CSC review
Today I trimmed off CSC from my portfolio, cutting out all my stake in it. It was a love-hate relationship.
I bought it entirely on technicals, held it with speculative hope, thought I'm holding it for investment but sold it on a rational and businesslike manner. I believe CSC will have a splendid FY08, but I couldn't care less anymore. This is simply a business that holds no place in my revamped portfolio.
I went in 5 lots at 0.305 on 16th April, 2007. Went in another 20 lots at 0.385 on 22nd May, 2007 after csc announced that it won a contract worth 200 million (something like that, can't remember the exact details). I made 2 mistakes:
1. Bad entry point on 16th April. I don't know what I'm thinking about.
2. Even worser entry on 22nd May. I bought on news that they won a contract, whereas I should have sold. This gap up is soon covered and the stock price went up after that. But by buying 20 lots at a high of 0.385, I basically sealed my returns for csc, no matter how great it looks. This lesson is already well learnt by me. It's my first exposure to being a contrarian instead of following the herd instinct.
At a price of 0.305, I bought it at a PE of 35 times (FY07 earnings). At a price of 0.385, I bought it as a price of 44 times. Considering the low margins (though it's better than most construction firms, I must admit), erratic earnings subjected to economic cycles and low ROE, is it a good buy? Furthermore, at a PE of 35 times, do I really expect the earnings of CSC to grow at 35% or 44% pa?
Subsequent mistakes come from not knowing when to sell off a cyclical stock. At the peak of the bull run, csc was trading at 0.495, PE of 57 times. I didn't sell it. My rationale then was that since the price kept creeping up, it will continue to creep up too. Even when the price first broke past ema20d, then ema50d, then ema100d I was still holding it. I thought it is just a correction and things will improve.
So what's my total losses?
Total capital input: $9,282.92
Total losses without dividends: $2,290.02
Total losses including dividends: $2,232.21
% losses inclusive of dividends : 24.0%
Stumble it!
I bought it entirely on technicals, held it with speculative hope, thought I'm holding it for investment but sold it on a rational and businesslike manner. I believe CSC will have a splendid FY08, but I couldn't care less anymore. This is simply a business that holds no place in my revamped portfolio.
I went in 5 lots at 0.305 on 16th April, 2007. Went in another 20 lots at 0.385 on 22nd May, 2007 after csc announced that it won a contract worth 200 million (something like that, can't remember the exact details). I made 2 mistakes:
1. Bad entry point on 16th April. I don't know what I'm thinking about.
2. Even worser entry on 22nd May. I bought on news that they won a contract, whereas I should have sold. This gap up is soon covered and the stock price went up after that. But by buying 20 lots at a high of 0.385, I basically sealed my returns for csc, no matter how great it looks. This lesson is already well learnt by me. It's my first exposure to being a contrarian instead of following the herd instinct.
At a price of 0.305, I bought it at a PE of 35 times (FY07 earnings). At a price of 0.385, I bought it as a price of 44 times. Considering the low margins (though it's better than most construction firms, I must admit), erratic earnings subjected to economic cycles and low ROE, is it a good buy? Furthermore, at a PE of 35 times, do I really expect the earnings of CSC to grow at 35% or 44% pa?
Subsequent mistakes come from not knowing when to sell off a cyclical stock. At the peak of the bull run, csc was trading at 0.495, PE of 57 times. I didn't sell it. My rationale then was that since the price kept creeping up, it will continue to creep up too. Even when the price first broke past ema20d, then ema50d, then ema100d I was still holding it. I thought it is just a correction and things will improve.
So what's my total losses?
Total capital input: $9,282.92
Total losses without dividends: $2,290.02
Total losses including dividends: $2,232.21
% losses inclusive of dividends : 24.0%
Stumble it!