McDonald's, Golden Arches, and Andrew Tan's townships

The local McDonald's franchise reported negative growth at the time our economy is expanding, considering further that our expansion is largely due to consumption. Picture more OFW's remitting money and their families having weekly budget for fast food, but local McD is not getting any benefit in terms of increasing profit out of it.

This regression of McD should also be placed side by side with JFC's report of high growth. Are the local McD stores raising their white flag of surrender to the Happy Bee? Jollibee is taking all the gains without leaving anything for McDo?

Why is this? One reason is probably. Andrew likes to complete his "townships," and a McDonald's store in a cluster of expensive condominiums and office buildings is a valuable chip for Dr. Tan. A chip that he utilizes for the 'bigger picture.'

Megaworld is even using a McDo store as a selling point, and AGI will build it, even if the store is not warranted initially given the small foot traffic (one first requirement for scouting for fast food location is high foot traffic). 

And so these stores may not be earning at all, but it would make the real estate around it more expensive. So, bad for Golden Arches (the company that holds the franchise for McD globally), but still good overall for AGI. 

But for long-term, AGI must still plan for Golden Arches to grow as well. I wonder though how AGI would resolve to show promise for Golden Arches as a subsidiary. Its marketing is still robust, commercials creative, and it is still differentiating itself from Jollibee as 'more premium' fast food alternative. Would this be effective in the end? 

About AGI, at this time

Weeks ago, I've listed AGI as among the issues I eagerly await to be given a chance to go back to. Among other reasons, I believe in AGI because

--this is the best-diversified conglomerate among its peers. 

--foreign funds has consistently show support for it.  

--Andrew Tan also is still hungry. He will continue to take risks and put money on opportunities that he sees.

--Ive never lost a trade with it (so far). This was one constant source of 'consolation prizes' many times over last year even during the hard downturn. 

But it's a foreign transaction that apparently now brought down AGI. Fidelity Fund, a big mutual fund in the US, apparently made a side deal with Andrew and bought a block at a big discount. At what discount? Appears they are not required to disclose.

In any case, this brought the wrath of other foreign investors. They sold down hard and perhaps attempted to bring down AGI to the perceived price that Fidelity bought it at.

And then there was also the lackluster earnings report for the most recent quarter.

The combination of the two negative 'catalysts' brought down price quickly by minus 20%, while peers such as AC continued to increase. Now, technical analysts will tell us that the downtrend is sure and continuing (see two parallel lines going down). It's not safe to get in yet.

Now, what to do?

Given that we dont know the buying price of Fidelity, and this is already a done deal, the first question is: has the market priced-in this factor by this time?

And then second question, can AGI recover to its winning ways in earnings on short and medium term? One subsidiary that reported negative is McDonald's. Can McD become a contributor soon? (More on McD as a member of AGI in another post)?

The forward P/E of AGI is now 14 and showing -7% one-year return. Compare this to AC  which have 25 P/E and +30% gain. If you consider just these data, it's time to start betting.

But if you are guided by TA,  you have to wait for around 25.3 to be breached convincingly (with good volume) before you get in.

For me, I entered AGI in my nimbler port at 24 and promptly sold all at 25 in 2 days when I saw that it is having difficulty breaching 25.

Then in my main port, I have been averaging down since this issue went below 25.3. Now my average price for 3 tranches is showing -4%. Im putting aside Technical Analysis mean time and just placed my next buy at 23.9. I wont be afraid even if AGI becomes 50% of my total port. I think all the four reasons that are mentioned in the beginning of this post are still true. It still sounds good to believe in the fundamentals of AGI.

Pick of the week for Workweek 35 is SECB... watch also FLI

I still have no time to look through many stocks, but SECB is one that Im seeing with persistent foreign buying. When we add into the consideration that the general market is steadily hovering above 7 K, and SECB appears to be one that is

1) solid fundamentally
2) but not yet threatening 52-week high (meaning, it hasnt gone up enough yet)
3) Invigorating its own activities with 'new' things (remember CANSLIM), even going further spending for a new logo:

The logo is a welcome 'youthful' change from this stale old-y one:

4) consider also the very positive earnings report in recent quarters.

I just hope CEO ViIllarosa is the real long-term visionary that he is being presented. He should truly steer SECB to compete with the Big 3 banks, as he declares the bank will. It's not that hard to best them from the surface, given, for example, BDO's notorious customer service and sly tactics for prevent withdrawals.

Also, make sure to add FLI on your watchlist.  FLI is being supported by two foreign funds. For a relatively-low-volume traded issue like FLI, this will be all it takes to take this realtor back up again to Q2 2013 highs.

Im back!

Although I would have loved to stay in this mode forever...

and get all vacation money from pure trading....

BUT the day job beckons. I was not totally absent from trading, but I failed to find time to jot down picks and trading notes.

The only trades I remember is buying and selling AGI, LRI, and TA in a few short weeks after seeing +5%.

Yes, it seems Im going back to that old strategy of
1) buy only highly-traded fundamentally-sound stocks, and then
2) put sell price the moment you see +5%.

Why go back to quick-in-and-out strategy?

It's ghost month and there seems to be very very stiff resistance at 7 K PSEi. It seems that a powerful resisting force is saying that we dont naturally belong in this index level.

This could be all hullabaloney, but Im relying on this possibility mean time, and make my trades with it in mind.

Conviction and belief in BEL paid off

Ive built considerable position from averaging down (In fact, I shouldnt have stopped averaging down). But I am still not yet selling. Im still leaning of holding on to it a few weeks until City of Dreams Manila opens.

This could change though depending on the overall sentiment we have with our market.

Hhhhmn, WEALTH is unloading TA again big time

This could be another gift that will give big time. 

First two buy tranches, waiting at 2.4. 

Picks of the week are one tranche in SCC, another in SECB, another small in UBP

If indeed we're on an overall uptrend,

these horses still can gas upwards vs. their previous highs.

One attention from a big fund, will push these up.

We should ride them some, beginning small just to be safe.

And so we're 7K again

I partly sided with the doomsayers (about inflation stunting our increase on short-term), and raised up a considerable cash position. I took profit early indeed. But since the PSE seems to be naturally-following the record highs of US indices, the selling was a wrong move on hindsight.

There's no remorse for me since that was the call, which was established based on info available. I have anyway still have some bets remaining and continuing to ride up these stocks in greens.

To those who stayed big on faith in MEG, et al, congrats! The only unfavorable indicator for us is that there was foreign selling yesterday. Well there could be rocky ups and downs in the coming weeks, but an uptrend should be the tide where the general sentiment is.

And this kind of sentiment is the sentiment we should ride on.

Let's hunt some highly-traded issues that still have some +10% jump in them. What's going to be your pick?

Whatever it is do not ride if you dont have time to monitor. You should be ready to withdraw on a moment's notice (like that moment when BSP indicates they are going to hike up policy rates).

Pick of the week for Wk27: watch out for the inflation report

Watch out for the inflation report later today. If it's more than 4.5%, you know what to do.

We would all need to lighten up more, and fast.

Pick of the week for Wk26 is BPI (after a quick browse through)

Still havent the time to do a more comprehensive review of our market. While in a business trip in this place,

I have very limited time to monitor our PSE, so I limited myself to observing foreign-buying more than anything else. Im aware that there has been almost a week of net foreign selling. But today, we're back to net buying at 0.7 B. And DEUTSCHE and other big funds are being bullish big at that. Is this pure window dressing? Probably not.

So the pick of the week is a starting entry in some fundamentally-solid stocks like BPI. I like the consistent foreign buying here and also WEALTH's joining the bullish fray in BPI. There could be a +5% for us here on short term. Best also to look at the other blue chips and hunt for similar characteristics (many foreign funds buying, gradual increase, etc).

BEL and MCP also could jump back steeply to previous high levels, after falling more than 20%.

Both are buy and hold still for me until their casino opened. In fact, knew just now that de Niro was in Manila last January.

Any firm my man de Niro backs up deserves some of my money.

Incidentally US indices are continuously making records.I wish we all have US billing addresses so we can trade here.

In any case, it's love our own muna. We can get some money out of our very own PSE.

***

Caveat though: we need to continue to monitor news on inflation.

Pick of the week is still to maintain a robust cash position

At this time, the minimum I think should be 50% cash. And keep your bets inside a few fundamentally-sound favorites as much as you can. 

Incidentally, I passed by NYC on a business trip and made it a point to visit this mother of stock exchanges.

[More pictures, and probably some reflections later]. 

Different time zone, so I wont be able to trade the rest of the week, probably.

Good luck on you own trades. Make informed decisions, based on your own research.

Pick of the week for Wk25 is still watch the sidelines

We seem to be moving sideways, so there's not much bearish signal at this time, as the Technical Analyst would say (we can just call it dangerous, bad, or evil signal). But still Im keeping cash position out of the reasons I posted earlier.

I also stopped averaging down on BEL mean time, since I cant understand why BDO (its own affiliate) and some big foreigners are unloading shares. Im at -15% in BEL even with averaging down at this point, but I will hold and buy again near 4.0. My position anyway is not even half of my top holdings, theres still some confidence and war chest in averaging down.

I can be mad about this Sy maneuvering / restructuring that seems to be destroying BEL. There was also some remorse--I should have sold when I was seeing +5% in this stock. But well, let' see what will happen in the week running up to the City of Dreams opening. This tumbling down of price could be a good thing in the end to believers.

And again, I would like to post that I would love, love, love to be given a nice price to come in again in AGI, MEG, PGOLD, and DNL. Since I unloaded also most of my TA during the GDP announcement, Im including TA in this list. I will try to post entry prices for these 5 in a later post.

If you're itching to enter now, enter small.

Beating the index so far this year

Both of my funds are substantially beating the index year to date. Index gain ytd is about 16%, but Im 28% in my main port and 36% in my nimble. And as of this time both have big cash positions.

Im not sure if I'll stay in this winning way throughout the year. But at least speaking for the period of the past 8 months, I think beating the PSEi was not that hard to do... as long as you really stuck with the companies that are fundamentally strong and showed good rebound as they did a year ago (say Q2 2014 vis a vis Q2 2013). The stocks that made me beat the index were concentrated positions on TA, AGI, MEG, TEL (and its big divs), DNL, and MBT. PGOLD was not a very hard pick to make as well, but my position here was small then I sold it also pretty quickly. Part of my education is in learning that one really does not need so many stocks in portfolio. If you gave 30% in TA, 30% in MEG, 30% in AGI, 10% to MBT (which has a low P/E for a top bank), and then made zero allocation to expensive and bland-performing SMPH and SM, you sure should also have beaten the index handily.

When I played with bazuras, mostly on small positions and for 'entertainment,' I made sure to sell already when I saw +10%. No need to be greedy. I profited from BHI, CPG, SGI, et al. On the reverse, on the losing side, I also cut generally on a Bazura when I see -6 or -7% and when the bid side is not getting any thicker. I usually sold on intraday rallies with these bazuras. I lost in LC, PX, ROCK which I all bought and sold inside a week.

In-and-out-in-two-to-three-weeks-after seeing-3.5%-8% gain is also effective in a volatile market. This helped late last year, especially. But the assumption here is that youll have time to "guard" your stocks and monitor the market. You need to see the buying side thinning to have an informed decision that the runup is probably getting weaker. Using this method, GTCAP gave me good profits 

Im seeing some newbies who relied on just RSI's on their first entries in SECB and other fundamentally-sound stocks. Im sure they also have beaten the index year to date. As long as they did not get greedy. 

If you do not play bazura, hedge bets this coming week

All my trades exempt bazuras at this time, precisely because I have no time to monitor the market. Third liners are good to play, but not for long or even intermediate term. It's just dangerous. They always remind me of bogus inventions like these. 

And the bureaucrats or supporters on the take (like Defensor) that endorse them.

These companies fizzle out and there's always a Filipino losing painfully at the other end (instead of us getting our money from foreign funds or from the profits of a strong company itself).

If youre purely on blue chips and high-volume traded stocks, the safest thing to do is to hedge bets these days. Last week, my only bet was to average down on BEL and that's it. My cash position is not in this high percentage since more than a year ago. And I have banked enough profit for a war, if we became tumbling down. I worry about the inflation report, the lower-than-expected GDP, and the shock (however short-term) of a BSP policy rate increase. If these worries are unfounded, I'll be happier since I still have a 50% bet (in mainport) and 30% (in nimble port) remaining.

If we go back and threaten 7K again, fine by me, I'll just buy again the favorites. Mean time, it's more a wait and see. My day job is also quite demanding these days, so really no time to monitor.

But good luck on your trades.

Pick of the week for Wk24 is a strong cash position. If youre not at at least 30%, sell some!

I saw that the PSEi is showing some signs of resilience. And although the locals are selling, the foreigners are firm on supporting some specific stocks. My relatively big positions in SECB and FLI are even showing big gains.

I still dont like though the general atmosphere, and the fact that we were red today. The inflation report and the possible rate increase by the BSP this week is also something to watch out for.

My reco this week is to maintain a robust cash position. If you have some belief in the chances of an uptrend, still maintain 30% cash. That's the safest thing to do this June.