Reinvest profit from Golden Agri-Resouces in Full Apex and Surface Mount Tech in September 2006

On one hand, I continue to read up financial textbooks and other investment books, as if I'm preparing for CFA. On the other hand, with fresh funds after disposing Golden Agri-Resources, I started to look for new opportunities. I just couldn't let my cash idle away in the bank.

By September 2006, I started to accept that good business (displaying high ROE, e.g >15 ) might justify share price above NAV while under performing ones (displaying low ROE, e.g <10)>15), it is also trading below NAV by about 15%. Next I bought Full Apex at 29.5 cents. Full Apex manufactured PET bottles and had prominent customers like Pepsi-Cola as its clients. But it was trading slightly above NAV for ROE greater than 15 too.

Originally, I was quite confident about Full Apex. Though it faced rising price of raw materials due to high crude oil prices, it decided to build its factory to produce plastic resin, an intermediate raw material for making PET bottles, to deflect some of the rise in raw material cost. I thought such vertical integration in business operation was good until a fellow value investor pointed out that not all companies benefit from vertical integration, else why would many out-source some operations. Anyway, I didn't hung on to Full Apex before selling it off because I was still not comfortable with above NAV counters. I subsequently sold off Full Apex at 31.5 cents in the same month when I thought the general market had appreciated too much and was due for another correction. I thought then that I could wait out for another under NAV gem.