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Majesty Fund
Funds ManagersHung Pun Ki, Majesty 2008078285Mak Yin Yan, Wendy 2008299994Wong Lam Wai, David 2008085991Yau Tat Kwan, Jacob 2008046921
Stock Track Portfolio Project 09-10
Majesty Fund
Presentation Flow
Trading Philosophy and Strategy1
Behavior Bias2
Analysis of selected trade3
Future Prospective5
Relative and Absolute Performance4
Majesty Fund
Trading Philosophy
11 Market is NOT efficient!
22 Believe in Value Investing
33 Believe in Momentum Investing
Majesty FundTrading strategy
• Primarily in Hong Kong Stock Market– Easily to obtain information via Internet– With a deeper understanding– Can catch the market sentiment easier
• Asset allocation– At the beginning as outlined,
10% spots and future, 20% cash, remaining contributed to HK stocks
Majesty Fund
Behavior Bias
• Ignorance of short-term game• emphasize on long term investment• Only 3 months• Neglect short-term volatility
• Selection of unfamiliar market• Buying of derivatives• Asymmetric information
Majesty FundAdjustments
Focus on stock-specific news events,
with reference to macroecono
mic news and financial markets
Paying more attention to Hong Kong and China
Stocks
Majesty Fund
0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED
• 1st reason: On 31/3, Announcement of 2009 Annual Results show 00363 is bullish.
• 2nd reason: On 31/3– Shanghai Industrial holdings Ltd released its 2009
Annual Financial performance• Overall gross profit rises by 5.8%• Profit in real estate sector rises by 66.2%• Final dividend 60 cents per share
– Catch the advantage of Shanghai Expo
Majesty Fund
0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED
On 31/3, we bought at HK$35.6
On 7/4, we sold at HK$39.9
Margin of safety is not beyond On 8/4, re-invest at HK$40.5
Majesty Fund
0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED
• However, there is a series of bad news.
09 April 2010Shanghai is planning to impose value-added tax on real estateBeijing is planning to restrict application of mortgage loan
from non-locals
12 April 2010Strictly investigate the risks of loans provided to real estate
producers of China
13 April 2010Large selling of Mainland real
estate stocks due to suppression in real estate
market
Majesty Fund
0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED
While f
oc
usi
ng
on t
he i
ndivi
dual
perf
or
ma
nce
of
00363,
we als
o
pay atte
nti
on t
o c
urre
nt
ne
ws.
We s
ol
d t
he st
ock after t
he i
nvestigati
ng
peri
od t
o st
op l
oss
on
14/
4.
Majesty Fund
0005 HSBC
• 4/2 monthly statement, new stocks released• 17/2 announcement of fourth quarter results
On 23/2, we bought at the price of HK$84.95
On 1/3, people were unsatisfied with the performance of HSBC in 2009
On 1/3, we sold at the resistant price of HK$86.65
Majesty Fund
Total Profit: $936.62 + $5158.05 =
$6094.67
On 16/4, we sold at
the price of HK$84.55
On 8/4, we reinvested at the support
price HK$79.55
Majesty Fund
Select Trade 3- Speculation(8173.HK)
Use at most 30% of money on speculative trading
Ride on moment with the help of technical analysis
Cut loss strictly at 15%
Bet on stocks with highest beta
Majesty Fund
Selected Trade- Technical Analysis
K line cross from below over the S line
Sudden Increase in Turnover
=> We wait for rising trend
Majesty Fund
Select Trade 3- Speculation
Buy at 0.061
Increase stakes at 0.073
Start profit taking at 0.091
Lessons learnt
When making profit, withdraw part of the money out and let the remaining run for itself.
Return =37.8%
Majesty Fund
Relative performance
1 2 3 4 5 6 7 8 9 10 11
-0.06
-0.04
-0.02
0
0.02
0.04
0.06
0.08
0.1
0.12
Comparison of weekly return of Majesty Fund and HSI
Majesty Fund
HSI
Majesty Fund
Relative performance
• Benchmark: Hang Seng Index• Outperform the benchmark!
Measure Portfolio BenchmarkSharpe Ratio 2.28 2.654Treynor Ratio 2.957 0.5437Return 10.92% 10.37%Volatility 12.64 20.64
Majesty Fund
Market Efficiency
• Null hypothesis– The market is in a random walk process hence it is
efficient
• Result from tests– Test statistics > critical values for both tests
• The market is efficient– Reject the null hypothesis
Majesty Fund
Late Performance
• Huge returnRate of return in the last month= 15%
• Constant return• Highest among all funds• Rate of return of HSI
= 7.4%
Majesty Fund
Majesty Fund
• We learned from mistakes• We invest in our strongest• We have good market sentiment
Fact!!These make Majesty Fund the best performed
PROVEN