Spotlight: Alliance Global Group, Inc (AGI)

Business Overview:

AGI started out as a glass manufacturer before becoming a holding company, diversifying its business into 3 segments:  Real Estate, Food and Beverage, and Quick Service Restaurant Business.  Below are some of the subsidiaries under these business segments:

Real Estate (AGI interest): 

Megaworld Corporation  (57%) - publicly listed MEG
Global-Estate Resort (61%) - publicly listed GERI
Richmonde Hotel Group (57%)
Eastwood Cyber One (57%)
Empire East (33%) - publicly listed ELI

Food and Beverage (AGI interest):

Emperador Distillers, Inc (100%) - product:  Emperador Brandy
The Bar Beverages (100%) - product: The Bar
Alliance Global Brands (100%) - owns the foreign subsidiary handling Piknik potato snack products.

Quick Service Restaurants:

Golden Arches Development Corporation (49%) - operations and franchising of McDonalds in the Philippines.

AGI is owned and managed by Andrew Tan, counted among the top billionaires in the country.
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Quick Numbers:

Fundamentals:

Book Value of Equity (3Q 2011): ~ Php 122B**
Outstanding Shares: ~10.3B

BV/share: Php 11.90/share

Debt Ratio: 25%
Beta: 1.28

Net Income:
2011:  Php16B
2010: Php 7.5B

Assuming conservative growth, fair value for the company mainly based on earnings using DCF analysis would be :
Fair Value/share: Php18.4 


As of 4/4/12, AGI's market price is at 12.22/share which is already a little above its book value; however, considering conservative growth (sustainable and long-term), it still has a potential upside of 51% towards FV.

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Technicals:

AGI has corrected back down after teasing to break 13.04 (major resistance - previous high since Dec 2010).  The company's stock price has just been moving sideways ever since. A short term uptrend can be seen starting Oct 2011 (Green line).  50 day moving average (blue line) may stand as support while its MACD will try to form a higher low, bouncing back up hoping to finally break out from its more than 1 year resistance line.


** Special thanks to gunther of FM for pointing out that I was using Total Assets and not Shareholders' Equity as the book value.  I edited this post to modify the book value computations.
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This post does not give a comprehensive analysis on the company/industry.  This is only a summary or a company snapshot as of the date it was posted.  Spotlight stocks featured in this blog are being chosen arbitrarily, and are only intended for the blog owner's personal consumption; not as a form of solicitation to buy or to sell.  Comments from readers who would like to point out errors, to share ideas, etc are most welcome. 

March 2012

ScIoN Fund (mid-long term)

YTD:  +18.20%
Benchmark: +16.2%

March was a generally good trading month for me since my portfolio increased for another 6% in just 2 weeks.  I was able to realize gains from ANI, TEL and PXP.  TA cash dividends has also arrived.  Biggest portfolio movers maintain to be FDC and MARC.  However, on the latter part of the month, MARC had a big correction going down to 3.  I'm currently 2% above my benchmark, so I'm happy with my first quarter performance so far.

I'm still bullish for our local market; however, I'm waiting for another correction of the market.  Index was able to maintain the positive trend channel which started January this year.  But, comparing it with the MACD indicator, there seems to be a negative divergence.  The ScIoN fund is currently 21% cash, so if ever there would be a major dip, I'd have enough ammo to buy.


AJC Fund (short term fund)
YTD (2 months):  -0.68%
Benchmark: +4.4%

The AJC Fund reached its all-time high of a +4.17% mid-March thanks to MARC (High of 3.52); however, as mentioned earlier, it went back down to 3. Since the portfolio is less diversified as compared to the ScIoN fund, volatility is higher at this point. I exited MARC at 3 with a gain of around 8%.  Last month's losses (-2.97%) were recovered and now, portfolio is at a near break-even (-0.68%). 


The challenge here is to beat the benchmark portfolio.  It includes EDC, BEL and MPI which were big gainers for March; thus, having a good run this month (4.4%).  I had entered AGI; however, price movement turned out to be a bull trap.  I'm having Cash ready at 70%, waiting to jump in when the market corrects.  

April 2011

Took a lot of losses this month as I am now enforcing discipline into my trading plan.  Finished the 2 part lecture on Technical Analysis provided by COL.  I find it very effective especially the observance of the 1:3 risk reward ratio. 

Despite the cut losses, the equity value on my portfolio rose to as high as 6%, mostly thanks to EDC and PX.  FDC is also now on the positive region.

Despite my earlier plan to just keep a minimum of 4 stocks to trade, I don't think it is no longer possible for me.  Right now, I am holding 8-10 stocks at a time.  About 3 of which are my core (AP, EDC, FDC, AMC), while the rest are for momentum plays.  PX is a leftover hold, yet gives me significant gain which even reached up to 30%.  URC, TA and FLI are my latest stocks and I hope they would not disappoint.  AGI has been a laggard, as I was not successful in range trading this stock.

April performance:
Cash: -0.91%
Equity:  +5.83%

March 2011 Performance

I am now going back closely to my previous high with regard to the amount of my equities.  Starting around November, Philippine stocks buckled away from its bullish trend as it underwent consolidation.  I even added up on my capital at the start of the year, which in hindsight was not good timing since prices continued to go down.

Mutual fund companies posts an average of around -3% YTD gain.  Based on my COL account, my YTD gain is -0.66%, already quite close to break-even.  If I am able to maintain this rate, dividend income coming in this April would be able to lead me out of the negative region.  This is definitely a relief for me since I have experienced reaching higher losses up to more than 10% during the first 2 months.

As per month-to-month performances, cash earnings went up by 1.23% while my total equity portfolio improved by 2.62%.  Below are the list of current stocks that I have:

Core:  (Long term investment based on growth potentials and that are heavily traded)
AP
EDC - after consolidating for many months.  It seems 2nd quarter would be EDC's time to shine.

Value: (Usually less liquid stocks but has growth potentials or is extremely undervalued)
AMC
FDC - I plan to accumulate more at 4.2 levels.  The firm would at one point, need to jack up its stock prices before its SRO.  They need to increase their float before November 2011, or else tax incentives as a listed company would be forfeited.  There are also plans for East West banks IPO this year.

Speculative:
PCOR - Bought this due to current prices of oil being high.  Unfortunately bought at a high, and I'm still not sure if it was the right thing to do during the time.  PCOR is more on oil distribution.  Could've explored more into oil drilling business instead (i.e. PERC)
PX - Bought this due to rumors on the PX and MA deals.  PX was relatively less risky as compared to MA, although I think MA should benefit more from the deal.  Latest news reveal that if ever the deal would push through, PX would get 60% while MA would get 40% on their deal on MA's mining rights.  Capital expenses would be provided by PX though.

Swing:
AGI - Trading at a range from 11.3 to 12.  I'll take advantage of it in order to lessen my losses.

After Another Major Correction

And so FDC disappointed me badly, currently having a 24% loss (!!).  The big price drop was due to the ongoing market correction, and was pushed further by the retraction of FDC in stock offerings due to the low price (which ironically made it lower).  I'm still holding this for the long term, albeit recognizing it as a stuck for now.  I still believe it is a fundamentally good stock, however, with its low float, I'm not sure when will it start going up again.  I am actually tempted to buy more to average down however, I am still studying some other options (stocks), hopefully to regain short term losses.

Some notes:
DMC- Director Sid buys at around 32.6, so it should be safe at those levels.  Probably average down at that price in case it goes lower again.
AMC- Milk prices are projected to go up.
AGI- c/o MEG is currently looking good at this down market.  Seems like property stocks are slowly going back in play.

Watchlist:
PCOR- with oil prices looking to go up, this stock may be cheap at these levels.  Plus good volume on the past 2 days.  Buy at 14.37.

Bumpy Ride Ahead

 From now on, I shall classify my holdings accdg to my investment plans.
Yesterday and today was bloody as hell.  I wasn't able to monitor today as I went out to play tennis instead hehe.  PSEi now in almost flat 4000.

Core (Long term)
AP - based on the latest candlestick, it might go down more.  RSI shows nearing oversold conditions.  Trade for profit at 28.76?
EDC - Range trading for now. 
AMC - I rarely monitor this hehe.

Momentum
AGI - If it shows strength tomorrow, it should be a good sign as it would bounce from its lowest RSI, and will confirm reversal, based on the hammer candlestick.
DMC - Break down.  May still continue descent until it gets oversold.
MPI - Must remain above its support at 3.86

watchlist
SCC -  buy at 180.  Bounce back at 178.
LND - buy at 1.46.  Stop at 1.26

First Blood!

The last 2 trading days was a bloodbath for most traders, especially today.  My paper profit from DMC and AGI had just been wiped out! I am currently holding Blues, which should have been traded on the swing. 

For the past few weeks, gains only come from the 3rd liners.  Because of this, I was tempted to enter in this so-called "basura" (garbage) stocks, with CYBR as target after its ceiling play last weekend.  Well, for now, the stock might be in consolidation mode, especially since the market was generally down today. 

I haven't had any gains yet since the start of this year.  I really should start thinking about swing trading the Blues, before any major trend comes up.  Or, just tell myself to be patient hehe. 

AP and DMC had a big drop today.  I've checked AP's previous charts and saw the 30 initial support.  Added shares @29.8, however it closed down further to 29.  I hope it doesn't continue to go towards a down trend.

Stocks to watch:
SCC - formed a bullish pennant.  Just wait for a rise in volume.

Before Classes Starts

I'm trying to take advantage of what little vacation I have left, in order to be able to monitor the market.  However, the PSE seems to be on a lull.  Except for speculative stocks providing profits, the usual blues are still in consolidation mode.

A short look on my current holdings:

AGI - Waiting for a breakout at 13.16.  Failed.  Sell on Strength.
AP -  Consolidating.  Buy the Dips
DMC - Hold. Maintaining Up Trend
MPI - low volume, but still continuing up trend.
EDC - Resistance at 6.15.  HOLD for now.  Generated 2 Buy signals (MACD and DMI)

A Look on AGI

CLSA (323) bought up at the open and was followed by the other foreign brokers.  Both MACD and DMI generated BUY signals with some support on the volume.  ParabolicSAR shows that the stock is just starting on its uptrend, as confirmed by the change of trend in the DMI chart. 

MEG, one of AGI's subsidiaries had been pointed out to be among those involved in year-end window dressing, so caveat on the rise in prices of related stocks.  Also, AGI has been treading on unchartered territory this year, as it has been consistently gaining new highs.

But so far for me, buy signals with support from foreign investors is good for me.

PD:  I have AGI at a cost of 11.58 and has been holding this stock for less than 2 months already.

End of November --> Finals Week

The long-awaited market correction has finally come, and I have not been spared. On the beginning weeks of November, I was able to cash in profits coming from AP and ORE after a month's hold, with 33% and 20% gains respectively.

During the first dip of the market correction, AP and ORE have been among the few that didn't get affected.  I thought of selling my ORE to lock-in profits, then shift towards stocks that gained new lows; thus, shifting to DMC.  Turns out, the correction has not yet reached bottom, so for a few weeks, my portfolio went down to as far as -7%.

Though I didn't intend to, I was holding a diversified portfolio of 7 stocks; thus, was able to lessen the risks on the volatility of the market.  My hardest-hit stock is URC, which currently sports a -13% paper loss (even reaching -17%).  I can imagine now that if I would need to maintain lesser stocks in my portfolio, I also need to be critical of my cut loss points.

As of the end of November, my realized cash gains were 7.08% while the standing of my portfolio is at -5.41%.  As of this writing, on the first weekend of December, the market has bounced up, and I hope this would not be what they call a "Dead Cat Bounce".  I am looking for ways on how to reposition myself. 

So far:  (PD)

AGI - hold.  May now as well continue trending up.  Signals have just crossed on the MACD line.  This might be a good Xmas stock, as lots of people will surely flock the casinos in Pasay = good revenues. :D

URC - trading above EMA levels and nearing a MACD cross.  A hold for now, but ready to shift once a good choice would be decided upon.

DGTL - For the nth time, seems like the market is still not interested with the DGTL story.  The telco industry in general shows lackluster performance in the market.  This stock got hit by the correction, now at around 7% loss in my portfolio.  I need to reposition again from this stuck.

ORE - Supposed shipping for December has been reported to be delayed up to next year, thus stock price showed some weakness during these past days.  Although my hold for this stock are actually just residuals from a partial sale before, I really should find a window in taking profits from this.

EDC - Still at 4% paper loss.  MACD shows a resting phase, in which we may see a rise in the future if only there would be favorable news enough to push the stock price back to top.

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Seems like I will just be holding my stocks up to year end.  My first trimester in grad school is about to end, and I have been busy again.  I hope I would have more fruitful trades next year.

Consolidation

The 2nd week of November proved to be a bloody one as the long awaited correction has finally come.  I held on mostly to my stocks since I was still busy with the midterm exams.  By the weekend, my total portfolio went down to about 5% from last month's equity.  Not bad, I guess since I now have a diversified portfolio, albeit a bit shamefully with 6 stocks hehe.  Most of which was due to some "stuck" situations leading to a hold.  I do hope I could get out quickly, to organize my portfolio to a hold of up to 3 core stocks only.

My biggest losers were EDC and URC with around 10% loss each.  EDC has been reported to be fundamentally good, despite consolidating for 2 months now.  As for URC, no news from it yet, but I think it wouldn't be able to rise back again up for my gain.  I plan to shift it towards a moving stock, perhaps like SCC; thereby, readying myself for a loss. 

Good thing I was able to sell my ORE (although not all of them), before the rundown.  This gave me a chance to buy DMC at a low (but not so low).  On the 2nd day of market decline, I thought it was already a good buy.  Only to realize days after that the correction is not yet finished.  DMC went to a low of -8% last weekend.

Today, market produced green candles, although with low volume.  I guess we're still on a consolidation phase, but at least this may signal a near reversal in the future.  This may be a reaction to Pacquiao's win over Margarito yesterday as local investors have been on a good mood. :)  Or, let's just say a lot have already been buying, thinking it's time to shop for lows.  If on Wednesday, the market would pick up again, then that would be a good signal for the rebound.

From a -5% month-to-date loss last weekend to a -1.5% loss today, I'd say my portfolio is still doing good.

A recap on my most recent trades: 
a.) AP --> AGI  :  I got out of AP thinking of a MACD cross at the top.   Only to find out that AP's reign is not over yet.  In fact, AP has been one of the few stocks still left standing despite the correction.  I think next time, it is still better to wait for the cross, then sell on strength.
b.) ORE --> DMC:  ORE still seems to be a good hold, however with the ongoing correction, I did the right thing of selling on profit and moving to a "cheaper stock".  ORE didn't have a selldown yet, while DMC went down from a near-40 to a 35.
c.) DGTL: I am comfortably positioned on this Telco, especially with a very positive 3Q earnings report.  While TEL and GLO went down, DGTL seems to pick up the pace for the industry.  Definitely a turnaround story.  Unfortunately, I just have a relatively minor hold on this stock.
d.) EDC : It's a bit hard to trade this stock for the long term.  I guess it is not yet ripe for the year.  It usually gets a parabolic rise, then consolidates roughly.  So far, fundamentalists have a good say on this stock (now that it's on its lows), so I'm still holding on for now.
e.) URC : I will just see how far it could gain on the next few days, then will surely transfer to a better moving stock.  Seems like URC has been on its high now at the 40ish range.

PD:
EDC- 23.5%  (5% paper loss)
DMC- 17.4% ( break even)
URC- 16.3% ( 9% paper loss)
AGI-  15.4%   (3% paper loss)
DGTL- 12.7% (2.2% paper gain)
AMC- 9.6%   (1% paper loss)
ORE- 3.7%  ( 19% paper gain)
cash - 2%