Majesty Fund

Funds ManagersHung Pun Ki, Majesty 2008078285Mak Yin Yan, Wendy 2008299994Wong Lam Wai, David 2008085991Yau Tat Kwan, Jacob 2008046921

Stock Track Portfolio Project 09-10

Majesty Fund

Presentation Flow

Trading Philosophy and Strategy1

Behavior Bias2

Analysis of selected trade3

Future Prospective5

Relative and Absolute Performance4

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Trading Philosophy

1 Market is NOT efficient!

2 Believe in Value Investing

3 Believe in Momentum Investing

Majesty FundTrading strategy

• Primarily in Hong Kong Stock Market– Easily to obtain information via Internet– With a deeper understanding– Can catch the market sentiment easier

• Asset allocation– At the beginning as outlined,

10% spots and future, 20% cash, remaining contributed to HK stocks

Majesty Fund

Behavior Bias

• Ignorance of short-term game• emphasize on long term investment• Only 3 months• Neglect short-term volatility

• Selection of unfamiliar market• Buying of derivatives• Asymmetric information

Majesty FundAdjustments

Focus on stock-specific news events, with

reference to macroeconomic news and financial markets

Paying more attention to Hong Kong and China

Stocks

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Short-term day trading

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0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED

• 1st reason: On 31/3, Announcement of 2009 Annual Results show 00363 is bullish.

• 2nd reason: On 31/3– Shanghai Industrial holdings Ltd released its 2009

Annual Financial performance• Overall gross profit rises by 5.8%• Profit in real estate sector rises by 66.2%• Final dividend 60 cents per share

– Catch the advantage of Shanghai Expo

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0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED

On 31/3, we bought at HK$35.6

On 7/4, we sold at HK$39.9

Margin of safety is not beyond On 8/4, re-invest at HK$40.5

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0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED

• However, there is a series of bad news.

09 April 2010Shanghai is planning to

impose value-added tax on real estate

Beijing is planning to restrict application of mortgage loan

from non-locals

12 April 2010Strictly investigate the risks

of loans provided to real estate producers of China

13 April 2010Large selling of Mainland real estate stocks due to

suppression in real estate market

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0363 – SHANGHAI INDUSTRIAL HOLDINGS LIMITED

Total profit: $11014.45 - $1762.92 = $9251.53

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0005 HSBC• 4/2 monthly statement, new stocks released• 17/2 announcement of fourth quarter results

On 23/2, we bought at the price of HK$84.95

On 1/3, people were unsatisfied with the performance of HSBC in 2009

On 1/3, we sold at the resistant price of HK$86.65

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Total Profit: $936.62 + $5158.05 =

$6094.67

On 16/4, we sold at

the price of HK$84.55

On 8/4, we reinvested at the support

price HK$79.55

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Select Trade 3- Speculation(8173.HK)

Use at most 30% of money on speculative trading

Ride on moment with the help of technical analysis

Cut loss strictly at 15%

Bet on stocks with highest beta

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Selected Trade- Technical Analysis

K line cross from below over the S line

Sudden Increase in Turnover

=> We wait for rising trend

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Select Trade 3- Speculation

Buy at 0.061

Increase stakes at 0.073

Start profit taking at 0.091

Lessons learnt

When making profit, withdraw part of the money out and let the remaining run for itself.

Return =37.8%

Majesty Fund

Relative performance

1 2 3 4 5 6 7 8 9 10 11

-0.06

-0.04

-0.02

0

0.02

0.04

0.06

0.08

0.1

0.12

Comparison of weekly return of Majesty Fund and HSI

Majesty Fund

HSI

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Relative performance

• Benchmark: Hang Seng Index• Outperform the benchmark!

Measure Portfolio BenchmarkSharpe Ratio 2.28 2.654Treynor Ratio 2.957 0.5437Return 10.92% 10.37%Volatility 12.64 20.64

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Market Efficiency

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1

1

2 3 10,1

2 2 1 1

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kqnq

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Majesty Fund

Market Efficiency

• Null hypothesis– The market is in a random walk process hence it is

efficient

• Result from tests– Test statistics > critical values for both tests

• The market is efficient– Reject the null hypothesis

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Our perspective in 2010

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Late Performance

• Huge returnRate of return in the last month= 15%

• Constant return• Highest among all funds• Rate of return of HSI

= 7.4%

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Majesty Fund

• We learned from mistakes• We invest in our strongest• We have good market sentiment

Fact!!These make Majesty Fund the best performed

PROVEN

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• The End• Thank you very much for your attention!