Tuesday, November 17, 2020

Portfolio Updates (November 2020)

November turns out to be a busy month with so many events happening around the world.

The biggest news was that Biden won the US Presidential election, and stock market breathed a sigh of relief as Republicans likely gain the senate majority, making the prospect of Biden’s tax hike unlikely.  

Also global markets gotten another boost when the news of the major development of Covid 19 broke during premarket hours, expect for tech stocks went on a steep selloff . While investors cheer for a vaccine breakthrough, my stock portfolio performance had been lukewarm at best, as many of my SG portfolio gains were offset by drop in tech stocks. Nevertheless, my portfolio is still in the green with 15.78% (XIRR) returns YTD.

Whereas on the east side, Jack Ma’s blunt China’s bank talk costs him the suspension of Ant Group IPO and sent shares of Alibaba down. Now it is trading below its 50 days moving average. If that all wasn’t bad enough for Alibaba and Jack Ma, China drafted new anti-trust laws guideline ahead of its Single’s Day to curb the power of tech companies.

I applied for Ant Group IPO and miraculously allotted 50 shares, and indeed felt so lucky for a moment until I got an SMS that I will be getting a refund.

Although it is only 50 shares, I can really count myself lucky when it was 872 times oversubscribed.

Despite all the volatility in  the stock market, I am so thankful that I have achieved my financial goals seven months early this time round as the worsening Covid 19 has given my tech portfolios a much needed boost and I have been actively been injecting much of my income to the stock market. 

Stocks Portfolio= $ 405,683 +$13637.70= $419,320.70

$13,637 is the value of 4817 shares of NikkoAM STI ETF. Indicative Value as of 16th Nov (will be divesting them very soon)

Cash at hand= $56,000

Total Portfolio Value= $475,320 (achieved Portfolio value >$460,391)

Updated as of 14th Nov 2020

Updated as of 14th Nov 2020

Despite a portfolio net worth above $460k, I did not achieve anywhere close to $23k annual dividends. The calculation was based on the assumption that my shares are averaging a 5% dividend yield. Currently the yield is only in the low 3% as most of my tech stocks are not paying a dividend. I will be growing my portfolio through capital growth strategy, and once I achieve my portfolio value of $3.9mil, I could convert the growth stocks to dividend playing shares which yields 5%.

Looking back at previous portfolio update blogposts, I realized it was not organized and consistent, and most readers may have difficulty figuring out my progress especially I have many portfolios all over the place. Recently I did some housekeeping by making some changes.

Moving on, I will categorize my stocks to 2 different portfolios: Dividend & Growth portfolio

(1) Dividend Portfolio

ETF not listed above: 4817 shares of NikkoAM STI ETF. Indicative Value= $13,637.40 

Updated as of 16th Nov

I will be divesting these soon: 2800.HK,  Raffles Medical, UOL, and ThaiBev because the positions are too small to be meaningful and I am not interested in following these companies anymore. Same for Nikko AM STI ETF, as my stock performance over the years has been doing better than the SG index.

Ideally, I am working towards having 20 shares in this portfolio, comprising of REITS backed by strong sponsor and three local banks. A few examples of strong sponsors are Mapletree Investments, Capitaland, Frasers Property, Lendlease Corporation and Parkway Holdings. They have good track record in injecting valuable properties to their respective Reit portfolios and supporting them through tough times. Having strong sponsor also meant that they could raise funds with lower interest rates. E.g Parkway Life Reit’s ability to issue bonds at extremely low interest. When buying decision is concerned, I will be placing more emphasis on quality of a stock rather than how undervalued is in terms of book value or dividend yield . Owning turnaround company can pay off very well if the company eventually turn its fortune around; but over years of investing had taught me that turnaround companies seldom turn. Hence, I rather buy a wonderful company at fair price rather than buying a fair company at a wonderful price.

Frasers Centrepoint Trust (SGX:J69U)

I entered at the price of $2.63 and $2.34  prior to right issue. I thought that the acquisition news was a positive one but the sell down of shares to the rice below its right issue had me scratching my head. I subscribed for excess rights and added another 1,000 shares at $2.07 before the news of vaccine broke.

Ascendas REIT (SGX:A17U)

I learnt my lesson from FCT that the selloff may continue after XD and XR. So I initiated a small position and will increase it market presents such opportunity. There’s so much to like about the new properties, especially its San Francisco commercial buildings with quality tenants like Pinterest and Stripe and properties are on a triple net lease and built in rental esclations. Honestly speaking there’s nothing not to like about the acquisition, just that I thought there could be better ways of financing than Preferential Offering. It's trading XD and XR today and I will be apply for excess rights.

During the March selloff, I did spring cleaning and sold Raffles Medical, UOL, HRNet and Capitaland shares, as I would like to keep only HK & SG shares for dividend portfolio. At the same time, I added a new position in Mapletree Commercial Trusts, Capitaland Mall Trust, Sasseur Reit (bought and sold at a profit).

Link REIT (HKG:0823)

I blogged about Link Reit and I continue to believe in the management in delivering growth for the future as they have good track record in increasing it’s Distribution Per Unit (DPU) through Asset Enhancement Initiative (AEI). They are actively diversifying away from HK properties by seeking additional growth in cities like UK, Japan, Australia and China. It is also one of very few Reits that conduct share buybacks for cancellation of units to increase its distribution per unit (DPU)

(2) Growth portfolio

Updated as of 16th Nov.

I managed hold on to the shares during selloff in March despite most of the shares were in the red then. My only regret is not having the courage to go all-in when there was so much fear during the time. When Covid 19 became widespread in US , there were many news and analyst showing charts where US GDP is diving to a level where it mirrors the great depression in 1940s and that made me think twice.

Since my last update, I have added Pinterest, Square, Roku, and increased my position in existing tech shares during last week’s selldown. Livongo has disappeared from my portfolio as it has merged with Teladoc.

Tencent Holdings (HKG:0700)

Tencent reported a good set of results with higher net profit , widening profit and operating margins ,ahead of analyst expectations. As a long term investor, I am not too concerned about China’s newly drafted antitrust laws for two reasons: Firstly, Valued added Services segement (VAS) still made up the majority of its earnings and the law doesn’t have much impact of gaming. Secondly, anti-trust laws exists in US and many western countries, and one of the notable cases was when the US Justice Department filing a lawsuit against Microsoft in 1998. Recently, Google was also used by US Justice Department and 11 states for anti-trust lawsuit. As tech companies become more significant to the overall economy, more regulation reflects the new reality. The same goes to big companies in Silicon Valley.

Alibaba (NYSE:BABA)

Although I have a much smaller position in Alibaba compared to Tencent, I continue to like Alibaba for its cloud computing as its cloud segment is now ranked third largest Infrastructure As A Service (IAAS) provider , just right behind AWS and Microsoft Azure. It’s poised to turn to a profit next year and will likely be the growth driver moving forward. It is trading below its 50 MA and seems like much negativity about Ant IPO suspension and anti-trust news have been priced it hence I will accumulate on market weakness.

 Pinterest (NYSE:PINS)

It's a new addition to my portfolio and I believe its monetization strategy is still in its early days. There's so much room for earnings to grow, especially it's Average Revenue per User (ARPU) for International markets is only USD 0.21. I watched the interview with CEO Ben Silbermann on Youtube and his goal is to make Pinterest a place where to get inspiration from daily life. Unlike other social media where they constantly invent new ways to get users stay hooked, Pinterest wants to get their users offline. Pinterest is not meant to be a place for socializing but to find inspirational ideas and make that effort to carry it out those projects. 

Pinterest's ARPU for US and Int'l segment
Source: https://www.statista.com/statistics/995251/pinterest-quarterly-revenue-per-user-arpu-region/

These days many social mediaa and tech companies are very focused on growth in their Monthly Active Users (MAU) but Pinterest keeps score by whether the product is playing a positive role in people's overall wellbeing. In achieving this, the tradeoff could mean going slow in growing their numbers. In their early days, there were feedback from Pinterest users that they would like to keep their boards secret for good reasons. For instance, pre wedding couples wanted to keep their wedding inspiration to themselves. Hence the team allowed to the users to have an option to keep their boards secret, eventhough publishing the content in general would attract more users to the platform in the short run. I believe the sacrifice will payoff in the long run and I contiue to believe in their mission- to bring everyone the inspiration to create a life they love. I will write a separate blogpost on Pinterest when I have the time.

Portfolio Net Worth

To date, my Growth +Dividend Portfolio Value= $ 419320

Portfolio 2(which I will not be updating anymore as of 2018) =$151,700

Cash savings= $56,000

Net worth (Equity and Cash)= $627,020

Almost two and a half years back, I wrote about achieving $1mil before age of 31. http://whatsbehindthenumbers.blogspot.com/2018/

I turned 31 today and unfortunately didn’t achieve my goals but I enjoyed my investing journey and learnt many valuable investing lessons. I made mistakes along the way and my returns would have been much better should I have started investing in US stocks earlier. Sadly, I invested in turnaround stocks in the early 2012- 2014 and never made money. As of now, my investment goal is to focus on growing my portfolio towards $3.9mil and to update it by blogging on a monthly basis.

Last year, I bought a car and cleared off the loan recently hence it also took away a significant chunk of my cash savings meant for investment as well.

How’s your stock portfolio been performing this month? Did you shares get a boost from the news of Covid 19 vaccine ?

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