Payout Ratio

Payout ratio is simply Dividend Per Share (DPS) divided by Earnings Per Share (EPS), which tells you how much buffer does the company have for it to increase its dividends. E.g. EPS for Singtel is about 22c and DPS is 11c on average for the last few years, so the payout ratio is 50%.

But what is a good payout ratio?

If the payout ratio is 30-40%, which I would say is probably below the global average, then you know the company has some room to increase dividends.

If the payout ratio is close to 100%, ie the company is paying everything that it earned as dividends, then we cannot expect a lot of growth in dividends unless earnings is going to grow significantly.

In Singapore, sadly, a lot of high dividend stocks also have very high payout ratio, ie no further room for dividend to grow unless earnings can grow. But if earnings can grow, then the firm would want the money to invest in growth and not return them to shareholders. Hence high dividend plus strong growth is an oxymoron. These stocks don’t exist. Or they are very rare.

When dividend and payout ratio both gets too high, dividend cut becomes inevitable.

However, cutting dividend is a big deal for many companies in Singapore, bcos a lot of shareholders buy Sg stocks mainly for their dividend and if it is cut, it means disappointment and selling pressure. Of course it also shows that management is not capable of steering the business well enough to pay their shareholders.

In fact, it got so important to the extent that some companies actually issued debt to pay dividends!

The two prominent cases being Singpost and Starhub.

In the early years when Singpost was listed, it was obligated to pay a high dividend yield for some reason that I forgot. So while Singpost’s net profit was just over S$100mn, it has to pay S$300mn in dividends! So bo pian, raise debt to pay dividend. However, that only happened more than 6-7 years ago and the company hasn’t done anything stupid like that ever since.

Ok let’s talk about Starhub.

For the past few years, Starhub generates annual net income of roughly S$300mn and pays roughly $300mn in dividends as well! At the same time, the firm increases its debt holdings almost every alternate year, in 1 year by as much as S$600mn! So people asked questions like why do they raise so much debt when they could have cut the dividends to save money?

Well I guess there are no easy answers. But if we analyse the cashflow statement of Starhub, we can see that perhaps the situation is not as bad. So it might be worthwhile to look at free cash flow vs dividend paid instead. Which is what I would do in the next post!

Singapore's Dividend Aristocrats

The S&P Dividend Aristocrats is a list of stocks in the S&P 500 index that has increased dividends for at least 25 years. As you might guess, this is definitely a very tall order and as of 2010, if I remember correctly, only 10% or 50 stocks made it to the list. It is expected that the list will further dwindle to 40 stocks or so which prompted some to ask whether the criteria is too stringent.

Well, that is the way with our world, I guess, when we don't make the cut, we can always lower the bar ourselves. Haha!

Anyways, some of the names on this prestigious list are very well known, like 3M, Johnson and Johnson, Becton Dickinson, Coca Cola and P&G etc. Thet last four are also famous holdings of our hero.

Intrigued, I went to take a look at which Singapore stocks had a good track record of increasing dividend. Well as our history is not as long, I used a looser criteria of increasing dividend for at least 8 out of the past 10 years.

Here is the list of stocks.

Well, I guess you are as disappointed as I am. Only 8 stocks made the cut. Of which 3 pays a miserable 2% dividend. 2 are in property and construction, a treacherous sector. Another 2 of them belong to the same group entity. And 1 of them is not even a Singapore company.

There are 2 banks, but value investors are very wary of banks bcos there are just too many moving parts to get a good read on these financial beasts. Even Buffett had his fair share of trouble with Salomon Brothers 20 years ago and now Goldman Sachs, which is being criticized for screwing clients left right centre.

Raffles Medical, one of the 2% yield stock, might be interesting but its valuation is way too high at 26x. Might be worth doing some research now and wait for a good entry point.

The truly investable Dividend Aristocrat of Singapore might be SPH but it's main business is in a declining franchise and its high property value is based on frothy valuation in a flood infested shopping district.

In a nutshell, using the dividend arisocrat criteria cannot help us find good stocks in Singapore. We might have some luck elsewhere in Asia.

What constitute an investment?

The way I see it, an investment has to be something that can generate cashflow. Stocks give dividends, bonds give interest and real estate gives rental income. These are real investments.

However in the strange World of Wall Street Craft, anything and everything becomes a feasible investment, an asset class of its own. The recent boom earlier this decade being commodities.

But if you think about it, commodities shouldn't be considered an investment bcos you don't get a cashflow. Holding a ton of copper, or a ton of wheat doesn't give you cashflow. The whole premise is based on prices going up. And when it's based on just prices going up, then it's dangerously close to the idea of the Greater Fool Game. Where you can only make money by selling something that is worth very little, at a higher price, to a greater fool who is willing to buy.

That is why value investors are not interested in price, we are interested in value. Price merely tells us if we can get the asset below its value. If there was no transparent price on the asset, we are happy as long as we have cashflow. But if there is no cashflow, you cannot calculate an intrinsic value of the investment. And in that sense, commodities cannot be classified as an investable asset class. Needless to say, a lot of the newly created asset classes like art, wine, vintage watches and other funny stuff cannot be called investment.

However, if those above mentioned can somehow be construed to generate cashflow, then the story becomes different.

For e.g. if a couple of artworks can be put together at an exhibition hall, and the owner can charge fees for viewers, then we have a cashflow, and the whole business can then be valued. In the same vein, wine is not an investment but the vineyard is. Copper may not be a true investable asset class, but a copper mine or a mining co. is definitely investable.

Similarly, traditional assets that count as investments may not be such if it doesn't generate cashflow. The best examples would be perennial loss making companies. Think Chartered, NOL and the likes.

As the saying goes, cash is king. Well if cash is king, in my opinion, cashflow is then the true master of the universe.

The Story of Bak Kut Teh

Just heads up, this is a post with very little value add. I thought about this while eating Bak Kut Teh. Just for entertainment. :)

For the non-ASEANs reading this, Bak Kut Teh is a Chinese dish that originated in S.E.Asia that is made up of spare pork ribs cooked in traditional Chinese herbs and served in a soup. It is also usually served with rice and soy sauce. You can take a look at my half eaten set below.

There is an interesting urban myth about the origin of the dish. Coolies working in Singapore and Malaysia earlier last century had to do tough work like carrying heavy goods at the ports for the whole day. As they were very poor, eating meat was not an option and eating food lacking nutrition ultimately resulted in poor health, sickness and weak bodies and their ability to work to generate money.

So Bak Kut Teh came to the rescue. The coolies would buy ribs that nobody wanted from the butchers at a cheap price, mixed with simple herbs (also cheap, I think) and then eat with rice and soy sauce. Simple as it is, this dish gives them strength, helps to prevent sickness and allow them to work all year long.

Of course today Bak Kut Teh has evolved into a popular dish that actually costs more than normal hawker food and it is usually served with spare ribs with lots of meat, You Tiao (or fried dough) and other stuff.

So while eating Bak Kut Teh, I thought about investing and realized a few analogies which could be drawn.

1. Value for money

Obviously, value investing is about buying more for less. Buy a good company at a reasonable price. Buy things cheap. Bak Kut Teh stands for this. Well at least during the coolies' times. Cheap but nutritional, helps the coolies stay healthy, get work done, earn more money. Today it is a bit different lah.

2. No Fat

In investing we want to buy companies that are lean and mean with no fat. That's Bak Kut Teh! Companies must understand that they have to stay lean in order to generate good returns. Actually, we ourselves strive to stay healthy and keep those cholesterol away so that we can fend away the harmful effects of metabolic syndrome right?

3. Innovate in changing times

The origin of Bak Kut Teh crystallizes the spirit of innovation. First, the coolies or whoever working with them came up with this spectacular dish that helped improved lives. Then, over the years, the dish itself evolved to fit into society. Even today, it's a highly popular dish. In investing, we must also be on the lookout for companies that can keep re-inventing themselves. As we speak PC and PC related companies are dying, big names like Intel, Dell and Microsoft are going all out to re-invent themselves. Although I must say, it's very hard to predict which companies can successfully evolve.

As with individuals, a lot of people struggle to stay relevant in society bcos things are moving so fast, it just gets harder and harder. Perhaps the story of Bak Kut Teh is really about evolution and how we should always re-invent ourselves to be useful.

High Dividend Stocks

An updated post "High Dividend Stocks 2011" is finally out! Do check it out.

Here is a list of stocks that I generated using the following criteria

1. Market cap more than $50mn
2. Dividend yield more than 4%
3. Past 3 yr average ROE more than 9%
4. Past 3 yr FCF yield more than 7%
5. Past 3 yr EBIT margin more than 4%

Obviously, as with all quant screens, more work needs to be done to refine the results. The first counter definitely look strange. I mean, with dividend of 30%, in 3 yrs you get back your capital. How likely is that?

Chances are something is wrong with the firm or with the data.

The name that I thought might be interesting is Telechoice - which sells prepaid phonecards. With the immigration floodgate opening again, it might see some profit boost in the next few years.

The other safe and well-known dividend names like M1, Starhub, SATS etc, well should always try to buy more of these if you believe in the Singapore story.

Well a small gift to all the teachers reading this blog today!

Valuation Expansion

On Wall Street, a lot of educated monkeys like to talk about valuation expansion. Basically valuation expansion simply means that some stock trading at 15x PE should be trading at 25x PE bcos its industry is sexy, or the company has undergone transformation of its business to become the new growth story or some other cock-and-bull story.

So say the stock price today is $15, and the stock earns an EPS of $1 ie PE is 15x. Valuation expansion simply means that the stock should be $25 bcos PE should be 25x. The basis of this argument is that since the stock is in a growth industry, or has transformed its business, or watever crap reason, the future EPS is not just $1 but much higher. Since we are not sure what that would be, just give it a higher PE to justify this growth.

The ingenuity of this crap theory is that nothing changed, but the "value" of this stock just expanded 60%. This then can be used to justify buying the stock at any price bcos we can always assuming super normal growth and increase the valuation. We can even increase the target multiple further from 25x to 50x. This would expand the original "value" by 333%.

Let's just do a simple experiment the debunk this valuation expansion theory.

Yr 0 EPS $0.5 (Stock price $25, ie PE 50x)
Yr 1 EPS $1 (Stock price $25, ie PE 25x)
Yr 2 EPS $2
Yr 3 EPS $3
Yr 4 EPS $4
Average EPS $2.1
True intrinsic value (using PE 15x) = $2.1 x 15 = $31.5
Upside = $31.5/$25 = 26%
Upside per yr roughly 5%

So assuming today we are at Yr 0 and this company started out with an EPS of 50c but bcos of its super power growth, the stock market has already valued it at 50x PE current yr and 25x next yr. Of course this is assuming it didn't disappoint, its EPS doubled to $1. In fact it didn't disappoint for the next 4 yrs and its EPS grew from the initial 50c to $4. This stellar firm actually grew its earnings 8 folds in 5 yrs!

Now how spectacular can a normal company get? I would think this type of growth puts the world's best growth firm to shame. Look at APPL, the darling-est growth stock in our lives. Currently it's the 2nd biggest company in the world by market cap. Its net profit was $1.3bn 5 yrs ago. Last year, it was $8.3bn. The 5 yr growth alas is 6.4x, still a tad less than our hypothetical co. at 8x.

So 8 fold increase in EPS is really as good as it gets. But, if you have bought it for 25x or more, the return in stock price is likely to be single digit return. As I calculated, the intrinsic value is $31.5 vs today's price at $25. Of course, the stock might bounce up a lot, to say $50 then collapse, or it's price might continue to stay very much higher than its true value of $31.5, but we are value investors remember? We don't follow prices. We follow value.

What I am trying to say is this: when you buy a valuation expansion story, your rate of return is destined to be meager even if the story comes true. In our hypothetical case, the stock return over 5 yrs is about 5% per yr. How fantastic!

To me, valuation expansion is then just another variation of the Greater Fool Game. Valuation expansion means the earnings of the company is not great now, BUT bcos there are a lot of people willing to pay 25x now, therefore the stock price should rise by a huge magnitude.

I would think that a better way to make money would be the always buy below PE of 17-18x. Value investors would certainly do that. With valuation expansion, there is no margin of safety at all. What if the growth didnt come true? What if the genius CEO died?

So when you hear valuation expansion next time, pls beware!

PS: APPL did trade at 25x PE 5 yrs ago and you would have made a lot of money buying it at 25x 1 yr fwd and held it until today. But the better chance to buy was during the Lehman Crisis when the PE fell to 15x 1 yr fwd and you could have more than doubled your money in 2 yrs!

Did Buffett underpay Mrs B?

I did a post some time back highlighting that perhaps the acme of investing might actually be not to short-change anyone in any transaction. ie to buy a stock at its intrinsic value while waiting for the intrinsic value to grow. This is a very sensitive point when we are dealing with day-to-day business owners rather than the stock market.

Obviously buying at intrinsic value is also different from buying a company at a huge discount and then waiting for it to revert back to its intrinsic value, which is the original thesis of value investing.

I thought that Buffett might have just pulled this off, and that is why he is the greatest investor on Earth.

Recently I did some study on the exact transaction that he did: buying over Nebraska Furniture Mart from its long-time founder and operator Mrs B.

The story goes something like this. In 1983, Buffett on his birthday, simply went in to the Mart and asked Mrs B. if she would like to sell, and at what price?

Here are some no.s at the time the transaction was done.

NFM
Sales 100mn (reported)
NP 5-10mn (estimate by 8%pa)

GPM of NFM 60% (reported)
Furnture mkt OPM 10% (industry average)

$55mn of 80% stake (reported)
$69mn for 100% stake (reported)

Buffett paid 7-14x PE

Based on my estimate, Buffett probably paid 7-14x PE for NFM. Now this is a huge range. If he paid 7x, he would have obviously underpaid Mrs B. If he paid 14x, then it's probably fair. So did he underpay Mrs B?

Well, sadly we will never know for sure, but chances are Buffett probably did underpay somewhat, judging by his track record and considering how the firm grew over the past 30 years. However we must also note that Mrs B was a willing seller at $69mn. She quoted Buffett that price.

Also, Mrs B probably would not have gotten much more if she were to list her company in the stock market. The brokers will take a cut. She has to pay for some auditors. Perhaps hire a few more staff to handle Wall Street people etc. With Buffett, she got her $55mn check on that day. And the best part, she continues to do what she does bcos Buffett wanted her to continue to run the business. No Wall Street analysts on her back every quarter!

I guess the conclusion here is that Buffett might not have been as noble as I thought. He did underpay his acquaintance somewhat but judging from the circumstances, Mrs B didn't mind that she got a couple of millions less (that is assuming she actually bothered to go and do a thorough valuation of her own co.) and she gets to do her job exactly the same way she liked it.

In fact, a couple of years later, Mrs B sold another business to Buffett. If she felt cheated, would she had gone back to Buffett?

The real lesson learnt for me here would actually be thinking about the best solution for both parties in every transaction. This means disclosing all the pros and cons to each party about the transaction, not witholding any information at all and working out the seek the win-win situation. I think this is very possible if both parties are rational, honest and committed to a long term relationship.

Portfolio Management for Retail Investors

Ok so much so for institutional portfolio managers. On average, they are crap. Once in a while, you find stars like Peter Lynch, Seth Klarman and Warren Buffett. But these exceptional people are far and few in between.

The interesting story about Seth Klarman is always about this book that he had written like ages ago, called “Margin of Safety”. It talks about value investing and it didn’t sell well at all. So it went out of print. But recently, some Wall Street people started to bid for it on Ebay and it was sold for US$1,000!

Well, I got a free internet copy and am reading it. Cost me like S$10 to get it printed and binded.

Anyways, today we talk a little about portfolio management for the retail investors. How can a retail guy like you and me try to do some portfolio management?

Well, first, we must have like a couple of tens of thousands to start with. If you only have $10k. Then you can basically only buy 1 or 2 stocks. There is not much portfolio management to talk about. Just buy the blue chips or maybe buy an ETF and wait for it to grow to like $50k.

The reason why $10k can only buy 1-2 stock is bcos if you divide $10k up buy 10 stocks, you will be paying $40-60 of transaction cost for each stock, which makes the cost 4-6% for each stock and this will eat too much into your return per stock (which is like 8-10%pa).

So for those who do have $50-100k, then you might want to think a bit about which 5-10 stocks you want to buy. Here are some guidelines... Well actually it’s the same guideline, which is to diversify across everything. You definitely don’t want 5 stocks all in airlines or airline related industries.

1. Diversify across industries

So first we think across industries. If you are a conservative guy like me, you may want to allocate like 50% or more of your money to defensive industries like staples, food, utilities, telcos etc. Of course there are some megatrends happening in our lifetime, so maybe put some into resources, China related, or even tech. But you must definitely understand the risks here.

2. Dividends

This is one big criteria for me. I would want to put 70-80% of the stocks into good dividend stocks. Stocks with rising dividend over time, these are the best. Actually, these stocks will usually come from staples or food. So there is no contradiction bet 1 and 2.

3. Geographical exposure

China and Asia are the darlings of the stock market for the next 10-20 yrs. It makes sense to put money with exposure to these regions. This also means that you should look for Singapore co.s with such exposure. I would put maybe 30-50% in Asia, but also provided I can find cheap and good stocks. This might be the hardest thing to do today.

4. Asset Classes

For those who need more security, you can definitely consider 10-20% of the portfolio into bonds. However, since bonds usually pay 4-5% interest only, which you can get with some stocks in Singapore. It really doesn’t make too much sense to buy them, unless you can buy them like 80c to the dollar or something.

5. Structure

So just to round things up, if you can have a 10-12 stock/bond portfolio, it may look like this:

5-6 stocks in staples/food/telco, which includes 3-4 dividend stocks
2 Asia stocks/ETFs
2 Resource/Energy stock
1-2 bonds

One last note, unless you are really good at market timing, it pays to avoid value destroying industries like most of the tech industry, airlines, container shipping, oil refining etc and industries in secular decline like newsprint, general textile etc.

Hope this helps!

How to Fail in Portfolio Management

Portfolio managers as a group has not contributed anything to the society at large. I mean a barber helps to cut people's hair, a doctor saves lives and a teacher educates our children. Lawyers, politicians, portfolio managers, as a whole, subtracted value from the society, if you ask me.

The famous stats is this, and I must state again: more than 80% of all fund managers fail to beat market indices over long periods of time. Some of them do beat the index for like 1 or 2 yrs, only to falter in the 3rd or 4th.

The market is really terribly efficient. The S&P500 has returned 10%pa on average over the last 80 years. Most other indices don't go that far back but academic studies have shown that stocks or equities, returned high single digit to low double digit per annum, on average.

Hence it is not easy to beat the market over the long run. Yes you may have a lucky trade, like buying BP at 250p and now it's close to 400p, a 60% return in 2 mths. But to replicate this for 10 years is another story.

Value investors don't fare too much better. Some studies showed that 20-40% of value funds outperform market indices. That still means that majority of so-called value investors still fail to beat their benchmark! Although they are about twice as good as the average fund manager.

I think there are several factors that explain why portfolio managers fail so spectacularly and it serves to remind us that if we can just adopt the right philosophy, we can avoid most of their mistakes.

1. Herd Mentality

Just a simple analogy. In a shopping mall, when we see crowd gathering near certain stores, bcos there is some event, we gravitate towards the crowd. If we see everyone running for the exit, bcos there is a bomb threat, we run! The market is a transparent place. Prices move every day as investors buy and sell stocks. Portfolio managers eat, breath and think prices daily. Hence when prices move up, they want to follow, and when prices move down, they avoid. Most retail investors also do the same. Maybe some kind of wiring in our heads tries to follow this flawed logic with prices but I think the analogy with the crowd sort of makes sense.

2. Short Investment Horizon

This is a very amazing trend. In the 1980s, the average holding period for a stock on NYSE was 5 yrs, as derived from the turnover volume. ie annual turnover was 20% of NYSE total stock volume or something. Today, the turnover is 200%! The average holding period is then 6 mths! As we know, institutions make up the bulk of trading volume. Hence portfolio managers are the main culprits here. Every one of them is just looking for the next BP trade. Long term investing is for the dinosaurs. But true value cannot be realized in 6 mths. Franchises take time to build. Firms take years to grow. Sadly, nobody is interested. Buy-and-hold value investors are a dying breed on Wall Street.

3. Information overload

Portfolio managers are bombarded by useless information daily. In today's world, we are talking about probably 300-500 emails from brokers, analysts, colleagues etc. Most of these are daily reports of newsflow happening in the world, analysts' upgrades or downgrades and other non-relevant stuff. But PMs, being paid to do some job, are basically salaried workers and couldn't just delete all these emails right? So they spend significant amt of time reading junk emails when they should be reading the real good stuff like articles on this blog. And seriously, when you hear a hundred opinions about a stock, you lose track and get confused.

4. Misaligned incentive

PMs are being judge by their annual performance and not long term performance. If they make money this year, they get the fat bonus. If they lose money, they eat grass. So this scheme basically drive their behaviour to find a 6 mth trade that works. Value stocks that will make you money in 3-5 yrs? Sorry, talk to my hand. Hence it's not a big surpise why the average holding period is 6 mths.

So I guess these are the major reasons why portfolio managers cannot beat their benchmark over the long run. Bcos of the strange nature of their job, some inherent human biases and perhaps most importantly, misaligned incentives that shaped their behaviour. The rest of us, we should do exactly the opposite and generate good long term return!

Portfolio Management: The Job

So basically portfolio management boils down to over or underweighting some benchmark stocks. Now that doesn't sound too difficult, why should the portfolio managers or PM be paid exorbitant salaries? And despite getting paid so much, they FAIL to deliver the results?

Well first we talk about the skills needed. The portfolio manager needs to know a lot to do his job. And I really do mean A LOT. If you think in terms of those 300 page university textbooks, it's probably 30-40 of them (CFA has 18 for 3 levels). Plus, 10-20 years worth of global news material, that is maybe volume to fill another 5-10 textbooks.

On academic subjects, first, he needs to know about security analysis, that is the basic bread and butter. Then the financial statements, ie accounting. Of course there are the relevant subjects like economics, finance, business, statistics etc. Well most these are covered in CFA, but CFA just gives a basic flavour. To be well-versed takes years more and there are also subjects outside CFA, like psychology etc.

Then on the non-academic side, there are the 6 major industry groups: Financials, Resources, Industrials, Staples, IT and Utilities. The portfolio manager needs know the dynamics/drivers/issues of all of them. Not to mention there are perhaps close to 100 different sub-industries and businesses in all. On top of that, he needs to be in tune with global current affairs.

Of course, you don't really need to learn and know everything to be a good portfolio manager or PM. Warren Buffett knows nothing about tech and the 21st century new glamour industries right? Though he reads a lot.

Well, you can get away with that when you are your own fund manager and people beg you to manage money FOR them. Alas most portfolio managers are salaried employees and they need to show senior management that they have the knowledge and experience before they get the job. But they certainly are not required put 50% of their net worth in the fund that they manages for others.

That perhaps also partly explain why they are so good at failing to meet their KPI!

Anyways, PMs need to know a lot and be capable of continuous learning in order to make better investment decisions. In most global fund management houses, their jobs go beyond just portfolio management. They need to do marketing, recruitment of analysts, monitor trades and settlements, prepare reports etc. All these perhaps partly explains their high pay. If you ask me, maybe it justifies like 20% of the total package!

Yeah, no matter what, we can never forgive them for not delivering the most basic result right?

But let's go back to over or underweighting stocks. So all the knowledge is just the preparation for the most important part of their jobs: to decide which stocks to over or underweight. This is what determines the portfolio return over the long run.

The irony of this all is that PMs don't think or act accordingly to deliver this result. Partly bcos of the institutional imperative that Buffett talks about. Partly bcos PMs are also humans, subjected to peer pressure and emotions.

Let's just have an example: Say we have PM Ah Gou managing the Singapore portfolio with STI as his benchmark. Naturally, NOL our beloved container shipping company, is in the benchmark.

Now the container shipping industry is very similar to the airline industry. Over the past 20 years, if you add up the culmulative profits of the whole industry, it is a negative number. The whole container industry has never made money for two decades, or perhaps even longer. However, in the boom years from 2005-2007, huge profits were made, NOL became a darling of the stock market. But all the profits were wiped out in just 18 mths. And NOL went from darling to dog. Yeah, the biggest underdog. The co. bled money through its hull and finally came hand in hat to investors, multiple times!

If you are even half a value investor, you would have avoided NOL at all cost. Even traders with sense know NOL is a risky trade, you could lose everything with this one. After all, Singapore is moving to value added services. We are talking about bio-tech, financial hub, education centre, casinos and more high end stuff, more service oriented industries. It was mentioned that SIA can be allowed to fail. Even Chartered got sold finally. How many times can Temasek bail out this loser in a losing industry like container shipping?

But if you are a PM Ah Gou managing singapore stocks, the story is different. After NOL lost a billion dollars and then got funding from its rights issue, analysts are shouting BUY bcos the industry has bottomed. Global trade is picking up, freight rate negotiations ended with huge price increase for the shippers. Indeed NOL rallied 80% or more from the bottom. If you did not overweight NOL, how are you going explain yourself?

So that's the dilemma for PMs, in the next post, we explore in depth about why they never beat the benchmark.