Occasionally when I daydream, I like to imagine that I am an experienced and successful investor. The thought evokes warm thoughts: Me, staring at the desktop of my MacBook Pro – PDFs of press releases and SEC documents strewn carelessly about. Looking outside the window on my left to a radiant summer day. Looking towards the HDTV and Xbox 360 on my right that kept me from enjoying that radiant summer day. Logging into my investment account and being greeted with welcoming green numbers that intangibly massage all of my worries away.
Reality, however, usually has other plans. When it awakes me from my buoyant stupor I am greeted by several glaring facts:
- I have not been doing this for very long – This coming September will mark only my third year of regular investing.
- I have not been consistent – The returns that I have garnered have come at the price of tremendous volatility.
- I have not been doing so well as of late – I am currently on track for a 30% loss for this year.
These facts accost me whenever I conduct company research or log my performance at the close of the markets. They sully my confidence, trigger self-doubt, and lead to reticence when I am considering a possible trade. If only those cold facts did not exist. If only their influence upon my mind and emotions could be lessened.
While only time-tested performance can provide me the permanent pool of investing confidence that I so dearly desire, I have found one way to assuage the pangs of insecurity that abruptly awake me from my wishful day-dreams: By realizing that I am following in the investing footsteps of money managers with resources, levels of training, and experiences that far outweigh my own.
Thus, when I see that my carefully researched positions are supported with strong investments from well-regarded professional investors, I am able to rest a little easier.
Consider the following four small cap companies that I own that have attracted thorough due diligence and large investments from skilled money-managers.
- Asia Pacific Wire and Cable (AWRCF.OB) is a manufacturer and distributor of cable and wire products in Asia. It has facilities in Australia, Singapore, Thailand and China. At its current price ($3.85) the company trades at half its tangible book value and sports a forward P/E ratio roughly equivalent to its price. Think it’s undervalued? So does MSD Capital, the investment firm that exclusively manages the assets of billionaire CEO, Michael Dell. As of its last 13D filing, MSD Capital owns almost 10% of Asia Pacific Wire and Cable.
- Universal Travel Group (UTA) is a travel service provider in China. The company derives 75% of its revenue from selling packaged tours with the remaining 25% of revenue coming from a mix of air ticketing and hotel reservation commissions. The company recently announced 2nd quarter earnings that beat analyst estimates. It trades at a forward P/E of 4.21. I like the company and so does the mutual fund giant Fidelity Investments, which owns nearly 13% of Universal Travel.
- Gulf Resources (GFRE) is another company that Fidelity Investments apparently loves. The American mutual fund company owns nearly 11% of this Chinese producer of bromine, crude salt and specialty chemicals. Gulf Resources recently announced preliminary results for the 2nd quarter that blew out analyst estimates. This cash cow of a company should receive a slew of analyst upgrades in the coming weeks.
- China Media Express (CCME) has never ceased to surprise investors. In its recent NT-10Q filing, the Chinese advertising company slipped in the fact that 2nd quarter earnings will beat estimates by over 50%. This type of surprise will do just fine for C.V. Starr & Co., the investing arm of former AIG CEO Hank Greenberg – it owns about 14% of China Media Express.
I will be the first person to note that my untested background gives little reason for other investors to heed my opinions. So, if you decide to invest in any of the aforementioned companies, tell them that Fidelity Investments, Michael Dell or Hank Greenberg told you it was a good idea.
Disclosure: The author holds LONG positions in all of the discussed securities.