All About Price: The Concept Of Freehold

This is part of my intermittent series on price, one of the most important and commonly encountered considerations in investing and trading. For this post, I will be touching on a relatively local concept called “freehold”.

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“Freehold” on Securities

While it is a term associated with properties, the word “freehold” in securities investing meant that the returns, be it capital and/or income via dividends/distributions, had covered the initial amount of the investment. Any further gains from the securities in question were treated as “free”.

The origins of the use of the word in this context were unknown to me, but the best I could surmise was probably a mix of the view of an investment paying it off itself, and the sense of freedom of doing whatever one wants with the extra returns. It is akin to having a stock price achieving a “two-bagger” status, i.e., being doubled in its value.

What to Do After

Though the freehold status has been achieved (and enjoying the moment of “full of win” feeling), the next immediate thought would be what one is going to do about it. A common approach would be to sell off the excess above the initial investment or deploy later dividends/distributions received into other asset classes or securities, but this action would be very much dependent on circumstances. 

For example, if there is further room for the share price to grow, or if even after reaching a two-bagger status, the book value of the share is not reached, then it is wiser to keep them in place. Another is that if there are no alternative or incentivising assets or securities to invest in, and one’s portfolio is not due or relevant for rebalancing, then it is prudent to just leave it as it is. 

If one has multiple portfolios (i.e., the Portfolio Multiverse concept), the choice of divesting the excess and channel them to other portfolios is plausible (e.g., trading, CPF, SRS, etc.). This could work for dividends/distributions received, too, since they are cash in nature and liquid enough to move around.

The Bedokian’s Experience

One of the rare moments which compels me to practice the “selling of excess” was our partial divestment of Apple and using the proceeds to initiate a trading (and subsequently investing) position into Nvidia back in March 2024 (which I shared here). Ironically, in the same link, I had also shared that we had bought back Apple (it had hit our entry price) around a month and a half later after selling some away. 

On hindsight, it turned out to be a good move as our first Nvidia tranche had returned more than 100% (freehold!) while it would just gain around 50% had the capital remained in Apple.

 

Check out the other posts in my All About Price series.

All About Price: Introduction & Valuation of Value 

All About Price: Buyer/Seller Remorse and Premorse

All About Price: The 52-Week High/Low

All About Price: Reversion To The Mean

All About Price: Bottom Fishing

All About Price: The (Price) Margin Of Safety

All About Price: The Price Ratios

Disclosure

The Bedokian is vested in Apple and Nvidia.

Disclaimer

More Screener Apps Introduced!

       

Over the weekend I had released the Growth Indicator stock screener app, and now I am releasing two more apps for use, for FREE.

 

 

Click on the pictures above to use the respective apps!

 

Introducing the Equities Indicator app for use on value/dividend counters, and the S-REITs Indicator app for use on Singapore-listed REITs. Similar to the Growth Indicator app, you could either use it as a webpage or bookmark it on your desktop/mobile like an app.

 

All three apps worked the same; just input the counter name and see if it fulfils the selection guidelines highlighted in The Bedokian Portfolio eBook¹.

 

Below are sample screenshots of a query output on the Equities Indicator and S-REITs Indicator apps:

 

Screenshot of Equities Indicator app (click for a larger view)

  

Screenshot of S-REITs Indicator app (click for a larger view)

 

For these two apps, the display results will take a little bit longer as the app algorithms are fetching real time data and performing some calculations in the background, hence some patience is appreciated.

 

As usual, these apps are for educational and reference purposes only, and does not constitute financial advice. A thorough fundamental analysis is required before making the decision.

 

Disclosure

The Bedokian is vested in Haw Par and Frasers Logistics and Commercial Trust.

 

Disclaimer

1 – The Bedokian Portfolio (2^nd Ed), p103-107

 

Hard Carrying

“Hard carry” is a terminology used by gamers that refers to a player or game character dominating an entire game or a game mission, resulting in the player’s/character’s team victory, even though the rest of the teammates are either performing poorly and/or did not do anything much. Putting it in a general context, a person is seen hard carrying a group when he/she was the one pulling everyone through with his/her skills and/or knowledge.

Picture generated by Meta AI.

On the investment front, there could be a few securities or counters doing the hard carrying of gains, such as those that provided the most capital gains, or those that gave the most dividends, or a fair mix of both.

It would be an interesting exercise to see what counters are the “hard carries” in one’s own portfolio, and although it may be comforting to see which were the resulting counters, an analytical and objective view must also be adopted on what to do with them.

Sustainability

Sustainability is often one of the key considerations of investors when conducting a portfolio review. Questions such as whether a counter would continue to give the same growth rate and/or provide the same yield throughout. Even if it cannot sustain the required increment, does it able to maintain within the desired threshold, or perhaps it could still provide some alpha over market returns or inflation rate? These two questions could only be guesstimated by fundamental analysis, i.e., reading up on the company’s forward trajectories and plans, and foreseeing how things unfold in the markets or anything that has a direct or strong indirect effect on the company/sector/industry concerned. 

Sizing

Hard carries in the growth category may run into the risk of being too dominating in terms of sizing in the portfolio. Unless one’s conviction and confidence on a company is strong, it pays to be diversified to avoid a wipeout should anything happen. Different people have different sizing guidelines, which for our Bedokian Portfolio the limit is 12% (for individual company counters).

Selling

On a related note to manage sizing, selling part of the hard carrying holdings is one way, which on a wider scale it is called rebalancing. As part of diversification, rebalancing allows the investor to move the capital from one oversized asset class or counter to an undersized asset class or counter, thus avoiding the potential larger loss should the abovementioned wipeout occurs. A big challenge in carrying out rebalancing is the mental hurdle of not letting a winning position go, thinking that it still has the potential to go higher (and earning more). For this it may be necessary to sacrifice a little bit of the hard carriers for the sake of the portfolio, for I had mentioned before, no security/counter is bigger than the portfolio itself.

Let It Go

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We recently sold a dividend stock at a loss. Initially, we bought it in July 2017 after reviewing its strong financials and solid fundamentals (such as price-to-book ratio, gearing, and revenue). When COVID hit in 2020, we purchased more shares as prices dropped, anticipating a rebound once the crisis passed—especially since the company is connected to tourism. The stock did recover somewhat, but after 2022 it began to decline again and has stayed weak since. Additionally, the dividend yield kept decreasing each year, eventually falling near to the 10-year annual inflation average of 1.75%¹.

In total, we incurred a -32.6% loss based on our entry and exit prices, made worse by the stock’s wide spread and low liquidity, which meant selling at the bid price. Even after accounting for the dividends we received, the overall outcome was still negative at -21.3%. The good thing was the company share represented only at 0.4% of our total Bedokian Portfolio value.

Cutting losses can be tough for investors, but it is often necessary to free up capital for better opportunities rather than letting funds stagnate. Potential price rebounds or dividend increases are not guaranteed. Instead of viewing one’s investment as hard-earned money lost, consider it as strategic capital to be redeployed effectively. This is one of the true marks of a rational investor.

Related post

Are You Mentally Prepared For Investing?

1 – MAS Core Inflation, 2015 to 2024. Monetary Authority of Singapore. 

How The Bedokian Conducts Fundamental Analysis

Fundamental analysis (FA) refers to the process of examining a company to assess its suitability for investment. According to The Bedokian Portfolio eBook, there are three tiers in FA: financial statements, environmental factors, and economic conditions. The analysis can be conducted using either a top-down or bottom-up approach.

 

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At the financial statement level, the company's income statements, balance sheets, and cash flow statements are looked at. Environmental factors are considered the "playing field”, encompassing elements such as competitors and governing regulations; the so-called "rules of the game”. Economic conditions refer to broader influences, including inflation rates, geopolitical developments, and other macroeconomic variables.

 

To detail the entire FA warrants writing a separate book, to which there are already a lot out there, and FA is not a one-size-fits-all kind of thing, hence I only scoped it to ratio analysis according to my selection guidelines. I had quoted this in my eBook: “…a full FA is to be carried out in conjunction with the selection guidelines” (it is at page 102 by the way), so it needs to work together with whatever FA being employed. However, some readers might find it incomplete since I left out much material.

 

In this post, I will outline my selected methods in conducting financial analysis, along with further perspectives on qualitative elements, particularly those extending beyond financial statements.

 

Valuation Methods

 

The eBook introduces several financial ratios, including the price-to-book (P/B), price-to-earnings (P/E), and P/E-to-growth (PEG) ratios.

 

The P/B ratio is often applied to most Singapore Exchange (SGX) listed equities, as some blue chip stocks are described as being traded "within the P/B band”, which is calculated based on standard deviations.

 

For equities in other regions, particularly growth-oriented stocks or those listed in United States (U.S.) markets that are seldom near their P/B, the PEG ratio is employed instead.

 

The P/E ratio serves as a comparative tool for ranking companies within the same sector or industry. Dividend yield is also considered, especially for dividend-focused investors like us, with a preference for yields that exceed the 10-year average inflation rate, though exceptions may be made for U.S. stocks, which typically have lower yields than local ones.

 

It is important to note that these ratios provide only a partial perspective, reflecting just a snapshot based on current or historical data. Further analysis of the numbers behind these ratios is essential, which involves reviewing financial statements such as revenues, net profits, and free cash flows. While valuation techniques like discounted cash flow (DCF) and dividend discount models (DDM) are recognised, I do not apply them often due to the numerous assumptions required.

 

Environmental Factors

 

Often referred to as the playing field, assessing a company's position within its sector or industry typically involves comparison with peers. This process can be complex due to overlapping business activities; for instance, while Coca Cola and PepsiCo are leading companies in the cola beverage sector, PepsiCo also operates in snacks and potato chips, whereas Coca Cola primarily focuses on beverages. Similarly, Apple and Samsung, prominent smartphone manufacturers, offer additional products not always in direct competition, such as televisions.

 

To enhance these comparisons, alternative data sources can be useful. Market share reports from research firms provide relevant statistics, though recent or detailed information may require paid subscriptions; however, some figures are available through financial news outlets. Company projections shared in quarterly and annual reports offer insights into expected developments from the management's perspective. In addition, primary data collection, sometimes called ‘scuttlebutting’, can provide personal observations that supplement formal research, such as noting the prevalence of certain products in specific regions (e.g., my observation of a lot of iPhone users in Japan).

 

Environmental factors also play a role in evaluating companies, including the concept of an economic moat described by Warren Buffett. While monopolies typically have significant moats, there is the risk of antitrust actions by regulators; thus, attention is often given to near-monopolies, market leaders, or brand leaders within a given industry.

 

Economic Conditions

At this level, outcomes are often unpredictable due to factors that are outside of our direct understanding or control. Here, analysts, economists, and fund managers frequently provide predictions (read: guesswork) based on available information, which may influence the analysis of the underlying tiers, i.e., environmental factors and financial statements.

 

Given the uncertainty, “guesstimates” (guessing + estimates) are generally made by referencing historical precedents and current data, though these assessments may not always be accurate. Some developments can be anticipated using macroeconomic knowledge—such as expecting interest rates to increase during periods of high inflation—while others, such as unexpected global events (e.g. COVID-19) or shifts in trade policies (e.g., tariffs), are more difficult to foresee.

 

Being adaptable in response to likely future changes allows for strategic decisions, such as applying associative investing methods (page 137-138 of the eBook), to potentially benefit from emerging opportunities.

 

Wrapping Up

 

The points above outline my general approach to FA, though my methods may vary based on the company, sector, region, or country being researched. While some FA tools and figures are standard, it is often tailored to each situation since perspectives and interpretations differ among investors.

 

Disclosure

The Bedokian is directly vested in Apple.

 

Disclaimer

 

Astrea 9 Private Equity Bonds

Azalea Asset Management, which is indirectly owned by Temasek Holdings, is issuing the Astrea 9 private equity (PE) bond on 8 Aug 2025. This bond will be listed on the Singapore Exchange, joining the earlier issued Astrea VI, Astrea 7 and Astrea 8 bonds.

There are three bond classes in the Astrea 9 series, with two classes (A-1 and A-2) available for retail investors. Figure 1 provides a brief of the two.

 

Fig.1: Information of the Astrea 9 A-1 and A-2 bond classes. Screenshot from Azalea website.

The Astrea 9 Transaction Portfolio, from which it derives the cash flow for the bonds, is made up of 40 PE funds managed by 31 General Partners and across 1,086 investee companies. These investee companies are diversified across:

• Sectors (31% in information technology, 21% in industrials, 15% in health care, and the rest across other sectors such as financials, communication services, etc.)

• Geographically (66% in the United States, 26% in Europe and 8% in Asia)

• Fund Age (between three and eight years, with the five-year and six-year making up 52%)

As seen in Figure 2, A-1 and A-2 bondholders are relatively high up in the receipt of distributions (Clause 5). 

 

Fig. 2: Astrea 9 cash flow and priority of payments. Screenshot from Azalea website.

The Rates

The annual interest rates (or coupon rates) for A-1 and A-2 are 3.4% and 5.7% respectively. Like the previous Astrea bonds, the rate for US$ denominated bonds are higher to compensate for the forex risk vis-à-vis against the S$. With the US$ depreciating against S$ by around 5.8% for the past five years, and we do not know how the US$-S$ forex rate would be, it is usually prudent to stick to local currency for fixed income instruments.

Perhaps the major consideration of investing in corporate bonds would be comparing with the (relatively) risk-free rate of Singapore government bond yields for the same duration. With the Astrea 9 bonds having the earliest callable date in five years and the maturity date 15 years later, and using the current Singapore government 5-year and 15-year bond yields at 1.8%¹ and 2.21%² respectively, the 5-year risk premium is 1.6% (3.4 – 1.8) while the 15-year risk premium is 2.19% (3.4 + 1 (step-up) – 2.21).

The Bedokian’s Take

The Bedokian Portfolio’s bond selection entails the bond to be at least of investment grade and five years to maturity³, to which both A-1 and A-2 met the mark. 

The low risk premium may be slightly uncomfortable for some conservative investors, since there is a very remote chance of the bond defaulting on the coupon payments and principal. So far, the retail tranches of past and current Astrea bonds (IV, V, VI, 7 and 8) have/had paid regular coupons on time, with no impairment of the principal.

With Singapore Savings Bond and bank fixed deposit rates going down, many investors may go for this as the next deemed “fixed deposit”, though I would caution it is still a listed instrument subjected to price and market volatility.

The offer period for the bond is from now till 1200 hrs, 6 Aug 2025.

Disclaimer

Reference

Astrea 9 Bond Prospectus - https://www.azalea.com.sg/sites/default/files/2025-08/astrea-9-pte-ltd-prospectus-30-july-2025.pdf 

1 – Singapore 5 Year Bond Yield. Trading Economics. 1 Aug 2025. https://tradingeconomics.com/singapore/5-year-bond-yield

2 – Singapore 15 Year Bond Yield. Trading Economics. 1 Aug 2025. https://tradingeconomics.com/singapore/15-year-bond-yield

3 – The Bedokian Portfolio (2^nd ed), p108.

The Most Important Moment In A Buy/Sell…

 …is to press the button. Period.

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Sure, pressing buttons are easy, whether the physical ones on your keyboard, the tactile touchscreen of your smartphone or on the computer monitor assisted through a mouse click, we all had done it before.

However, it is the weight of responsibility or consequence that comes with the pressing of the button that makes this seemingly harmless activity a not-so-simple endeavour. Imagine sending an important email that may make or break one’s career, or on a more serious note, the big red button to launch nuclear weapons (as far as I saw from some entertainment channels on how it works).

Or, more relevantly, your decision to whether to buy or sell a counter for your investment portfolio.

I believe a lot of thoughts, considerations and analyses had been factored in before the buy/sell call was made, but the final act before the actualisation of the transaction would be conviction. Advice, opinions, views and recommendations could come from anywhere and anyone, but conviction should come from the decision maker himself/herself.

Yet, it is this final step of conviction that is filled with doubts, anxieties and worst case, fear. A lot of “what-ifs” happens at this stage, which is akin to a high wall between the penultimate and the last steps of a staircase. Still, a decision must be made, whether one likes it or not, for the individual’s investment journey must go on and the markets wait for no one. Looking back, if a good call is made, well done, but if a bad call is made, learn from it.

Like the journey of life, these ups and downs are lessons for us to be better investors.

All About Price: The Price Ratios

This is part of my intermittent series on price, one of the most important and commonly encounters considerations in investing and trading. For this post, I will discuss about the various financial ratios that has price as a component.

Picture generated by Meta AI

There are five main types of ratios with price as a major component, which I let Gemini AI handle the descriptions (output displayed in a different font):

1. Price-to-Earnings (P/E) Ratio:

• Formula: Market Price per Share / Earnings Per Share (EPS) 
• Interpretation: A higher P/E ratio suggests that investors are willing to pay more for each unit of earnings, potentially indicating overvaluation or high growth expectations. A lower P/E ratio may suggest undervaluation or lower growth expectations. 
• Example: If a company's stock price is $50 and its EPS is $5, the P/E ratio is 10 (50/5). 

2. Price-to-Book (P/B) Ratio:

• Formula: Market Price per Share / Book Value per Share
• Interpretation: Compares the market price of a stock to its book value (assets minus liabilities). A P/B ratio above 1 suggests the market values the company higher than its net asset value.
• Example: If a company's stock price is $20 and its book value per share is $15, the P/B ratio is 1.33 (20/15). 

3. Price-to-Sales (P/S) Ratio:

• Formula: Market Capitalization / Total Sales (or Price per Share / Sales per Share)
• Interpretation: Indicates how much investors are willing to pay for each dollar of a company's revenue. Lower P/S ratios may suggest undervaluation or that the company is not effectively utilizing its sales.
• Example: If a company's market capitalization is $100 million and its total sales are $50 million, the P/S ratio is 2 (100/50). 

4. Price-to-Cash Flow (P/CF) Ratio:

• Formula: Market Price per Share / Cash Flow per Share
• Interpretation: Measures how much investors are willing to pay for each dollar of a company's cash flow. It can be a more reliable indicator than P/E ratio because cash flow is harder to manipulate than earnings.
• Example: If a company's stock price is $60 and its cash flow per share is $10, the P/CF ratio is 6 (60/10). 

5. Price-to-Earnings-to-Growth (PEG) Ratio:

• Formula: P/E Ratio / Expected Earnings Growth Rate
• Interpretation: Helps to assess whether a stock's P/E ratio is justified by its future earnings growth. A PEG ratio less than 1 is generally considered favorable, suggesting the stock may be undervalued relative to its growth potential.
• Example: If a company's P/E ratio is 20 and its expected earnings growth rate is 25%, the PEG ratio is 0.8 (20/25). 

 

These ratios are usually available from most stock screener sites, or one could calculate the numbers based from the stock market prices and financial statements.

Generally, the lower these ratios are, the better the company’s valuation is, ceteris paribus, though a whole lot of relativity and context are needed in an actual analysis. They should be utilized as a guideline, not as a major dealbreaker when selecting companies to invest in.

The All-In-One Price Ratio

Conversely, during my specialist diploma course days (read here for more details about my view and experience of the course), a lecturer had briefly spoke about using the various price ratios and aggregate them to a score, which I dubbed it as the “all-in-one price ratio”. While I did not get more details on this other than a short mention, perhaps this may be my next side project in deriving “the number”.

Check out the other post in my All About Price series.

All About Price: Introduction & Valuation of Value 

All About Price: Buyer/Seller Remorse and Premorse

All About Price: The 52-Week High/Low

All About Price: Reversion To The Mean

All About Price: Bottom Fishing

All About Price: The (Price) Margin Of Safety

Inside the Bedokian’s Portfolio: ASML

Inside the Bedokian’s Portfolio is an intermittent series where I will reveal what is actually inside our investment portfolio, one company/bond/REIT/ETF at a time. In each post I will talk a bit about the counter, why I had selected it and what lies ahead in the future.

For today’s counter, I had only just added it last week and that is Advanced Semiconductor Materials Lithography Holding N.V., better known as its shortened name ASML.

Partial screenshot of ASML 2023 Annual Report cover. Source: ASML

A Global Player

ASML was founded in the 1980s as a joint venture between two Dutch companies, one of which was the famous electronics company Philips. It makes photolithography machines that are crucial for the manufacture of integrated circuits, or chips/microchips in everyday speak. 

The past decade had seen ASML’s rise with pioneering technology such as the extreme ultraviolet lithography (EUV) process, which allowed smaller process nodes and subsequently more compact chips to be made. The ongoing artificial intelligence (AI) revolution had provided a critical supporting role for ASML in the whole scheme of things. 

A Holistic Analysis Approach

Granted that there were (and still are) many stock analysts, financial news channels, and investing and trading social media sites talking about ASML, it would be difficult not to be tempted to jump onto the bandwagon of like-minded ASML bulls. Thus, a degree of fundamental analysis was required before convincing ourselves to be vested.

Figure 1 shows selected financial line items for review, in particular revenue, net income, current and long-term debt, and free cash flow from 2022 to present.

Selected Financial Line Items (EUR, in millions)	Periods
	Trailing 12 Months	31 Dec 2024	31 Dec 2023	31 Dec 2022
Revenue	30,714.4	28,262.9	27,558.5	21,173.4
Net Income	8,702.8	7,571.6	7,839.0	5,624.2
Total Debt (current debt + long-term debt)	4,687.6	4,631.6	4,260.4	4,584.1
Free Cash Flow	9,283.7	9,083.1	3,247.2	7,167.5

 

Fig.1: Selected financial line items of ASML. Source: Yahoo Finance (as of 21 June 2025)

While revenue was increasing and total debt was kept around the same level, some of the small kinks encountered were the slight undulating net income and the large drop of free cash flow in 2023, the latter of which caused by a net effect of a larger amount of contract liabilities over contract assets. While the term “liabilities” may invoke some concerns, it is basically accounting treatment of payments and recognition of revenue.

As ASML is viewed as a growth counter, I used the growth investing selection guideline from the eBook¹ and apply to it, though I also threw in price-to-earnings ratio for an overall picture (see Figure 2).

Equity Selection Guideline	ASML
Price-to-Earnings (P/E) Ratio being the 25% lowest amongst other companies within the same sector/industry	ASML’s forward P/E of 27.55 is higher than industry average of 25.91
Price/Earnings-to-Growth Ratio of 1 and below	1.44 (5-year expected)
Operating Margin percentage being top 50% among other companies within the same sector/industry	ASML’s operating margin of 35.37% is in the top 50% among the same industry, whose average is 4.27%
Return on Equity (ROE) percentage being average among other companies within the same sector/industry	ASML’s ROE is 55.62%, above industry average of 11%
Positive free cash flow for at least the past three years	Positive as shown in Figure 1
Gearing ratio (Debt/Equity) is constant or reducing for the past three years	0.21 (up to Mar 2025) 0.27 (2024) 0.37 (2023) 0.53 (2022) Signs of reduction

 

Fig.2: Selected financial ratios and percentages of ASML. Sources: Yahoo Finance, Zacks, Gurufocus.com and Stockanalysis.com (as of 21 June 2025)

Though some of the ratios did not fit into the selection guidelines, such as PEG ratio > 1, and not being the average ROE percentage across the industry, certain liberties and discretions were taken to further the decision to go ahead with the investment; these are guidelines for conservative growth companies (stated in the eBook), and after all, most importantly, they are guidelines, i.e., not rules set in stone.

Another aspect that I want to bring in is the comparative figures used, like the industrial averages and P/E utilized, are sort of a red herring. The truest form of comparison is to find another company or sector/industry that matches closely to what ASML does, a not-so-easy task given that its closest competitors Canon and Nikon are conglomerates and their photolithography is just part of their overall operations.

This brings us to the next level of fundamental analysis after financial statements: environmental factors. ASML is a major player in the photolithography business commanding an estimated 90% of the global market share according to some sources, and its EUV process gave it a huge advantage over its other competitors. In gist, it is a near monopoly of its field. This is the major dealbreaker, plus its solid financial fundamentals, to make the buy call.

The Future 

The biggest concern on the future profitability of ASML is its role in the whole geopolitical arena. The United States government had pressured ASML via the Dutch government to restrict some of their latest photolithography machines for export to China, from where it derived 41% of its revenue for financial year 2024. This may be slightly compensated with the demand for semiconductors in other parts of the world, fuelled by the need for smaller chips with faster processing, and not forgetting the burgeoning world of AI.

Disclosure

Bought ASML at:

USD 747.00 at June 2025

Disclaimer

1 – The Bedokian Portfolio (2^nd ed), p151-153