this article “Manila Water Investing Risk and Reward“. It was the bet of a lifetime, a crash that I only saw similar to 2008. And I know I’ll be making money.
So much my excitement on this, I used our Christmas budget (to the much convincing of my wife) and sold some of my ACEN shares (which was a mistake). I kept reminding my wife of our wedding vows, uttering the words “In sickness and in health. In richer or for poorer.” With a strong emphasis on the poorer part. Since this is investing and we don’t know for sure what will happen, hoping she doesn’t leave me should I lose all our money. I convinced her that there’s no possible way I could raise 1 million pesos in such a short amount of time and no possible way we could lose our money, so I needed our savings. I don’t even know when MWC would recover, but I know it would be quick. So I needed to act now.
I bought as it goes down and averaged at P7. As of this writing, MWC is at P17 per share, almost 130% gain.
I’ll continue to hold MWC perhaps forever, because they have 2 of the Philippines’ best business minds managing the company, The Ayalas and Razons. Why would you sell a company like that?
By the way, wife is happy to how it turned out.
CLI – Still A Diamond in the Rough
If MWC would be considered as luck by many (people don’t realize how much skill is needed to convince a wife to part with her money), CLI is just pure straight up value investing. It’s slow but the payout is big. I made an analysis on CLI three years prior on this article named “CLI A Diamond in the Rough.
Truth be told, I never liked the real estate business. Because it needs a lot of capital to keep going and keep making profits. But I just admired the family that runs CLI. It makes me want to cheer for them, for they are good people and you want them to succeed.
Of course its not all just that, the company passed the fundamentals and so I bought my shares.
The stock went down since it IPO’ed and up to around 3.7 per share. I kept buying. For 3 years I kept buying, settling at an average price of P4.2.
Today, CLI’s price is around P3.9 or P8.7 if price is adjusted for stock dividends, up by 107%.
These are all the things that went right and wrong since I started this blog. You can back-read on this blog and verify if the investments were a success or failure, and think for yourself if value investing is right for you.
Also I think its a good way to show you that you can never be 100% accurate when picking stocks. But what matters is that you put more bets on the things that you are sure of.