Tuesday, November 13, 2007

Selling EWH and VBC Ferro Alloys

I sold the two speculative stocks that I had in my portfolio last week. EWH - the Hong Kong Index - was sold a mere 2 days after it was first purchased. I sold it at a loss of about 4% (at $23.10). As it was a speculative position and I was investing in an unknown, my stop loss was very low. I am happy that I got out soon as EWH has kept dropping - today it is at $21.14.

Net net, with the gains in VWO last month and the loss in EWH this month, I made roughly 7% in a month and a half on 25K. Speculation can be rewarding.

I also sold VBC Ferro Alloys in India at Rs 365. I had purchased it at Rs 351. I can see why this stock should do well in the current power craze in Indian stock markets as the company owns 10%-15% odd in Konaseema Gas Power plant. At Rs 365, VBC Ferro is trading close to book value when power stocks in India are trading at 3x-4x book. Still I sold, as I think the noose is tighetining around speculators. US is going to flirt with a recession in 6 months if not earlier.

I own 3 stocks in my PA now:
a) Blue Dart - trading at 15x Dec08 P/E and growing at 30% yoy. Almost a monopoly in overnight courier business. While competition is hotting up with Gati starting services soon, the stock is cheap. Plus DHL (Blue Dart's majority owner) came out with its open offer last year at 550. Stock is now at 565. I plan to keep this forever.

b) Deccan Chronicle - While corporate governance is questionable, I love newspaper stocks. At 15x March08 P/E, it is cheaper than US newspaper companies. I plan to keep this forever.

c) Omaxe - Some money should be invested on speculation - this is my speculative stock these days.

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