PELIKAN–My Fatal Mistake

Posted by L. C. Chong on February 16, 2014

From 1997 to 2006, with just economic moats (but minimal financial analysis) and some lucks , I managed to pick up and invest heavily (in proportion to my capital and income) PBBANK, GAB, CARLSB, GENTING, DIGI, PETGAS and AIRASIA at low price. As of today, worth of my gross investments in these stocks already exceeded 7 digits. I don’t mind you can call my a “lucky bastard”.
At that time, I was fully aware that while I have very good hunch in identifying good stocks with wide economic moats, luck element plays very important role in my investment. Until 2006, none of my investment yield negative return. This success created and grew complacent about my investment skills. Actually, at that time, I also studied fundamental analysis and technical analysis, but the progress was very slow because I was not so serious in learning.
PELIKAN was the stock that makes me seriously put greater efforts in learning fundamental analysis and technical analysis.
Starting from 3 Nov 2006, I bought 5000 units PELIKAN at 2.1 and additional 2000 units at 2.48, 10000 units at 3.3 and 5000 units at 3.85. Then the subprime crisis came. PELIKAN dropped from 4.1 to  0.8. I also averaged down PELIKAN. In Aug 2009, I sold off PELIKAN.
Lesson learnt:

1. Lack of knowledge in measuring economic moats by using quantitative analysis.
2. Lack of knowledge in fundamental analysis.
3. No idea about valuation
4. No idea about Changes in Shareholding
5. No idea about the impact of withdrawal of foreign funds
6. No idea about exit rules.
7. We cannot expense luck too much.

I made some other small mistakes, but PELIKAN is probably my only most fatal mistake so far.
After the incident with PELIKAN, I put very high efforts in enhancing my investment skills.