How to pick stock (part 13)

YTL

YTL was the first company I invested based on two reasons: good mgmt and good cash flow mgmt. This gave me a lot of experience on dealing with this kind of investment.

I was saying YTL was my long term holding company, I really not much about the stock price, in stead, I would buy it when it dropped below my purchased price - 5.20 on year 2006.

Let me explain how to determine how the good mgmt was and how the dividend policy changed the other's opinion on it.

I started to search for blue chip stock after I failed on small cap stock, in other word, I tried to be balance by set aside some portion into blue chip stock against small cap stock, history proved me half correct and half wrong.

Due to the long working hour, I can't really be a trader, hence I am more towards long term investor. By doing some asset allocation (at that point of time, I was about 30k to 40k, hence I was able to put a little bit percentage on it. After a while, ytl issued ytlpowr, and I started accumulate ytlpowr by execute the right to purchase on the cost of about rm1 per share.

Ok, back to the point. I picked ytl is because it has a proven track, and it had some problem on that time. The pe was less than 10, which for me was considered as low. It has some good cash flow generating asset, such as utility - electricity and water, cement, infrastructure construction, and so on.

The ambition of ytl boss was to keep 20% grow in trm of asset base each year until year 2020.

The corporate finance was done very excellent by the company. They always borrow at low rate and invest in low risk asset to get better return.

Actually during this period, I had passed cfa level 1, hence I would be more familiar with the finance term that I learnt from it.

So, with this two reasons, I strongly believe ytl can perform even better during the bottom of the economy circle.