Pesobility Blog

Q&A: Can Foreigners Trade Stocks in the Philippines?

2014-03-06T22:44:00.000+08:00

Cherry asks,

Can a foreigner have their stocks too in the Phils? My husband printed a form from COL and I might start with them as soon as I get back from the Philippines on March 3.

Answer:

Yes! Non-Filipinos can definitely trade stocks. There are just some limitations but they may not concern you as much. One of the more obvious is the SEC rule on foreign ownership which limits foreigners' ownership of company shares to 40%. So unless your husband plans to take over a company in the Philippines, you don’t have anything to worry about.

MWC to be replaced by MER in Philippine Stock Exchange Index (PSEi)

2014-02-24T14:37:00.001+08:00

Effective March 17, 2014, PSEi will have a recomposition, Meralco (MER) will replace Manila Water Company (MWC) in the stock exchange index.

This is based on a memo released by the Philippine Stock Exchange. There's no specific reason stated in the memo why MWC was booted out. It just stated the general qualifications to be in the PSEi list:

1. Free float level >= 12%
2. Top 25% by median daily value / month for at least 9 / 12 months
3. Top 30 on full market cap (MCAP)

So I guess it's more of Meralco has beaten MWC with one of the criteria above.

Investing in Dollars

2014-01-24T10:17:00.001+08:00

I'm just going to share what I did this January: As the stock and bond market are going sideways, I bought Dollars and put it in BDO Dollar money market fund. I do not encourage just following what I did, please do your research too until you are convinced with the risk you are taking.

Why did I invest in USD?
I am betting that the U.S. Dollar will appreciate in the next 2-3 years.

How can I say that the Dollar will appreciate?
- U.S. economy is starting to pick-up.
- Hot money in the Philippines is flowing out.
- BSP's low interest rate is not attractive to foreign investors.
- U.S. Gov't starts tapering its Quantitative Easing policy which means less USD will flow to emerging markets.

The above reasons do not guarantee that the Peso will continue to depreciate. There are many factors affecting forex and many strategies that BSP can employ to reverse the process of Peso depreciation; one of which is increasing the interest rate, in which in my opinion it will happen soon, probably this year. There's already a pressure to increase the interest rate because a lot of $ is flowing out of the country in the recent months.

I bought the Dollar then placed it in BDO's Dollar money market fund. Money market is a low risk type of fund thus the return is minimal, earning around ~1.5% in one year. Still, this is better than just putting it in a savings deposit.

Even if my bet is wrong, I'll just treat it as part of my savings. Unlike stocks, betting in a foreign currency is usually not as volatile.

Q&A: Choosing between COL or BPI Trade online broker

2013-09-19T15:27:00.002+08:00

Hazel says

Good day! Your blog was very informative regarding your stock recommendations. I'm a newbie when it comes to the stock market. I'm planning to invest in stocks but still don' t know if i'll choose col or bpi trade.

Hi Hazel, thank you for visiting. For your first question, you can also consider First Metro (under Metrobank). This is my broker and so far I have no complains about it. If you're really choosing between BPI Trade and COL, I would suggest to choose COL in general. I have officemates who use COL and BPI Trade, and BPI Trade tends to have a lot of down time since it's a very old system, and many times you might get frustrated like my officemate.

But I'll tell you two reasons why you would consider BPI Trade, and these are deciding factors for some, especially those who have a lot of money:

1. The cash you don't use in stocks earns interest (same as a normal savings deposit). This is a great convenience, but it's only useful if you have a lot of money, like at least 5M, and you actively trade your stocks. For example, there are times that you sell all or a big chunk of your portfolio, probably because you feel that the stock is already overvalued or there's a crisis. During this time, the money is just parked in your account. Parked money in First Metro and COL accounts, AFAIK, do not earn interest, but BPI Trade does. So if you have 5M parked in your account, you'll probably earn around 4,000+ Pesos per quarter (rough estimate). Not bad.. can be used to buy groceries.

2. Odd Lot Trades do not impose the minimum P20 commission rate. There are fees when you trade stocks, it's usually 0.25% or P20 whichever is higher. If you're not familiar with odd lots, it's simply the trades below the minimum unit of trading. For some who's into odd lot trading, this is a great advantage, but for usual people, this is not that useful.

The above two are the advantages of BPI trade over the others, but I'm guessing you won't be needing them that's why I would suggest COL or First Metro in your case.

For your financial questions, feel free to email me at manny@pesobility.com and I will try to answer them as soon as I can.

Market Watch: An Unexpected Outcome [September, 2013]

2013-09-19T10:52:00.001+08:00

Today, the Philippines, including many markets all over the world, is enjoying hefty gains from an unexpected turn of events when U.S. Fed deferred tapering its stimulus program. As of writing, the Philippine stock market is up > 3%, the reason being, that the tapering has been priced in even before it was implemented. Now that it has been postponed, the market adjusts accordingly (in this case, it goes up).

If you have followed the advice from Pesobility's previous entry to buy your favorites below 6100 PSEi, then you should now be reaping your rewards. However, when to sell is completely up to you. Sell now, wait a little more or hold for long term? It will depend on your personality and risk appetite.

What now?

It is most likely that today is an overreaction to the news, so we might expect a minor correction in the following days. The QE tapering is just deferred and no one knows when it will be implemented, but the estimate is it will still be this year so we need to be vigilant about it. In my personal opinion, the general trend is now upwards upto 4th quarter this year (unless there's another crisis).

Before today, you should have something in your portfolio, I wouldn't advice buying today and going with the flow. My personal take is that I will continue what I already have now that the market can now breathe a little easier. I'm still betting that the Philippine Stock Market will rally in 4th quarter to reach my target 6800 points. And when 6800 points has been reached, my strategy will then depend on what's happening. If our market skyrockets beyond 7000 this year then I might probably sell because we are now again in the high P/E levels. But that's just my personal opinion. Don't take my word for it; I urge you to do your own research.

Market Watch is a free market assessment from Pesobility. It tries to explain why the stock market or the bond market is up or down, the factors affecting the trend, and a recommended plan of action.

My stock picks this September 2013 [Philippines]

2013-09-14T08:04:00.003+08:00

CPG (Century Properties) if below P1.40 since it's still undervalued (7+ P/E), even below P1.50 I'd still consider it value-investing. This remains my "Warren Buffet Stock". Hold for 1-2 years unless there's a crisis.

In the property sector BEL (Belle Corp.) may also be worth mentioning as their profit may jump. They should already be earning from the lease of Melco's casino and they'll probably earn more when the casino starts operating.

COSCO if below P10. This is a medium risk stock since it's relatively new but with the management and the direction they are heading, I believe it will be a great holding company one day; in the likes of SM if done right. But there's a long way to go.

OV (Philodrill) - Placing a relatively small allotment. Higher risk since oil explorations can go either way, however, their direction in reaching 2B profit in 2-3 years time may be in place since they already started drilling in Galoc field to double production. 2B net profit means a P/E of 4+ at the current price of P0.039.

AP (Aboitiz Power) - below P35. I bet on power generation in the next 3-5 years especially that Mindanao is under-supplied. AP also gives good cash dividends (4-5%), so I'll just continue to invest in it on a quarterly basis as an alternative to bonds. I'm okay with the price not moving too much because of the cash div.

[Update 9/19/2013] Please disregard my AP recommendation. I might have missed something here. Seems Aboitiz Power has big foreign debt which means they are very vulnerable to Peso depreciation which is happening now and might probably continue to happen (calculated guess) in the long term. Aside from this however, AP is a good company, but their vulnerability to forex changes (as well as other companies with big $ debt) means their profits will be very volatile.

Note the above is under the assumption that there are no crisis. Global stock market is unstable due to US, China, India/Asia. Watch out for international news that can affect our market, like US Fed tapering. And as always, the sell strategy is not disclosed here because it depends on your personality and risk appetite. So plan a good sell strategy so you won't get left behind.

Good luck and happy investing!

Reminder: GTCAP and LTG will replace MER and BEL in PSEi on Sept 16

2013-09-13T09:50:00.002+08:00

~~After~~ On September 16 trading day, GT Capital Holdings, Inc. (GTCAP) and Lucio Tan Group, Inc. (LTG) will join the list of Blue Chips in the Philippines or the top 30 companies that composes the Philippine Stock Exchange Index (PSEi).

In a statement by Phil. Stock Exchange president Hans Sicat, he said that this is a result of a regular assessment of the main index to reflect the current market of the Philippines.

Manila Electric Company (MER) and Belle Company (BEL) will be kicked out (harsh term) of the index so you may expect a bit of temporary selling pressure; it's possible that it may be overly done in which case, it's a possible opportunity buy because even if they were removed from the index, their business and management remain the same.

In my personal opinion, I don't get why newly created corporations such as LTG and BLOOM got "indexed". Yes, they seem reputable, but shouldn't PSE give them the chance to prove themselves first and create a good track record? I mean compared to Jollibee Foods Corporation which has been here since the 70's, LTG and BLOOM are babies. Anyway, they seem to be well-managed so most likely their businesses will do good; plus they are right on the spot in terms of liquidity, market capitalization, and free float level (criteria of being in the Philippine Stock Market Index).

Mark the date: September 16, 2013. Happy trading!

$SUN shareprice skyrockets! [Why? A Newbie Guide]

2013-08-16T10:54:00.000+08:00

In my previous post, there is a speculation about the strategy of AGI companies, specifically, when Suntrust Home Developers (SUN) was left as a shell company, theoretically for a greater purpose. These speculations have come to life, and are continuing to do so when SUN has just announced that it's allowing existing shareholders to subscribe to 2.5x more shares.

If you are a shell company, a company without asset, why would you want your shareholders to subscribe more? It means the owner is eyeing for a profitable venture and a backdoor is in place. Backdoor is a way for non-listed companies to be listed in the Philippine Stock Exchange. This is done because listing from scratch or Initial Public Offering (IPO) is quite expensive to do compared to just acquiring a shell company that is already listed in the exchange.

Before the disclosure was announced, SUN was trading around 0.57-0.60. No one knew then when a backdoor will be in place, or if it will ever occur, so the share price of SUN went down. When the disclosure was announced that additional shares will cost P1.00 each, that's the signal that a backdoor will occur soon! SUN's share price skyrocketed.. immediately you will think that a SUN's stock price will be valued at least P1.00 so those who bought below P1.00 were fortunate. SUN's share price reached ceiling price immediately. The next day it also reached ceiling, and today it's still up but no one knows for sure how high it will go.

The disclosure states that only existing shareholders can buy additional 2.5 shares. This means if you own 10,000 SUN shares, you can buy 25,000 more shares at P1.00 on SRO. The fact only existing shareholders can buy more shares adds to the buying pressure, that's why SUN's price is going beyond P1.00. There's an increased demand to have shares of the company (EVEN IF WE DON'T KNOW WHAT ANDREW TAN IS PLANNING). We're just trading in good faith that Andrew Tan won't let us down, that it might be Emperador that will backdoor SUN. Some are just trading for the play of instant money, well I think most are.

I don't know how high SUN will go up. Today, it's kinda shaky: it's reaching ceiling but sometimes the price goes down also. If big players are playing SUN, or maybe there's just a big demand for it, then it can still go up beyond P1.90 (Today's ceiling is P1.90).

So who will the backdoor company be? My gut tells me it's Emperador. The SUN is up and everyone seems happy, but for how long? When SRO has an Ex-Date, the share price will probably go down the day before ex-date, similar to dividends' ex-date case.

Market Watch: August 2013, QE Fears Anew

2013-08-08T15:09:00.000+08:00

[August 28, 2013 Update] Aside from the reasons below, the conflict in Syria has dampened investor sentiments when U.S. announced it is considering the use of military force in Syria after the Syrian government "crossed the line" by using chemical weapons against the rebels. More than 1,300 people died, including women and children in the said attack. This indicates a new war is brewing.

Isn't War good for the economy?
Well, yes and no, but generally no. Some corporations may benefit from it directly or indirectly, i.e. U.S. buying supplies needed for the war, higher oil prices, etc., but the general economic impact is negative, like what is learned from the war in Iraq. Economic uncertainties, less investors, higher government debt, money spent on military is better spent on health care, education, etc.

Other factors causing the downtrend market
U.S. will reach debt ceiling in October.

-----------------------

[August 22, 2013 Update] FED has announced support for tapering QE (see more information below). Philippine stock market is down more than 6% in the first hour of trading this morning. Below is an entry posted two weeks ago for the downtrend we are seeing right now. The downtrend may not be over but it may be an opportunity to buy your favorite stocks below 6100 PSEi points.
-----------------------

Asian stocks fell this week as U.S. Fed officials failed to clarify when will it start cutting down its quantitative easing (QE). Not to mention August is the ghost month so we might really expect a downtrend in this period because of the market uncertainties.

Why are we affected?

We live in a global economy. If U.S.' quantitative easing is tapered, there will be an outflow of hot money from emerging economies, including here in the Philippines. It will trigger a major sell off to liquidate the funds and this will affect our stock market. A chain reaction may likely occur to sell more stocks if the stock market goes down because investors want to protect their assets by liquidating. If it's overly done, there might be a panic and the effect will be catastrophic because stock market will continue to fall. This is what happened in the Asian financial crisis of 1997. We hope we do not experience it again.

What to do?

This is a period where you need to be vigilant. Watch out for news relating to QE. U.S. Fed hints that it will start cutting down its QE at the end of this year (2013). Depending on how and exactly when they taper it will affect our market (positive or negative, probably leaning on the negative side).

Investment in stocks and funds that are in equity will be most likely affected. What I will do is cut back in my monthly investment in these vehicles until the uncertainties become manageable. In other words, I will NOT yet sell or liquidate and continue to hold my positions unless a financial crisis is triggered. I'm not saying you follow the same strategy, but this is just to inform you to watch out for the upcoming events that will unfold that may significantly affect our market.

Q&A: I have 100K to invest, what now?

2013-08-01T11:12:00.000+08:00

Time for some Q&A segment, I'm loving this. Special thanks to Mr. Romy for this article.

Romy said:

I have read your pesobility blog regarding mutual funds handling by FAMI. Since, I'm interested to try for investments, by the way I am one of the OFW working in the Middle East and planning soon to go for good and stay in Philippines with my family. Please help me or give me guidance that my decision to invest my earnings with FAMI is a right decision.

My plan is l will invest an amount of 100,000 pesos and apply for (Balanced Fund) and decided to keep it shall we say about 15 years then after that, this is the time I will start withdrawing the interest every month as this will serve as my pension benefit. Some of my colleagues and friends trying to convince not to go for it, as they said I will loss 100% and nothing will happen to your earned which you have work for how many years in the middle east. Despite of that discouragement, I want to pursue with your guidance that I am making a right decision and I'm ready for the risk (in case).

Answer:

Thank you for reading pesobility blog and taking time to email.

There are several questions on top of my head right now: Do you plan to have other investments after investing 100K in a balanced fund? Like business, stocks, etc. Another is, what will be your source(s) of income when you're here in the Philippines? Like do you have or plan to start a business, or will you go back to employment?

This will make me better understand your situtation, but let me have a general, unsolocited advice first from the current information.

The One Time Investment

It's okay to invest 100K and leave it for 15 years. I actually commend you for having a very long horizon (15 years), and it's almost certain that your investment will profit. Take note, though, that 100K is relatively a small amount. After 15 years, it will probably become 500K (rough estimate). The question now is will it be enough for you? I think the answer is, No. All the more, the interest you will be withdrawing from it won't be that great; for shopping money maybe, but I'm guessing you will use this for your retirement? If I'm correct, then 500K is a very small amount for retirement.

I would not suggest a one-time investment. I believe that investment is a discipline, and not a one time thing. It's also a risk, and loss of money is certainly possible and you want to equip yourself with the circumstances that go along with investing and not just blindly put money and hope that it grows. In the process, you learn from your mistakes, you will learn from it and make you a better investor who makes better decisions with your finances.

100% Loss in Investment

Do not easily be discouraged with people saying you'll just lose 100% of your investment, because it's likely that they have done it the wrong way, and it might not have been "investing" at all. There are many people who invests in Pre-Need plans, insurances, or college plans, or even Pyramiding and multi-level marketing. I'm not saying this is wrong, but when putting your money in any institution, you should carefully check how they conduct their business. Do a due diligence, how they make money from your money. Example, some businesses, by its very nature, will go bankrupt. This is true, especially when the way they profit is just getting more money from people without actual products/services or when the products/services are just a front. This is an entire topic in itself, so research research research.

Bond Market, Stock Market, Mutual funds, Bank investments have been here for many, many years because their foundation is in our industry and economy. Before these institutions/investment vehicles go down, our economy must collapse first. The chances are very slim but not impossible (Look at Greece, Spain, etc).

The Investor Mindset

Investment should be continuous. In general, making 10% per year is already considered a good investment, whether it is from stocks, from mutual funds, UITF or mixed. If 10% per annum is already considered good, your 100K will not really grow into millions if you do it one time. Another thing, investing in something means you really believe in that business, so for example you will invest in FAMI Mutual fund, do your research, is the management of FAMI ok? Does FAMI has a proven track record as a business? Because note that investing is you're owning a part of that company, so it's like you are the part owner of FAMI when you invest in it. And like any part owner, you should regularly do your due diligence, like check if the business is still doing well (not just from rumors or people, but from their financial statements), if there are official news regarding the business, do you believe in the people that run it?

Being a serious investor takes a lot of market analysis and learning investment options, for example what will you do when there's a significant change in inflation, what will you do when interest rates go up, what will you do when China's economy slows down, or when U.S. Fed decides to stop its quantitative easing. These will make your head hurt, and it's certainly not for everybody. Many of us wants the easy route, what's the easiest way to invest.

The Easier Way to Start Investing

If the above is not for you, there's another way; a much simpler way to invest. This is not fool-proof thing, and there are still risks involved but for me this is the easiest way to start and make the right attitude in investing: It's called the Peso-Cost averaging.

The idea is very simple, choose an investment vehicle (like Balanced Fund) or a stock that you're really convinced in. Let's say you are decided that it's balanced fund. Place a fixed amount of money at fixed intervals and do it for long term. Example: Place P10,000 pesos in balanced fund every month, no matter what the market situation is. Or maybe P20,000 per quarter (every 3 months), whichever is the most convenient to you, as long as you can place a fixed amount at a fixed interval.

Study shows that in the long term, there's a high probability that you will profit. The profit may not be as large compared to analyzing the markets, but it's certainly easier, less stressful, and you'll learn a lot from it too. This is not realized in short term, it should be long term like more than 3 years. Look at it like paying your monthly bills, you should be disciplined to invest consistently.

Final Words

In the end, if you have 100K, I would suggest you split it like invest 10K per month consistently then even after the 100K is used up, continue investing 10K per month. After 15 years, you would have saved a lot and profited from your investment. That would be roughly 1.8M + profit from investment if done continuously, as compared to 500K if you do a one time 100K investment after 15 years.

The above is just an example, there are other factors as I said that may affect this. Please do not follow what is written above word per word, but digest the ideas and make your own strategy and plan in investing. I salute OFW's, more power and God bless.

August a.k.a "Ghost Month" is coming [What to expect]

2013-07-31T13:11:00.000+08:00

We've all heard of it at least one point in our life, but what is Ghost Month really and what does it entail?

I've heard about it since I was a child; my mother owned a business and she always associated August as "Patay na Buwan" (Dead Month), or I guess it's the same thing as "Ghost Month". It is when business growth (not just profits) usually slows down. It is only recently that I knew it originated from a Chinese belief about spirits roaming the earth at this period.

The 7th month in the Lunar calendar (not Gregorian) is generally referred to as the Ghost month. If we were to base it in lunar calendar, it means it doesn't always start in the month of August. It's probably for simplicity that August became the Ghost month and for that reason, this articles assumes the same thing.

The 15th day of the 7th month in the Lunar calendar is the Chinese Ghost Festival. This year, 2013, it's on the 20th of August. This is the time when it's believed that our realm + heaven and hell open, and spirits wander the earth.

During this month, it's most likely that many businesses, including non-Chinese ones, who believe in this do not sign new contracts or conduct any major decisions because it may be considered bad luck. In a business culture highly influenced by the Chinese, this is something to be considered because it will most likely affect your business whether you like it or not.

But not only does August fall on the Chinese Ghost Month belief, there are other seasonal events that happen to fall in the same period: Frequent rains / storms, parents just finished paying the tuition fees of their children, and preparation for Christmas season when people really spend money. All of these combined affect consumer spending and businesses.

So what happens to investments during August a.k.a. the ghost month? Bond market is not that much affected since debts are paid continuously. The only thing I can think of right now that may affect the bond market is that there may be less businesses who will offer new bonds during this period.

For the stock market, expect a temporary downward trend during this month. People who believe in this may stop buying or selling stocks. Combined with other people who are fearful during this month, we may see lower volume of trades during this period.

For those invested in Mutual Funds or UITF's, it's the same thing, since your fund is invested in the same Bond or Stock market.

If you want to know if you should take your profits and sell your stocks prior to this period, then I believe the answer is No. It's tricky to time the market, and Ghost month is not a crisis. In fact, this month may be an opportunity to buy more shares in the company you believe in when the share price goes down. Just like the saying goes, "Buy when people are fearful".

I asked my Chinese friend if he stops buying and selling shares during the Ghost month period and he said "No, in fact, my first big gain, I bought them during the ghost month."

[Dividend Investing] Why I bought Aboitiz Power shares below P35

2013-07-30T10:55:00.000+08:00

Recently, I withdrew a portion of my bond fund which already profited from the bond fund boost this year. FAMI is already at 18% in its first half of the year.

I am following this 75%-25% guide, where you shift your investments from Stocks to Bonds or vice versa depending on the market. We are currently at record low interest rates, and I feel that BSP will increase its interest rates eventually (probably next year). When this happens, long term bond funds will be less profitable. I'm looking for an alternative for the money I had withdrawn and I chose to do a dividend investing. Dividend investing is a strategy to buy stocks that gives consistent and relatively bigger cash dividends (>2%).

An alternative to bonds are preferred stocks. Preferred stocks give fixed and usually the highest cash dividends in the stock market e.g. SMC2A with an annual dividend rate of 7.5% (and a step-up rate after 5 years). Preferred stock prices are relatively stable, you can check their charts that the range they are traded isn't large (but any stock is still volatile under certain market conditions). But I personally didn't go for preferred stocks. I chose a common stock, AP, just because my risk appetite is bigger, I guess. I want the opportunity not only of a good dividend yield, but also the possibility of a good yield from a share price increase if I think that the stock is undervalued.

That's why it comes to this. I chose among the blue chips which gives a good (>2%) cash dividend. There are several index stocks that meets this criteria: PLDT (TEL), Globe (GLO), Aboitiz Power (AP) and Meralco (MER). TEL has the highest cash dividends among them (5%-6%+ I think).

Among the choices, I picked AP to be my cash dividend strategy. It gives a lower (4%-5%) dividend than TEL but there are other factors I considered in choosing AP over the others. I've said this before, and I'll say it again, I find Aboitiz companies to have good management and good value (low P/E ratio). A low P/E ratio would indicate relative stability and an opportunity for share price increase. Also, AP is in power generation business, so it should be relatively stable unless we all go off the grid and use solar cells to power our homes.

In summary, I chose Aboitiz Power (AP) as my cash div strategy because of 1) consistent and bigger than average cash div returns 2) It's part of the index a.k.a. blue chip companies. 3) Good management. 4) It's a bargain (low P/E ratio).

My buy range is 31-35 and it will most likely fall on the range again, even below 34, since the Ghost month (Aug) is coming; this is when I'll add more shares. Above is my personal opinion only, it's based on my research and I do not suggest you just follow what is written here, I urge you to do your own research using the methodology above and come up with your own list and your own choice. Of course it would be great if we have the same choice.

How about you? Are you considering a dividend investing strategy? Share your insights in the comment section below.

Note that for dividends there is a 10% tax. The aforementioned returns do not deduct the tax.

List of Preferred Stocks and other stocks by Sector

2013-07-29T14:04:00.002+08:00

This is a feature request from a Pesobility visitor.

Rudyard said:

Can you please post on your blog the updated or latest list of PSE prefered stocks shares, e.g. Petron prefered or Ayala prefered shares or stocks. It will be highly appreciated.

Thank you for the email Rudyard, it was actually a feature that was planned to be incorporated to Pesobility website, I just didn't have the time to do it. But now, I'm pleased to inform you and the rest of Pesobility visitors that it is now available here: http://www.pesobility.com/stock/preferred

Not only that but you can also select and group then according to different sectors as well:
Bank | Casino and Gaming | Chemical and Industrial | Construction | Consumer | Education | Holding Company | Hotel and Leisure | Information Technology | Media | Mining and Oil | Power and Water | Preferred | Property | Retail | Other Financial Institution | Other Services

You can also now search this and all of the content through the search box found on the upper left portion of Pesobility website.

I hope you and other people find this useful, because I myself do.

Q&A: What's the "catch" behind dividends (Stock or Cash)

2013-07-26T13:52:00.001+08:00

Thank you, Claris, for the email and allowing me to post it. I hope other people find this informative :)

Question from Claris:

I'd like to ask sana about the concept of dividends. So I saw yung FFI disclosed na magbibigay sila ng 110.37% stock dividends. Nagulat ako kasi commonly mga 20% stock dividends lang nakikita ko at mataas na un. So bale pag nagbuy ako ng stocks from FFI, pag narelease nila ung dividend ay madodoble (and more) yung number ng stocks ko? What's the catch sa mga ganto?

Answer:

Tama ka sa concept mo ng stock dividends. Kung meron kang 1000 shares ng isang stock tapos nagbigay ito ng 20% stock div, magkakaroon ka ng additional na 200 shares. Isama ko narin yung concept ng Ex Dividend Date (or Ex-Date) para ma-explain ko ng maayos ano yung "catch". Bale ang Ex-Date, ito yung araw na magsisimula na kapag bumili ka ng shares, hindi ka na entitled sa previously announced na dividends at ito ung araw na usually bababa ang presyo ng stock.

For example:
Security Bank (SECB) declares 20% stock div.
Ex-Date: Aug 5, 2013

Sa August 4, 2013 (isang araw bago ang ex-date), ito ang last day na makakabili ka ng shares ng SECB na entitled magkaron ng dividends. Bale sa ex-date (Aug 5), pag bumili ka ng shares, wala ka ng matatanggap na dividends sa Date Payable. Applicable ito sa lahat ng dividends, like Cash Div and Stock Div.

Para sa stock dividends, ang "catch" nito ay kung efficient ang market, yung value ng stock mo ay bababa based sa adjustment factor na ang formula ay 1/(1+x) - 1 where x = (stock div percent / 100). For example, kung nag declare ang 20% stock div ang Security Bank (SECB) at nag close sya ng P200 per share the day before Ex-Date. Sa araw ng Ex-Date bababa ang share price ng SECB (assuming efficient ang market) by -16.66667% ((1/(1+0.20) - 1) x 100) or magiging P166.67 nalang ang price ng SECB sa Ex-Date.

Bakit nangyayari ito? Simple lang ang idea. Ang stock ay binubuo ng shares, at kada share ay may value. Example ang isang stock ay may 100,000,000 shares at ang presyo ng kada share ay P2.00, so meron kang P200M sa kabubuan (100M shares x P2.00). Kung ang kabubuang bilang ng shares ay umangat ng 20%, magiging 120,000,000 shares na ang kabubuan, ngunit wala itong idinagdag na value sa bawat share dahil hindi naman nadagdagan ang kita ng kumpanya. So sa parehong value na P200M, dadami ang shares na maghahati hati (from 100M to 120M shares). Ang value na ng kada share ngayon ay 200M/120M = P1.66667 per share, bumaba ito ng -16.66667% (adjustment factor na na mention sa taas).

Medyo similar ang konsepto ng "catch" sa cash dividends pero mas madali na syang isipin, kung magkano yung cash dividends, yun yung ibababa ng presyo ng isang stock pag dumating ang ex-date. Example, nag declare ng P100 cash div ang PLDT at nag sarado sya sa P3000 sa araw bago mag ex-date. Sa araw ng ex-date ang share price nya ay magiging P2900 (kung efficient ang market). Ito naman ay dahil nawalan ng pera ang kumpanya ng binigay nya ito sa may mga hawak ng shares. So kung nagbigay ng P100 pesos cash-div ang PLDT kada share, it follows na bababa ang value ng kada share ng P100 pesos din dahil napunta ito sa bulsa ng mga may hawak ng PLDT shares.

[Update August 22, 2013] The above statements seems too disadvantageous for the shareholders. There is a reason why companies declare stock dividends. There are SEC rules that disallow corporations from hoarding excessive profits i.e. retained earnings exceeding paid up capital. Companies issue more stocks to increase paid up capital so that they can retain the earnings.

This is actually positive since it means the company is expanding rapidly and earning so much more that it has to issue stock dividends. This indicates that the company is doing good in business, in turn, this also benefits the shareholders at least theoretically. This is true most of the time, take note that growth is not the only factor driving share price up.

For your financial questions, feel free to email me at manny@pesobility.com and I will try to answer them as soon as I can.

My Stock Picks for July 2013 [Philippines]

2013-07-19T17:13:00.002+08:00

The Philippine stock market was lashed by multiple crises outside the country: U.S. Fed's QE madness, China's slowing economy, Japan's overheating but inspite all these, our country remains fundamentally sound; our GDP is high (7.8%), inflation is low (2%-3%), interest rates remains stably low. My opinion is, generally, the market is in an upward trend (unless we encounter another crisis).

Though I worry that Fed's QE is the biggest bubble to burst yet, that's for another time and for another blog entry. Now, markets are generally at ease, so until the next crisis, here are my stock recommendations:

CPG (Stock information)

CPG's share price went down big time. Based from my analysis, this stock is highly undervalued (7.5 P/E at P1.42). The upside is great. If it reaches P2.00, the profit is already 40%. If it goes back to its 52 week high, that 71% profit.

I call this my Warren Buffet stock because usually when you invest in a stock, at times it haunts you and you can't put your eyes off the market. This one makes me sleep at night. It's a personal opinion; do your research and find your "Warren Buffet" stock.

My buy price is 1.25-1.45.

MER (Stock information)

When the rumor that San Miguel (SMC) company was in trouble, this stock was also affected somehow because SMC has 30% stake in Meralco. Today (July 19), San Miguel's officially announced the sale of shares in Manila Electric Company at P270 a piece. This made the MER's stock price tumble to 275-280 range.

However, Meralco hasn't change, its fundamentals are the same, and it remains a strong company. Meralco shouldn't be affected even if SMC goes bankrupt (knock on wood). There's no real fundamental analysis here, its P/E is still a bit high (17) but it was high ever since. The only analysis is if it bounces back, the upside is big. 52 week high = P397 which is a 43% upside from P277.

My buy range is 270-280.

MWC (Stock information)

Manila Water share price dropped when its deal with Indonesia failed. It was a big opportunity that was lost, however, Manila Water's P/E is at 12 (relatively low) and the snag seems to be forgotten since its price is now increasing.

My buy price is 32-34

MBT (Stock information)

I owned MBT shares before I sold it at 117 then its shareprice skyrocketed to 139.5. Compared to other stocks, the upside is not that great but I recommend this stock because it's one of the stocks that rebounds quickly.

Buy range: 105-109

Obligatory disclaimer: Follow above recommendations at your own risk. The above guide does not tell when you will sell, it's really up to you.

Computing Your Mutual Fund / UITF investment manually (E.g. FAMI)

2013-07-19T15:50:00.005+08:00

For this entry, I will be using FAMI (First Metro) SALFIF (Save and Learn Fixed Income Fund) for my sample computation.

It is very easy to compute your profit/loss. Just get the number of shares you got (it should be in the receipt sent to you) and multiply it by the current NAVPS.

For FAMI, the NAVPS is listed in the FAMI Website.

Example:

Last October, 2012, you placed 5,000 Pesos in your FAMI SALFIF Account. After you got the receipt, take note of the details in the receipt and note it somewhere, like in your journal or in an excel / Google docs spreadsheet.

Amount: P5000
Number of Shares: 2771
NAVPS: 1.7683

So last October, 2012 the value of my investment was 2771 x 1.7683 = P4899.9593, it means I immediately incurred a loss of ~P100 or 2% because FAMI has a sales load of 2% (more on this in another blog entry).

Now, let's compute how much it is today. Go to FAMI website and get the NAVPS of SALFIF, which is currently 2.2073. So I multiply the number of shares 2771 by the current NAVPS 2.2073. 2771 x 2.2073 = P6116.4283. So in 9 months, my P5000 last October 2012 is now worth P6116, which is a 22% gain. (Not bad!)

Take note of the terms and conditions in your mutual fund/UITF though. For example, FAMI has an exit fee of 1.5% if you withdraw your funds within 6 months.

For convenience, I shared a sample computation sheet using Google spreadsheets. You may access it here.

Want to start investing in a mutual fund? I can help you with that, email me.

The biggest PSEi drop in recent history, what happened?

2013-06-13T16:16:00.001+08:00

It has been a bloody market today. The stock market dives to 6,114.08 or -6.75%, the largest drop since 2008. Why is this happening despite our emerging economy?

To explain this, we have to look what's happening outside the Philippines:

Japan's Stock Market Plunge

Japan contributes largely to the worries in the Asian financial market. Nikkei is down by more than 6 percent today. The drop is among the many we've seen in the past few weeks which ultimately caused Japan to officially enter the bear market. Everyone is cautious on what's may happen next.

The quantitative easing of its central bank is backfiring, plus other global economic worries (below) also factor in.

U.S. Fed to Lessen QE

Quantitative easing (QE) is a solution that the U.S. government devised to save its economy from crashing. It does that by buying billions worth of bonds each month in order to stop the prices from free-falling. This was proven effective in the short period it was established, but now, the market seems to be dependent on govt's stimulus. There's a lot of uncertainty what will happen when the govt stops quantitative easing. This uncertainty breeds fear, which in turn, drives the stock market down. And when the U.S. stock market falls in this global economy, everyone also falls.

China's Economy is Slowing Down

China is the industry engine of the world, almost everything is made in China. When China reports that its economy is slowing down, it reflects that the global demand is slowing down which again invokes fear and uncertainty.

There are a lot of uncertainties in the global market, not to mention the economic problems in Europe. These uncertainties multiplies the effect in our stock market today triggering a major sell-off. Closely monitor what happens to Japan, U.S. and China and you'll have an idea what will happen to the global financial economy and how it will affect the Philippine stock market.

I believe we area nearing a global financial catastrophe if this continues and if there are no positive news to impact the market. Fortunately for the Philippines, we may still have an ace card: MOODY's upgrade rating which is expected soon, will it trigger a reversal from our market slump?

What is to be done during these times

The problem is no one knows how low it'll get. There are some signs to look for like when the market stops plunging and moves sideways. The good thing is the market phases do not usually happen in one day so you'll have time to react.

Market Emotion

So where do you think are we? Probably between "Fear" and "I'm out"?

The market is very volatile, during this time, investors protect their money by liquidating them (to avoid the effects of further depreciation). People withdraw their investments from mutual funds, uitf, stock market etc. This has an adverse effect on the stock market because it will drive stock prices down, which is currently what's happening, locally and abroad. The net foreign sell (NFS) in our stock market is huge in the past few weeks.

But again, no one knows how low we'll reach. Are we at the lowest point this year? If we are then it's a great opportunity to buy, if we're not then it's time liquidate. We'll see :)

My June 2013 Stock Picks

2013-06-10T13:48:00.000+08:00

My June Stock Picks

I always had a disclaimer that I was afraid that the stock market was growing too fast. Now that my fear has come to pass, I got less reason to be afraid of. The market has corrected, and I believe it's still correcting. It's relatively a good time to buy this month when the market is down (As long as PSEi is below 6900).

My list is more of a guide on which stocks to buy, it's still up to you to research about it, and definitely up to you WHEN to sell them (E.g. When you feel we have a major correction happening, or in time of crisis / recession, or when you reached your target price, or on whatever technical analysis you may have.)

MEG / MEGW1
[Buy below P3.9 / P2.9] Even if it was removed from MSCI Index, I believe Megaworld Corp (MEG) is still undervalued compared to other property units. This is for long term holding. COL Financial's target price for Megaworld is P9 which I think is too good to be true, although MEG has a lot of growth potential. Its current P/E at P3.83 is 15.3, still relatively low compared to other companies in the same industry. Plus what I love about MEG, is it has its warrants counterpart MEGW1 which has more room for profit growth (but less liquid).

There is ONE problem that I see though, which would make it a bumpy ride: In my previous post, I speculated that Alliance Global (AGI. Parent company of MEG), will merge its property units. If this is true, MEG will have a similar fate to SMPH. In which SMPH's (the surviving entity) share price went down and its acquisitions (SMDC, HP) went up. It is possible that MEG's share price will go down temporarily because of this. Anyway, it's still a theory.

SMPH
[Buy below P19] After the merging of SM's property units (July 5?), the upside is big (~18%) if it reaches its 52-week high. But the new SMPH will be bigger and more valuable since it will now hold all the property stake of SM. I'm yet to compute the exact figures.

BDO
[Buy below P89] It consolidated around 92-93 (~8% upside) before and has a 52-week high of 99 (~13% upside). Even though the upside is not that great and its P/E is already high (21), BDO's popularity makes it a good candidate for a quick play. And basing on its Q1 earnings, its growth maybe above expectations.

TA
[Buy below P2.40] Based on its Q1 earnings, its growth potential is also promising. Since its shareprice already went up, I would wait for an opportunity to buy it at a lower price. Also there is possibility that TA will give property div to its oil exploration company.

If I wrote this last week, I would've added BPI [Buy below P94], MWC [Buy below P37], AGI [Buy below P23] and ALI [Buy below P31]. You can still wait if their prices will go down this month. I bought BPI when PSEi was in 6600 levels, but now it has gone up and the upside is not that great anymore. Same goes for MWC (my favorite stock, I buy it whenever there's a great opportunity for it). AGI, like BDO, is very popular; its share price bounces back quickly when the market recovers.

There are a lot of bargains in the stock market, since the market has already corrected significantly (and may continue to do so), this time is a good opportunity to buy (wait for days that the market is down). But still be cautious, again, the correction may not be over, I am guessing it will still continue for around 1-2months. But hey, buying this month is definitely better than buying last month (esp. at 7400 PSEi). You are lucky if you followed the SELL IN MAY AND WALK AWAY strategy, hehe.

Another thing, this year, and possibly for a few years more, our construction industry is on a boom! Cement companies may be a good long-term investment (HLCM, LRI)

At a time like this (when market goes down significantly), I check the list of blue chips sorted by its change from its 52-week high. I personally stay away from Lopez companies, Ramon Ang companies (SMC, etc), and Airlines unless the deal is too good to pass.

Good luck and happy investing!

Obligatory disclaimer: Above recommendations are just personal opinion, follow them at your own risk!

Deadly Speculation on AGI companies $SUN $MEG $GERI $ELI

2013-06-10T12:33:00.001+08:00

[See Aug 14, 2013 update at the end of this post]

Disclaimer: Speculation is the mother of all evil so act at your own risk. The statements below are purely speculative.

In quick summary: My speculation is Alliance Global Inc. (AGI) properties would be merged into one, the surviving entity will probably be Megaworld Corp. (MEG). Suntrust (SUN) will be left as a shell company for a more profitable venture (to be backdoored, Emperador? Travellers? Dunno).

AGI will hit two birds with one stone if it were to do this. SM already did it, merged its property units to SM Prime (SMPH), which will make SMPH larger than Ayala Land (ALI). To be competitive, AGI may need to do the same with its property units Global-Estate Resorts (GERI), Empire East (ELI) and Suntrust (SUN). In the merger, ELI and GERI will benefit from this (much like what happened to SMDC and HP). SUN already sold its property stake to MEG, which spurred speculations (SUN's share price up by 30%-40% today).

So why not just merge SUN with the others. It may mean AGI has bigger plans for SUN. There was a rumor before that Travellers International (Part owner of Resort's Word) will use SUN as a backdoor which lead to SUN's price to shoot up, but the rumor was silenced when AGI disclosed that Travellers Group filed for its IPO (means it won't use a backdoor listing).

Now, SUN is more or less a shell company when it sold its property stake to MEG. What is the purpose of this? Could be used as a backdoor for Emperador? Or maybe Travellers changed its mind? But in any case, the speculation is that it's highly probable, SUN will be used as a backdoor for another company.

[Update Aug 14, 2013] Seems the speculation above is coming to life. AGI announced property mergers, CHECK! SUN was left as a shell company, CHECK! And now, SUN just released a disclosure that allows existing shareholders to buy additional 2.5 shares at P1.0.

This clearly indicates a backdoor is brewing. Why? If you have a shell company, a company without assets, why would you conduct a stock rights offering. It means there is a motive to revive this shell company ito a profitable venture. The question, again, is who will it be? Emperador? Nobody knows yet since it's not included in the disclosure, which means more speculation and hype!

If you can buy SUN below P1.00 it MIGHT be a good buy, but I doubt you will be able to buy shares below P1.00 (if people know the value of their existing shares)

FAMI Website has been hacked!

2013-05-29T11:41:00.001+08:00

As of the moment, if you go to fami.com.ph, you'll see a different page. The FAMI website has been hacked by an entity who calls itself "The Dark Vortex" or spelled as "TH3_D@RK_V0RT3X". The motive is not known behind this attack; it's probably just for show.

Screenshot of the hacked FAMI Website

The question is, why is FAMI website still down up to now? It should be easy to take the site back and restart the server. The extent of damage is still uncertain, hopefully it's just the website that is hacked and not the accounts and critical data.

Here's the text that is displayed on the hacked website:

@=================================================================@

W@IT

H@CK1NG TH3 W3BS1T3

==========================================================

H@CK1NG C0MPl3T3

UPL0@D1NG D3F@CE

==========================================================

==========H3LL0 @DM1N=========

TH3_D@RK_V0RT3X W@S H3R3

W3BS1T3 IS H@CK3D
F33L TH3 P0W3R 0F BD H@CK3RS
TH1S IS 0NLY TH3 S7@R7

I @M @ MUSLIM. I L0V3 MY MUSLIM BR0TH3RS.
FR33 @LL MUSL1MS
0R ELS3..............................
I @M C0M1NG T0 M@K3 JUST1C3

@S F0R TH3 @DM1N. D0N'7 CRY. I W1LL B3 B@CK S00N. & Y0U W1LL W3LC0M3 M3 V3RY W3LL
Y0U ST33PED IN TH3 WR0NG H0US3
~~~~~FR0M~~~~~
~~~~~TH3_D@RK_V0RT3X~~~~~

@LL MUSLIM H@CK3RS ===== ===== @LL H@CK3RS 0F JUST1C3 ===== ===== Muslim Cyber Army

~~~~~GR33TZ T0~~~~~
TH3_D@RK_V0RT3X
@LL L33T H@CK3RS ===== @LL B@NGL@D3SH1 H@CK3RS ===== Muslim Cyber Army
BANGLADESH ZINDABAD /

GR33T1NGS T0====== ALL HACKERS OF JUSTICE ======= UND3RW0RLD CYB3R @TT@CK3R ======= My Beloved DARKK HEX |

[Update 5/29/2013 2PM] FAMI site is back to normal.

SDA for Individual Investors to be Phased-Out Before the Year Ends

2013-05-22T10:37:00.003+08:00

To those who don't know, Special Deposit Accounts (SDA) is an investment option from Bangko Sentral ng Pilipinas (BSP) which aimed to mop excess liquidity in the Philippines. There was a time (I think 2009) when the interest rate was high ~4.5%. Imagine having a low-risk investment with a return of ~4%. This was very enticing to investors, it was certainly better than bank deposits, even time deposits, and was competitive to bond investments.

Now, BSP may want the money out of its system. There's a rumor that SDA will be phased out. Seems there's now too much money parked in SDA (P1.859 trillion as of May 3), and it's not beneficial for the economy anymore. It started with BSP cutting the rates down, from 4+%, down to 3.5%, when it didn't work, it further cut the rates down until it reached the rate we have today which is a mere 2% (gross).

Seems there's some truth to the rumor. New memorandum 2013-021 from BSP implicates that banks can no longer offer SDA to individual investors. SDA is now exclusive to funds in trust and UITFS are allowed to park.

The order also states that by end of July, 30% of current placements should be withdrawn from SDA and the rest should be removed by November 30, 2013.

So if you're an individual and you have placement in SDA, I would suggest that you already look for alternatives. In my earlier post, I recommended BPI Maxi Saver, but you are not limited to that. There's also Bond UITF's and Bond/Fixed-Income Mutual Funds (MF) that offers lower volatility and risk but have moderate returns.

`

Source:
Philstar

My Top Stock Pick(s) for May 2013 [Philippines]

2013-05-14T08:18:00.000+08:00

The main stock I picked in my last entry, which is CPG, has already increased in value. For those who are looking for new opportunities, below may be worth noting.

FGEN

At 21.95, First Gen Corporation's PE is 9.8. Like in my previous entry, I personally don't like Lopez companies, but at the moment, it may be an opportunity that's too good to pass. If you buy it below 22.6, it may be a good deal.

Among LPZ, FGEN and EDC, FGEN may be the best bet for now. For the companies I researched in the month of May, only FGEN stood among the rest.

Disclaimer: Before buying or taking any recommendations, please do your own research. You should be convinced with the stock you'll be buying. Above recommendations are my personal opinion only.

Why I won't buy $AUB shares at IPO price

2013-05-08T10:27:00.001+08:00

This could've been the first time I'll participate in an IPO, I was psyched to buy Asia United Bank shares when I heard the news the it was oversubscribed in international market.

But upon checking its financials, it has a net income of P1.4B in 2012 and will have 328M shares, that makes it a P/E of around 22 at its IPO price of P95/share which is very high, meaning it's overpriced, and there will be a great expectation for its growth for the price to be justified. One of the factors that may help in its growth is that Asia United Bank now a unibank. Last Feb 2013, its application for universal banking license was approved, which means additional earnings can be made not just from banking alone but from being an investment house.

Anyway, personally, I won't participate in its IPO. My fundamental analysis doesn't allow me to, and I'll stick to my decision. Sure, the share price can go up with pure hype even if it's not justified, but I'll pass. There will be more opportunities to grab. PBB and EW IPO were much justified; among the three, AUB has the highest P/E at IPO, EW has the lowest.

The story behind $SUN and some analysis

2013-04-25T13:14:00.000+08:00

Suntrust Home Developers, Inc. (SUN) is run by Andrew Tan, which, as many of you already know, also runs AGI, MEG, ELI, and GERI.

There's a rumor circulating that SUN could be used as a backdoor for Travellers International Group (a joint venture between AGI and Genting Hong Kong, owners of Resorts World Manila and are also set to build the new Resorts World Bayshore).

Does this make any sense? My personal opinion: YES, it does. IPO is expensive, maintaining a listed company is also expensive, so it's a win win if Andrew Tan already owns a listed company that can be converted into a more profitable venture.

Conglomerates are now thinking of merging their property units, it's also possible that AGI is also thinking of merging its own property units MEG, ELI and GERI. Since SUN only has a small portfolio, it may be excluded from the merger.

If you look at SUN's history, however, you'll notice that it has a shady background before it became the SUN we know today. Before SUN changed its name in 2002, it was the controversial BW Resources (Symbol: BW). In 1999, its share price skyrocketed from P2 to P107 (5K% increase) when a rumor spread that Stanly Ho, a bigtime Macau casino operator, was investing in BW to build a Casino in the Philippines. Stanly Ho even made an appearance in the Philippines which further contributed to an increase in BW's share price.

The deal never went through and BW's share price plunged. According to PSE's investigation, it was stock manipulation through wash sales in which the buyer and the seller are the same to deceive investors that the stock is active and profitable. Allegedly, cronyism played a major role in this scandal. Dante Tan (Major shareholder of BW) and JV Ejercito were business partners and friends.

Today, the motive may be more legitimate, and the deal may more likely push through but who really knows? No one yet. As of writing, AGI is neither confirming nor denying it. Its latest disclosure is vague, stating that Traveller's Group is looking at both debt and equity market for its financing.

However, there's another twist to the story. Remember Stanly Ho? He still owns a chunk of overvalued shares in BW Resources which is now SUN. It is also possible that this is just a way out for him, jacking the price up for profit or just to get his investment back. Again, who knows! Either way, SUN's share price would go up.

CAVEAT! Just a personal opinion, there's no guarantee in this analysis. Agree or disagree? Share it in the comment section below :)

Source 1, Source 2, Photo from archian, Special thanks to my mentor

How to top-up your investment in FAMI using Metrobank Direct

2013-04-25T10:42:00.000+08:00

If you already have a Metrobank Direct account, it's never easier to add more money in your FAMI investments (SALEF, SALFIF, SALBF, SALMF):

This tutorial assumes you already have your FAMI and Metrobank Direct accounts, if you don't have it yet, please enroll first.

click the image for larger view

Steps to top-up any FAMI investment:

1. Login to your Metrobank Direct Account.

2. Go to "Pay Bills" Section

3. Select "First Metro Save & Learn ..." of your choice

4. Enter your Account No and left-pad it with zeroes to make it an 8 digit number. E.g. if your account number is 12345, you should put 00012345 in the Account No.

5. Enter the same number in the Reference No. field.

6. Input your phone number where you can be contacted should there be issues encountered.

7. Enter the amount of money you want to add to your investment. Minimum of P1000 is required.

8. Click the Continue button.

9. Review the summary and confirm your action.

That's it! Wait a few days to get your confirmation receipt.

Note that if you're already enrolled to one of the FAMI investment products e.g. Save and Learn Fixed-Income fund, you can add to any product of your choice (SALEF, SALFIF, SALBF, SALMF)