ASPIREZ CAPITAL


"The trick to investing is not to lose money. The losses ruin your compounding rate & compounding is the magic of investing."
 

INVESTMENT PHILOSOPHY & STRATEGY
Aspirez Capital, a value investor, aims to achieve above market returns by blending its value investing strategy with insurance writing strategy. Aspirez Capital invests in undervalued well-managed companies in industries where earnings and dividends could be expected to grow not only steadily but faster than inflation and the overall economy. Besides that, Aspirez Capital underwrites insurances in the capital market to generate insurance float and potentially underwriting profit. The value investing strategy can be partially funded by the insurance writing strategy.

 

VALUE INVESTING: PURCHASE PRICE < INTRINSIC VALUE
Aspirez Capital aims to invest in a company, where its cashflow from operation is more than enough to pay for dividend, special dividend once in a while, share buyback, maintenance CAPEX, asset acquisition, and debt reduction throughout all market cycles, when its market price is less than its implied intrinsic value. Aspirez Capital believes that as long as the market undervalues the company relative to its intrinsic value, it is making a solid investment with a margin of safety. Aspirez Capital reasons that the market will eventually realise the true value of the company and will correct its course.

 

INSURANCE WRITING: INSURANCE PREMIUM > UNDERWRITING LOSS

Aspirez Capital writes insurances on good quality equities, bonds, commodities, currencies and/or indices. In the capital market, those insurance contracts are called put options. The insurance contracts require counterparties to make upfront cash payments to Aspirez Capital when contracts are initiated. The insurance float, which can be defined as the premium payments made to Aspirez Capital less losses paid out, could be partially used to fund the value investing strategy. If Aspirez Capital breaks even on insurance contracts, Aspirez Capital will have enjoyed the use of free money for a period time. Although it is far from a sure thing, Aspirez Capital expects to do better than break-even in the long run.

 

Contact

aspirezcapital@gmail.com

Highly Focused | Highly Disciplined | Highly Contrarian
 


*chart above was derived from actual broker's statements

Return Contributors

2009: long positions on Berkshire & United Health Group + put options sold on General Electric, Wells Fargo, financials, real estates & agricultures

2010: long positions on Berkshire + put options sold on financials, real estates, agricultures, waters, utilities, S&P500, 20Y+ Treasuries & junk bonds

2011: long positions on Berkshire + put options sold on oil, consumer staples, Berkshire & Altria Group + covered call options sold on Berkshire

2012: long positions on Berkshire + covered call options sold on Berkshire + put options sold on utilities, consumer staples, junk bonds, S&P500, oil

2013 (YTD): long positions on Berkshire + put options sold on well diversified basket of commodities, Philips Morris and McDonalds

 

Major Mistakes Made

2010: Prematurely sold off United Health Group at a smaller gain

2011: Prematurely sold off Inverse VIX Short Term ETF

 

*Highly concentrated portfolio with high conviction (3 to 5 companies on average)

*Some of the put options were sold with the intention to purchase underlyings (can be either companies or ETFs).

 


*chart above was derived from actual broker's statements

(The actual inception was 2Q2006 / No proper record keeping prior to 2011 / Singapore broker was not able to provide statements prior to May 2011 /

Total return between 2Q2006 and May 2011 was estimated to be around flat as all the gains made from 2Q2006 to 2Q2008 were wiped out by the global financial crisis)

 

Return Contributors

2011: long positions on Singtel, Starhub, Thai Beverage

2012: long positions on First REIT, Starhub, Adampak (privatisation, 22% take-over premium), Thai Beverage (rallied on the back of M&A activity)

2013 (YTD): long positions on Thai Beverage (successful acquisition of FNN) & Riverstone, took profit on Macquarie International Infrastructure Fund & Starhubs

 

Major Mistakes Made

2007: Didn't not take profit Pac Andes Resources Development (a HK based seafood sourcing company) when the company's financing position turned weaker

2008/09: Made a loss when Hongguo filed for bankruptcy (a Singapore listed Chinese cosmetic company)

2011: Sold off ComfortDelGro prematurely at a loss (but with a good reason, switched into another company with much better prospect)

 

*Highly concentrated portfolio with high conviction (3 to 5 companies on average)

 


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Disclaimer:

- Past performance is not an indication of future performance

- This is not a solicitation for business

 

Copyright October 2013