Saturday, December 26, 2020

Portfolio Updates (December 2020)

It’s finally Christmas and it's the season I look forward to every year and the time for cold weather travel to ski on powder snow. Unfortunately, this time is different. I booked a few flights for travel this year and all got cancelled (including the travel bubble one). If there’s anything good in not being able to travel is that I managed to save more money. I continued investing in stocks and I am blessed that my portfolio has done well this year, particularly my Growth portfolio. Thanks to the circuit breaker, the times spent at home has allowed me to do more personal reflection, come out with an investment strategy and act on it.

Despite the US stock market hitting record highs, I believe next year will still be a good year for equities market. The past few months rally is fuelled by stimulus rolled out by Federal reserve and government. The next rally will be underpinned by reopening of business and economies as more people get vaccinated.

(1) Growth Portfolio

Missing from the photo: Zoom (NASDAQ: ZM)

My growth portfolio had a good run in December. Cybersecurity companies like Zscaler and Crowdstrike continued to hit new highs after the earnings report early December since their services are getting more in demand as cybersecurity concerns mount. Crowdstrike reported 81% year on year increase in annual recurring revenue. As long as public cloud revenue continues to grow, Crowdstrike is expected to see growing demand. It also owns a handful of patents: 41 patents in process, and 46 international patents.

https://ir.crowdstrike.com/static-files/547e5c92-3594-4eef-9dfc-9eca37b635f4

Crowdstrike (NASDAQ: CRWD)
Crowdstrike's latest corporate overview (see link above) shows two patents: US Patent 9,798,882 (Real-Time Model of states monitored devices) and US Patent 9,043,903 (Kernel-Level Security Agent) which forms its key part of the company’s moat. As mentioned in my previous blog, see here: http://whatsbehindthenumbers.blogspot.com/2020/07/why-i-added-crowdstrike-holdings-crwd.html , Crowdstrike uses AI to scan all the data it gathers from every of its customers to efficiently search for treats. Once it detects a threat, it uploads that file to cloud and shutdown the treat, as well as for all its clients. Hence it truly benefits from network effect like Apple and social media companies. The more clients they have, the more signals it gets and hence a better threat graph.

For my growth portfolio, I have initiated new position in Palantir, Tesla and added back Zoom (after selling it too early for $200 in May. I plan to add Salesforce as I foresee that it will continue to be a leader in CRM. If Salesforce’s history shows us anything, is the fact that they have successfully acquired companies in the past and it has proven its ability to grow and continued to be a leader for CRM Customer Engagement Centre. Sometimes you just got to place your trust in the management that they can continue to bring Slack to its ecosystem and sell the services to their current clientele base.

Why I initiated a small position Tesla (NASDAQ: TSLA)

Investing in Tesla shares is definitely not for the faint-hearted. Despite astonishing share price rally over the past few months, I believe in its growth story in terms of its superior technology (electric motor and battery,) supercharger network and vertical integration are still in the early stages.

Superior Technology
Tesla’s permanent magnet synchronous reluctance motor (induction motors in the past) makes it more superior to its competitors, in terms of price and efficiency. Its battery has allowed Tesla to maintain a grip on EV market compared to its peers. Its current model 3 has 14% better energy density. To understand battery energy density, check out this link: https://www.fluxpower.com/blog/what-is-the-energy-density-of-a-lithium-ion-battery#:~:text=What%20is%20Battery%20Energy%20Density,one%20watt%20for%20one%20hour.Currently Tesla’s North American Model S Long Range Plus promises 402 miles without stopping a charge and Tesla’s Model S can go on 370miles on a single charge.

SuperCharger Network
Secondly, Tesla, like Apple is building its own ecosystem, where several Mac devices and application are designed to work with each other in useful ways. Tesla builds its own network of proprietary supercharges that can fast charge and being proprietary means other EV cannot tap into Tesla’s network. So, once you own Tesla, everything is designed to work together. Like Mac, there are no compatibility issues and Tesla holds their owner’s hands throughout their journey.  

Vertical Integration
Tesla's vertical integration in terms of manufacturing also contributes to its superiority in technology. Most of the Tesla’s car parts are developed in house which means improving its supply chain coordination, better costs control (no middleman) and faster rate of innovation.

I read articles about Tesla and there are worries that it faces competition from other new EV players. I see this as a positive for Tesla, as these new EV rollouts by other companies will help to make electric vehicle the new mainstream. So when demand of EV starts picking up, consumers will start to compare and realize that Tesla is the best in class.

(2) Dividend Portfolio

Capitaland Integrated Commercial Trust (SGX: C38U)
I have closed all positions for Tracker Fund of HK 2800, and divested Capitaland Integrated Commercial Trust .However I am left with fewer than 100 shares as I didn’t manage to offload in the unit share market on the same day. The reason for divesting is that I already own a handful of retail Reits and any sort of diversification is not going to lower my risks. Secondly, it's because of its 6% exposure to hospitality sector, RC Hotels, which will face challenges in maintaining its occupancy rate in short and midterm. Lastly its commercial business which consists of mainly Grade A CBD office may see subdued demand due to prevalence of WFH measures, which I believe will not go away post-Covid 19. In the face of business uncertainty, tenants are also asking for shorter term renewals and considering downsizing their office space.

Ascendas REIT (SGX: A17U)
Unfortunately, I didn’t learn my lesson from FCT and subscribed for 2926 excess rights for Ascendas Reit. I was expecting that Ascendas Reit to perform better exrights than FCT as its rights dilution is much lesser compared to FCT. But I still see the acquisition as a positive move, especially it's DPU accretive and attractive dividend yield of 5% in such low interest rate environment.

I have also added Mapletree Logistic Trust too. In my view, Reits and Financials stocks that pays good dividend should continue to do well against the backdrop of interest rates staying low for some time. For 2021, will be a year to buildup my warchest and any weakness in Reits is an opportunity to add.

Stock Portfolio Net Worth

Stocks Portfolio= $442,120+$7,036= $449,156

$7,036 is the value of 2,400 shares of NikkoAM STI ETF. Indicative Value as of 126th Dec (divested 2,417 in Nov 2020, and will be divesting in batches)

Cash at hand= $50,600

Total Portfolio Value= $499,756



Time weighed Returns (2020)= 22.38%
XIRR (2020) = 20.27%

June 2022's goal- 85.59% achieved


June 2030's Goal- 12.78% achieved


Portfolio 1 Net worth (i.e. Growth Portfolio+ Dividends Portfolio) = $449,156
Portfolio 2 Net worth= $170,529
Cash at Hand= $50,600
Net worth (Equity and Cash)= $670,285 


Closing Remarks

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We are just two more days away to Phase III and hope that Singapore's local case will continue stay at zero or low single digits. While there's still long way to go before Covid 19 gets eradicated, here's wishing everyone a safe and blessed New Year and may 2021 be a better year for all of us! Take care and stay safe!

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2 comments:

  1. congrats on the great results!

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    Replies
    1. Thanks Kyith for dropping by! Hope next year will be a good year too!

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