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FINANCIAL CHRONICLE™ » EXPERT CHRONICLE™ » EPF/ETF - Poor invesment strategies...

EPF/ETF - Poor invesment strategies...

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Think9

Think9
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I always had this question. Do the EPF funds get invested in good shares?? and do the department analyst do proper study in stock before buying ??

EPF/ETF are people`s money. I think they have done so much mistakes before and im quite shocked who advice to buy.

i can remember, EPF bought huge qty of SPEN at 220, then 180 level , again 167 , latest 135 . And now its 134.. Why such a poor investments ? I mean we all know SPEN and most of the hotels got a higher PE. I mean just using simple ratios anyone can understand that SPEN is over-valued until it falls to 130-135 levels.. How many additional no.of shares EPF would ve got more no of shares, if they bought at 130-140 levels instead of 180-220 levels..

And mind you, EPF invested on GRAN at 220 levels..

Related articles :

http://www.ft.lk/2011/06/29/epf-active-in-sluggish-bourse/

http://www.ft.lk/2011/05/25/epf-buys-1-m-more-shares-of-spence-hotel-holdings/

http://www.ft.lk/2011/04/21/epf-invests-more-in-aitken-spence/



Last edited by Think9 on Wed Jun 29, 2011 9:16 am; edited 1 time in total (Reason for editing : spellings)

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Post Wed Jun 29, 2011 9:18 am by duke

I think holding companies should go around a PE ratio of 10 because they're just a holding company. That means it should come around half its current value.

Chinwi

Post Wed Jun 29, 2011 10:05 am by Chinwi

This is a big topic.

The open secret / rumor in the stock market is that the guys who decide what shares to be bought by these funds first collect them in big quantities for their own accounts using the big loans given by friendly banks ( the lenders know there will be no problem).
With the buying interest the prices go up and when the prices reach peak the funds wake-up and buy shares.

If you analyze the history of the shares bought by these fund for past 1-2 year you may see they didn't touch them even when we were buying. All of sudden they come in and buy in big quantities when others sell to get profits.

avatar

Post Wed Jun 29, 2011 10:09 am by Academic

@duke wrote:I think holding companies should go around a PE ratio of 10 because they're just a holding company. That means it should come around half its current value.

Yes. Largely diversified holdings should be subjected to "Conglomeration Discount" in calculating their fair value. Thus PE should be lower.

xhora

Post Wed Jun 29, 2011 11:11 am by xhora

It was proven in a TV political discussion that when last year stock market grown about 90+% return on investments to EPF fund was only about 4% what a waste.

avatar

Post Wed Jun 29, 2011 11:22 am by duke

@Chinwi wrote:This is a big topic.

The open secret / rumor in the stock market is that the guys who decide what shares to be bought by these funds first collect them in big quantities for their own accounts using the big loans given by friendly banks ( the lenders know there will be no problem).
With the buying interest the prices go up and when the prices reach peak the funds wake-up and buy shares.

If you analyze the history of the shares bought by these fund for past 1-2 year you may see they didn't touch them even when we were buying. All of sudden they come in and buy in big quantities when others sell to get profits.

Like what a person named Nimal Perera did.
http://www.ft.lk/2011/05/05/deals-within-deals-only-spark-in-bourse/

May be in civilized countries these things make investigations.

avatar

Post Wed Jun 29, 2011 12:18 pm by Academic

Most of so called High Net-worth Individuals have similar stories some where in their life lines. The CSE can't make attractive for foreigners if rulers do not take steps to punish and stop inside traders and manipulators.

econ

Post Wed Jun 29, 2011 12:20 pm by econ

it seems that those central bank fund managers do not care about public funds like EPF,ETF..

Think9

Post Wed Jun 29, 2011 2:37 pm by Think9

And this s what Dr.harsha de silva has to say-

http://www.ft.lk/2011/04/01/dr-harsha-de-silva-challenges-central-bank-on-epf%E2%80%99s-investments/

Btw guys check out the crossings today on SPEN and AHUN.. EPF buyin more to avg ?? hehe. probably someone has seen the post.. lol. . ( joke )


TODAY'S CROSSING

Time Crossings

13:37:49 AHUN 299,432 @ 75.00
13:37:20 AHUN 275,905 @ 75.00
12:39:30 AHUN 2,000,000 @ 75.00
12:07:06 SPEN 171,000 @ 133.00
12:06:36 SPEN 237,500 @ 133.00
12:00:53 SPEN 500,000 @ 133.00
11:58:35 SPEN 500,000 @ 133.00
11:44:29 SPEN 500,000 @ 133.00
11:44:19 SPEN 500,000 @ 133.00
11:42:53 SPEN 500,000 @ 133.00
11:42:25 SPEN 250,000 @ 133.00

avatar

Post Wed Jun 29, 2011 2:39 pm by duke

@xhora wrote:It was proven in a TV political discussion that when last year stock market grown about 90+% return on investments to EPF fund was only about 4% what a waste.

Are the EPF reports available anywhere? I'm also an investor of the fund as most of you.

avatar

Post Wed Jun 29, 2011 2:53 pm by gamaya

They bought Gran at 200 laughs at 50.

They can easily buy at lows like this. Even newcomers to CSE have made much more gains than this. I wonder what kind of analysis they do before buying.

avatar

Post Wed Jun 29, 2011 3:01 pm by eeyohan

dear Friends EPF and ETF got enough holding power more than 20 y ... they can hold ... don't worry abt it

Think9

Post Wed Jun 29, 2011 3:06 pm by Think9

safeguarding some of the investors ?? ; ) Im sure it is a factor as well.

talk about GRAN. it hit 260 making it up 20 - 30 rupees per day but CSE didnt band it at all. but now it around 100 - 110 levels which is 150% down. I feel GRAN will come to 70 levels and will again start sky rocketing.

AND IM SURE ! CSE wont band it . never !

Think9

Post Wed Jun 29, 2011 3:16 pm by Think9

@ eeyohan : I think i ve to teach u how EPF and ETF works until we get retire.. but well........... u knw! i cant waste time..

but just an economy lesson :

when you HOLD.

Hold = saving = economy leakage. When economies is not circulating well, the growth is pretty less. That wats happening in developing countries. so it consumers / gvmnts resposibility to make sure things money get circulated .

example : By the time SPEN reach 300 , I can buy and sell in different levels and gain more than 1000% profits.. and if the gvt has done the investments properly Im sure they would ve developed the country more. At least to cover the huge loss gvt get from water board .lol. but in terms of business, i called it " Poor investment strategies " .



aladdin

Post Wed Jun 29, 2011 4:43 pm by aladdin

Guys i feel all of u are going on a wrong direction. A fund like EPF is not investing on short or medium. Normally they invest looking at the long run such as 5-10 years of profit realization. In that view what above discussed will not be valid. Many think that the decision made by EPF is wrong because majority is in the set of mind of look at the short run.

But one thing is bit suspicious to me. All the time the seller was same to EPF. May be a core incident. But who knows.

I report u decide.

avatar

Post Wed Jun 29, 2011 6:17 pm by Academic

@aladdin wrote:Guys i feel all of u are going on a wrong direction. A fund like EPF is not investing on short or medium. Normally they invest looking at the long run such as 5-10 years of profit realization. In that view what above discussed will not be valid. Many think that the decision made by EPF is wrong because majority is in the set of mind of look at the short run.

But one thing is bit suspicious to me. All the time the seller was same to EPF. May be a core incident. But who knows.

I report u decide.

Just because you are going to hold for long why do you pay more?

Suppose you gonna buy a land to hold for 20 years, if you can buy it for X would you pay X+Y and buy?. It is always beneficial to buy at low regardless the time-frame ! No more justifications are needed (common sense), I suppose.

avatar

Post Wed Jun 29, 2011 6:43 pm by wis

@xhora wrote:It was proven in a TV political discussion that when last year stock market grown about 90+% return on investments to EPF fund was only about 4% what a waste.

Is it really 4%? Anyway not a surprise if it is.

Think9

Post Wed Jun 29, 2011 7:11 pm by Think9

agree with academic.. it is commonsense ALLADIN..

generally why do a bank giv us a loan?. coz they use it to earn higher by re-investing. Same as for EPF /ETF funds. What they do as holding, they re-invest in order to gain more. And from the gain they get, they can use for the benefit of the country. Im not sayin our EPF and ETF are on a risk, what im saying is y can they invest wisely and do more things.. im pointing the finger on EPF n ETF board.

im sure now the 4% also not there. : D .

aladdin

Post Wed Jun 29, 2011 7:51 pm by aladdin

@Academic wrote:
@aladdin wrote:Guys i feel all of u are going on a wrong direction. A fund like EPF is not investing on short or medium. Normally they invest looking at the long run such as 5-10 years of profit realization. In that view what above discussed will not be valid. Many think that the decision made by EPF is wrong because majority is in the set of mind of look at the short run.

But one thing is bit suspicious to me. All the time the seller was same to EPF. May be a core incident. But who knows.

I report u decide.

Just because you are going to hold for long why do you pay more?

Suppose you gonna buy a land to hold for 20 years, if you can buy it for X would you pay X+Y and buy?. It is always beneficial to buy at low regardless the time-frame ! No more justifications are needed (common sense), I suppose.


brother as every one else the people who drive that fund also cannot 100% predict the market. I am prety sure that when EPF was buying these shares, those showed a buy signal in all the technical as well as the fundamentals. Unfortunately due to many reasons the price has drop by now. So what i said is, the are not looking at short term. They look very very long term That is the reason they keep on buying mate. Look what will happen in 5-10 years time. I am 100% sure they get more than 100% profit. If they deposit the money in TB's they will end up geting just max 50% for 5 years. That is what i wanted to explain.

aladdin

Post Wed Jun 29, 2011 7:55 pm by aladdin

@Think9 wrote:agree with academic.. it is commonsense ALLADIN..

generally why do a bank giv us a loan?. coz they use it to earn higher by re-investing. Same as for EPF /ETF funds. What they do as holding, they re-invest in order to gain more. And from the gain they get, they can use for the benefit of the country. Im not sayin our EPF and ETF are on a risk, what im saying is y can they invest wisely and do more things.. im pointing the finger on EPF n ETF board.

im sure now the 4% also not there. : D .

As i explained in reply to Acadamic, if we look at this in a small scope of a mentality of getting high return in short term, then yes EPF has failed. But think of the broaden scop and potentials of the companies they bought. Then u can see the big picture. But saying so, i said i am but suspicious about the transactions because always (Most of the time) the seller was same. Who knows. Anything is possible in CSE.

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