Monday, November 15, 2021

Portfolio Update (Nov) and & my position in Chinese companies! (average price and total no. of shares)

November has typically been a good month for investors if history is any indication. This is particularly true for tech investors, with Nasdaq smashing past the 16,000 points psychological barrier on 5th November which was attributed to stellar jobs data. We are just halfway through the month and many analysts believe that the stock market is poised to gain more steam in the next few weeks.

Peloton (NASDAQ: PTON)

Despite the positive market sentiment, I have not been purchasing any stocks in November other than picking up shares of Peloton. Despite the pessimism surrounding the prospects of Peloton, I remain optimistic about the future of the connected fitness company. While it recently reported an operating loss as a consequence of poor marketing strategy, its subscriber base still continued to grow albeit at a slower pace. If management can execute well in the subsequent quarters, given enough time, I believe this innovative product will be able to cross the chasm from being a niche product to a mainstream product. I will be doing a quantitative and qualitative analysis on Peloton on a separate blog post.

Tesla (NASDAQ: TSLA)

I count myself lucky to be able to pick up more shares of Tesla at about $800+ USD before it headed to the $1,000 USD mark. Though the company is firing on all cylinders, the $1 trillion market cap may likely be short lived as Elon Musk began selling 10% of his shares. I took advantage of the volatility spike and wrote some Tesla put options. I have successfully closed my short positions but held on to the $700 USD put expiring on 10th Dec. I am still deciding if I should still on hold given that Tesla may have more further downside in the short term. But I am definitely hodling on to my existing shares.

Growth Portfolio


Aside from Chinese tech giant stocks which have been relatively muted, their US counterparts such as Shopify, The Trade Desk, AirBNB, Roblox, and Nvidia exploded and hit all time high. I have managed to add more shares of AirBNB and Shopify during post earnings before it exploded, which contributed to my total returns in my portfolio. Both companies ranked high in terms of my conviction level, alongside Tesla and Coinbase. As mentioned in my previous blogpost here , I will be Coinbase at $300 USD and am waiting to increase my position at $200 + USD levels if the market presents the opportunity.

Dollar Costs Averaging (DCA) Strategy

I have been DCA-ing Tencent Holdings since 2018, but I will be hitting the pause button in Jan 2022. It is because I would like to reserve a higher portfolio allocation for stocks that can potentially do a 10X in 10 years. Currently, the tech titan makes up close to 10% of my portfolio and I foresee that it will occupy 15% of my portfolio when the Chinese market recovers and the stock regains its glory. Being a mega cap company, it’s hard for Tencent’s share price to triple or quadruple, let alone 10x, due to the law of large numbers. Typically, as a company grows, each incremental revenue represents a larger number due to high base effect. Hence, as business expands, it’s harder to maintain existing percentage rates of growth.

Also, years of investing has taught me that it can be tricky to value Chinese companies with the evergoing regulatory saga. The weakness in their price action despite having no news of fresh crackdown suggests that there's a lack of institutional investors investing in these companies. Even if tech regulations subsides and Chinese internet companies’ share price eventually recovers, I believe that the Chinese Communist Party can step in anytime to reshape the prospects of tech sectors with a stroke of a pen. It’s because the Chinese government follows a socialist market economy system, whereby the government must ensure a good balance between pure capitalism and people’s welfare. In a worst-case scenario where CCP limits the growth of tech companies causing institutional investors to flee from Chinese stocks, we could potentially end up in a value trap.

Dividend Portfolio


Mapletree Industrial Trust (SGX:ME8U)

I am still in the queue to sell Mapletree Industrial Trust (MIT) at $2.77. Unfortunately, the Reit price drifted downwards which lowers my probability of selling it in the near term. Current valuation suggests to me that a better option is to buy more of MIT on current price weakness and sell at a better price when it recovers. After all, tech stock valuations appear quite stretched and it’s probably good to deploy my existing cash to Reit for the short term.

Champion Reit (HKG:2778)

As for Champion Reit, I am waiting for the much-needed boost in stock price which will likely play out when the border restrictions between China and Hong Kong are eased. As of now, I will keep calm and collect dividends.

Profit/Loss for Chinese Companies:

NYSE:BABA


9988.HK (Alibaba)


NASDAQ:BILI



9626.HK (BILIBILI)


1211.HK (BYD)

NASDAQ:JD

2382.HK (Sunny Optical)


700.HK ( Tencent Holdings)

1810.HK (Xiaomi)


Crypto Portfolio


I have added Solana into my crypto portfolio and injected additional funds into Bitcoin and Ethereum early this month. A few weeks trying out Huobi, news came that Huobi Global will be exiting the SG market by March 2022. Hence, I have spent yesterday afternoon researching for a new crypto exchange to use and with the lowest likelihood of pulling out of Singapore. After much YouTube-ing and Google-ing, the crypto platforms which best suit my needs are Gemini and FTX. I like Gemini due to its ease of use and free withdrawals but didn’t quite make the cut because it doesn’t allow me to purchase Solana. Nevertheless, I will be using Gemini to buy Bitcoin and Ethereum and take advantage of the free withdrawals to transfer to Hodlnaut to earn weekly interest. Whenever I wish to buy Solana, I will purchase it using FTX and transfer it to a cold wallet. If you have any other good suggestions on which platform I should use, it will be greatly appreciated if you could leave a comment below.

Total Portfolio Value

Stocks and Crypto portfolio=$588,349

Cash on Hand=$92,040

Total Portfolio Value= $680,389 (+$27,470)



Achieved 91.87% of 2023's financial goal


Achieved 17.40% of 2030's F.I.R.E.goal


Thank you so much for spending time reading my blog and I really appreciate you. If you enjoyed reading my blog, hope you can support me by liking my Facebook page here or sharing my post. You may also follow my Twitter account here, where I post my buy and sell transactions. Currently, I do not earn any fees through any affiliate programme or sponsor. If you have any queries, feel free to post them and I am happy to take questions! :)


Sunday, October 31, 2021

Should you invest in ProShares Bitcoin Strategy ETF (ticker: BITO)?

 

Source: https://www.wsj.com/articles/first-bitcoin-futures-etf-rises-in-trading-debut-11634656217

On 18 Oct, when NYSE sounded its opening bell at 9.30am, Bitcoin HODL-ers had another reason to rejoice. The digital coin finally made history by being the first cryptocurrency ETF to list in the stock market. Even hours before the trading debuts, Wall Street could sense the excitement with the Bitcoin futures ETF up 4% during pre-market hours.  

Bitcoin YTD return source: https://www.marketwatch.com/investing/cryptocurrency/btcusd


Today, the crypto craze has subsided a little after the mother of all cryptos (crypto blue chip or crypto pioneer) had inched to an all-time high of $66k USD. Nevertheless, its year-to-date return has been an impressive 110%, after gaining much institutional acceptance, with visionary institutions like Tesla and Square pilling their cash into Bitcoin.

While bitcoin investors are generally getting eye-popping returns so far, it does not come without costs.  Other than experiencing wild swings in prices (the need for diamond hands), Bitcoin investors who buy into the digital currency directly also face the risk of being susceptible to a crypto cyber-attack. The introduction of the Bitcoin ETF may seem to pave a less risky way for retail investors to jump into the crypto bandwagon, enjoying the upside exposure to bitcoin and minimizing the possibility of a hacking incident.

And that was what I exactly thought, until I did a deep dive on the ETF by reading its prospectus and fund fact sheet. It’s important to understand what you are buying before you buy. I admit I am not exactly a Bitcoin or any crypto aficionado; but I will share my thoughts on alternative ways to have a slice of crypto pie.

A Little Bit About BITO

1. Not a Pure Bitcoin Play

Source: https://www.proshares.com/funds/bito.html


After looking through its fund holdings, I felt that the phrase ‘ProShares Bitcoin Strategy ETF (BITO)’ is quite misleading. I hope you feel the same way too…

When one invests in S&P500 ETF, he or she should expect a return roughly similar to the S&P 500 index, as the exchange traded fund aims to mimic the performance of the index. However, the same could not be said of BITO. Although this fund has exposure to Bitcoin futures, almost 30% of its value is tied to Treasury Bills. A treasury bill is a kind of bond issued by the government with a maturity value and pays a periodic coupon. While it is conventionally accepted as a safe investment, an investor will enjoy lesser upside if Bitcoin value appreciates. Moreover, bonds are susceptible to interest rate risk, and with the impending interest rate hikes, investors are faced with an additional layer of credit risk and market risk on top of the Bitcoin price fluctuations.

2. The Risk of Contango

What is Contango?

Let’s say if I am prepared to buy 100kg of silver coins from a seller in three months’ time. With a silver spot price of $768 (Silver Price per kilo), should the seller charge me a lower or higher price than the current spot rate today to ship it to me? The logical answer should be a higher price. The reason is this: in the meantime, the seller will have to incur the (1) costs of storage and the (2) costs of carry. Before the silver reaches me, the merchant may have to cover expenses for insurance, delivery, opportunity costs of getting the funds three months later. The normal market in futures is contango, where the future price of an asset is higher than the current spot price.

From the chart above, we can infer that the further the time to expiration, the higher the price. This is because the seller has to incur a higher holding cost for storing the commodity.

Similarly, in the case of Bitcoin futures, the seller will incur storage risks or platform risks and all these costs are reflected in the costs of rolling future contracts. As this ETF does not invest in Bitcoin directly, but in Bitcoin futures, in a contango situation, the fund manager may end up selling the expiring Bitcoin contracts at a lower price and purchase a longer dated Bitcoin futures at a higher price. It’s also stated in the BITO ETF prospectus that Bitcoin futures have experienced significant periods of contango.

So again, returns on investment in BITO may be lower as compared to buying Bitcoin directly due to a possibility of negative rollover.

3. Relatively High Operating Expenses

One of the hallmarks of investing in an ETF is its low expense ratio. Yet, it’s unfortunate that the opposite is true for Bitcoin ETF, which charges 0.95% in operating expenses. To give you some perspective, Vanguard S&P 500 Index Fund ETF has an expense ratio of 0.03% and even the actively managed Ark Innovation ETF, which is led by star stock picker Cathie Wood, charges an expense ratio of 0.75%.

While Bitcoin Futures may require some active management in hedging of Bitcoin futures contract, paying 0.95% of the fund value yet holding a significant amount of Treasury bills and incurring contango ‘bleed’ is something that I am not comfortable to pay. In my opinion, the total costs of owning this ETF outweigh the ability to buy and sell the ETF easily like a stock.  

Alternative to Gaining Exposure to Cryptocurrency via Stock Exchange

If you are still FOMO-ing over the crypto craze, here’s some other suggestions for you to ponder. Firstly, you need to ascertain if you are (1) bullish on Bitcoin or just (2) cryptocurrencies in general.

1.Bullish on Bitcoin:

Source: https://btcmanager.com/microstrategy-bitcoin-btc-489-million/

Consider investing in MicroStrategy, ticker symbol MSTR. It is a business intelligence company (at face value?), but its assets are closely tied to the value of Bitcoin, with the digital currency making up 80% of its total assets. However, the IT company is funding the purchase of Bitcoin via the issuance of convertible notes, so there’s some form of leveraging effect. As of 30th Sept 2021, it holds approximately 114,402 Bitcoins with an average purchase price of $27,713 USD. Investors could end up with double strokes of luck if Bitcoin mania continues and the company reports strong revenue growth.

Source: Microstrategy’s 10-Q filings 

2. Bullish on Cryptocurrency in General

If you are bullish on cryptocurrency in general, look no further than Coinbase Global. Despite it went public via a direct listing, i.e. Special Purpose Acquisition Vehicle (SPAC) deal, it was already highly profitable prior to its listing. Founded in 2013 with hopes of being a Bitcoin mainstream payment platform, its business has evolved over time. Fast forward today it is now the largest cryptocurrency exchange platform by trading volume. It names SpaceX, and Tesla as clients, with hopes to be the Amazon of Assets.

Today, Coinbase makes money through a variety of ways: trading fees when someone transacts digital assets in its exchange, interchange fees when a user makes a purchase with Coinbase credit card, and lending fees when it lends out funds in customer accounts to other institutions, just to name a few.

Despite having multiple revenue streams, I believe the crypto platform is only barely scratching the surface. Recently, Coinbase announced that it will be launching its non-fungible token (NFT) marketplace, which is a digital marketplace where users can showcase, mint, and sell their NFT. The NFT graze is already gaining momentum, and it will only get bigger when the metaverse world truly materializes. Just last week, Facebook (now called META) announced a partnership with Coinbase for digital wallet Novi.

Many cryptocurrencies have been created in the past few years, yet many have failed and vanished into thin air when investors shunned them due to lack of adoption. Even if Bitcoin ever loses its shine as the ‘store of value’, I believe crypto is here to stay. Hence, investing in Coinbase stock means betting on a positive outlook for retail and institutional adoption of digital currency overall.

Thank you so much for spending time reading my blog and I really appreciate you. If you enjoyed reading my blog, hope you can support me by liking my Facebook page here or sharing my post. You may also follow my Twitter account here, where I post my buy and sell transactions. Currently, I do not earn any fees through any affiliate programme or sponsor. If you have any queries, feel free to post them and I am happy to take questions! :)

The author owns Bitcoin, Ethereum, Solana and shares of Coinbase at the time of publication. This is not a recommendation or advice to readers to buy or sell crypto/ETF/stocks.




Wednesday, October 20, 2021

Portfolio Update (Oct) and & my position in Chinese companies! (average price and total no. of shares)

The recent weeks have somewhat been a roller coaster ride for investors. This is especially true for Chinese tech investors, who had probably seen their stock portfolio continue to nosedive while Nasdaq attempted to make new highs. It was due to regulatory fears dominating the headlines of the mainstream media practically everyday with the intention to spook investors. Just as we thought that it couldn't get any worse, the property giant Evergrande sent another shockwave to the Chinese market, which further crushed tech stocks although it had no fundamental impact on them.

Fortunately, time heals everything, and things seem to be looking up again with Alibaba closing at $175.8 HKD. However, many investors are predicting that the Chinese internet stocks will have to go through another round of stock decline to form a double bottom before recovering. As for me, I have always been bad at timing the stock market, so dollar cost averaging on Chinese stocks works best for me. Sometimes, I tend to believe that the more people predict something will happen to the stock market, the more likely it won’t happen.

As promised, I will share my profit/loss for my Chinese stocks till the Chinese tech market has made a full recovery.

Starting with  Alibaba...

NYSE:BABA


9988.HK (Alibaba)




NASDAQ:BILI


9626.HK (BiliBili)



1211.HK (BYD)



NASDAQ:JD




2382.HK (Sunny Optical)




700.HK (Tencent Holdings)


1810.HK (Xiaomi)





Transition to a 100% Growth Portfolio



A few weeks back, I made up my mind to close all my positions in dividend stocks for good and to go all in on growth companies. It was not an overnight decision. The past few months, I was a bit hesitant to pull the trigger but the strong desire to achieve F.I.R.E by 40 gave me the courage to go for it. Most of my dividend stocks were in REITS which gave stable dividends. At this current stage of my life, dividend income is not a very meaningful supplement to my income and the total returns may not have what it takes to accelerate my path towards financial freedom. By divesting all my REITs, I could take the proceeds to invest in growth stocks that can deliver exponential growth, like the kind of returns I have achieved from tech stocks during Covid 19 season last year.

I had to admit that it was not the best time to sell my REITs because inflationary fears were hitting hard on high yield shares, but at the same time, tech stocks got battered by it as well. So, I am divesting REITs at depressed levels and on the other hand, buying growth stocks at a better valuation than past months. Also, executing sell trades takes up a lot of my mental energy, especially when I had seen dividends effortlessly credited into my bank account. So instead of worrying about losing out on recovery gains, I thought it would be best to act on it before I get busy with work again and drag my feet around it.

On top of that, I planned to have a more concentrated growth portfolio by trimming my growth stocks to keep the total stock counters to about 20-30. My target is to cut down to 40 stocks by this year's end, and further reduce to 25 stocks by the end of 2022. 

Growth Portfolio



Tesla (NASDAQ:TSLA)

Tesla remains one of my highest conviction stocks and I have plans to add more by buying on dips and dollar cost averaging strategy.

There are fears among investors and analysts that the possibility of the launch of Apple Car to compete with Tesla, and the worry that the latter is facing growing competition from traditional automakers as they launched their version of electric vehicles. I think they are clearly missing the point. A commonly overlooked factor which sets Tesla apart from other legacy automakers is its scalability. Elon Musk once said that "It's relatively easy to make a prototype but extremely difficult to mass manufacture a vehicle reliably at scale. Even for rocket science, it's probably a factor of 10 harder to design a manufacturing system for a rocket than to design the rocket."


Source: https://www.businessinsider.com/elon-musk-says-building-factory-100-times-harder-than-making-car-2019-3


If you have been closely following Tesla’s progress, you would be familiar with Sandy Munro, a veteran automaker expert. According to him, Tesla is 10 years ahead of competition which is attributed to its production speeds. This creates a feedback loop by collecting customer's opinions and making the engineering change to improve its vehicles. Till date, I have yet to see any other traditional automaker mass scaling at Tesla’s rate of production.

I started a small position in Tesla shares late last year but as I read up more on the company and listened to interviews by Elon Musk, my conviction began to grow, and I bought more Tesla shares along the way.

Tesla will be reporting earnings tonight, and I am looking forward to see what’s in the cards. For me, any dip is an opportunity to buy.

Coinbase (NASDAQ:COIN)

Despite the recent stock run-up, the crypto exchange platform is still looking cheap even from a value investor’s perspective. In Q2 2021 alone, it posted a $1bil USD in net income. Assuming the net income stays constant for the remaining quarters, its net income alone is $4bil and with a market cap of $64bil, we are looking at a price to earnings ratio (PE) of only 16X for a fast growth company, with operating margins of 40% and much growth catalyst ahead!

Although it has broken the psychological resistance of $300 USD, I may consider initiating a small position and buy the dip if it drops below $300 USD.

OpenDoor (NASDAQ:OPEN)

I have sold a call option at  $24 USD strike price and the shares had closed slightly above it. If it expires in-the-money (ITM) this Friday, I am happy to let go of my shares and will also divest all my remaining OpenDoor shares. The future of iBuying business is bright, and I believe it is out to disrupt the traditional real estate sector. I think its value proposition is helping homeowners to sell their houses fast and easy. Instead of going through the conventional method of selling a house with the home viewing and engaging a lawyer, sellers can quickly complete the property transaction with a cash offer through iBuying platform. It saves the property owner’s time and gets rid of all the hassle of finding a suitable buyer. Next, OpenDoor then does the necessary repairs or renovations and sells it in the open market.

There are many iBuying players listed in the stock exchange, and another two big players are Zillow and RedFin. I chose to invest in OpenDoor because it is a pure play in the iBuying market, and it has been posting strong revenue growth in the past few quarters and still accelerating its growth plans.

Despite my positive outlook on iBuying, I have decided to let it go as an attempt to reduce my total share count, because my conviction level in this company fared lower compared to my other stocks. It’s about opportunity costs and I can use the proceeds to invest in other companies that I believe can generate a higher return. My average price in the company is $21.74 USD and I have been investing since May. So, I am getting an annualized return of about 20% return in a matter of 5 months.


NASDAQ:IBKR

I have received $1k USD worth of IBKR shares for shifting my funds over to the IBKR platform from Standard Chartered. I won’t be updating the fund value in my portfolio but to include it in my cash holdings after I have completely divested all the shares, which can only be sometime nearing 2022 as there is a holding period of one year. 

Dividend Portfolio




Recent Transactions



As you can see from the above, I have sold almost all my dividend shares except Mapletree Industrial Trust (MIT), which I am still queuing at $2.77. It was the first REIT I have bought since my army days, and (still) my favourite REIT of all time because of its reputable sponsor and its unbeatable track record of increasing its DPU every quarter without fail since the start of its listing.

Mapletree Logistic Trust (MLT) (SGX:M44U)

After I have sold 3,500 shares of MLT, I have forgotten to divest the remaining odd lots. So, I am stuck with 15 shares. I will be keeping the shares as it doesn’t make sense to sell considering the exorbitant fees for selling plain odd lot shares. I will do an internal write-off and will remove this counter from my stocks.cafe portfolio.

Champion REIT (2778.HK)

I will be keeping this beaten down REIT till it has recovered to a reasonable valuation of at least $5 HKD. Its extremely low valuation is attributed to a series of unfortunate events, starting with Hong Kong Protests followed by Covid-19, Chinese Tech crackdown and Evergrande saga at the same time. When tourists from China start flocking to the streets of Hong Kong again, the REIT should be able to see a meaningful recovery. 

Inari Amertron Berhad (KLSE:INARI)

This semiconductor maker company is more of a tech company than a dividend stock. Hence, I will be shifting it to my growth portfolio. It is not the type of revolutionary or generational company, but it’s better than letting my Ringgit idling in the bank earning a meagre interest.

Crypto Portfolio



I have transferred my Bitcoin holdings from binance.sg platform to Hodlnaut to earn weekly interest. There is default risk and cyber risk associated with it, and I could potentially lose all my Bitcoin. However, it’s still a good risk to reward ratio considering that Fireblocks, Hodlnaut’s primary custodian, diversifies the crypto holdings into offline cold storage and hot wallets, meaning that the digital assets are never held in the same baskets in the event of a cyber-attack. Moreover, my Bitcoin allocation is only a small percentage relative to my stock portfolio so I am not too worried about it.
Instead of the usual binance.sg to buy Bitcoin and Ethereum monthly, I have switched to Huobi as the fees are more attractive and I could explore other cryptocurrencies as well. Nevertheless, I am keeping my existing Ethereum on Binance.sg platform because the transfer fee is quite costly.

Total Portfolio Value

Stocks & Crypto Portfolio: $530,429

Cash on Hand: $122,490

Total Portfolio Value= $652,919 (+$28,090)




Achieved 88.16% of 2023's financial goal

Achieved 16.7% of 2030's F.I.R.E.goal


Thank you so much for spending time to read my blog and I really appreciate you. If you enjoyed reading my blog, hope you can support me by liking my Facebook page here or share my post. You may also follow my Twitter account here, where I post my buy and sell transactions. Currently, I do not earn any fees through any affiliate programme or sponsor. If you have any queries, feel free to post them and I am happy to take questions! :)