Merry Christmas and a happy new year to you if you’re reading this during the holidays! I celebrated my Christmas by having a really satisfying nap in the afternoon – though not as satisfying as the dividends I’m going receive from LSE:BATS going XD this month. Hehe.
And that pretty much wraps up 2019 for me. Another year of investing awaits me, but I have much more to reflect upon before I continue my journey in 2020.
I love how bloggers make investing look so interesting and motivating, especially those who manage to beat the STI ETF every single year. I guess I was enticed by how well these people had done, and thus the birth of Miss Niao. And it was only when I started my own journey that I realize that investing isn’t that rosy, or exciting.
In fact, it is a really boring journey. Most of the time, you are just waiting for an opportunity to enter at the right price. Essentially, trying to time the market so that you get better-than-fantastic returns that you could get from buying the index.
Also, as much as I try to time the market, the reality is that it also depends on when I get my salary, how much savings I have at the moment, etc.
In 2019, I only made 8 trades – 1 sell and 7 buy transactions.
- BUY – Micron Tech (NYSE:MU) on 9 Jan
- BUY – Kraft Heinz Co. (NYSE:KHC) on 26 Feb
- SELL – AEM (SGX:AWX) on 26 Feb
- BUY – British American Tobacco (LSE;BATS) on 4 Mar
- BUY – Hongkong Land (SGX:H78) on 12 Mar
- BUY – Hongkong Land (SGX:H78) on 26 Jul
- BUY – Tat Seng Packaging (SGX:T12) on 3 Sep
- BUY – Chip Eng Seng (SGX:C29) on 6 Nov
And my existing portfolio holds a total of 10 stocks, excluding Nikko AM STI ETF.
See more of my portfolio here.
Time-weighted returns: 18% against 6.64% (STI ETF)
I omitted G3B from my entire portfolio from StocksCafe because I didn’t want to include those returns as part of my portfolio returns. So the total XIRR and time-weighted returns will be purely based on my effort to try to beat the market.
Although time-weighted returns show that I beat the STI ETF, but in reality my whole portfolio did horrible against the S&P 500 which yields a 29.24%. Holy moly crap. Can you imagine if you only bought this index? You could have beat many years of investing in SGX alone.
But alright, in all fairness and the magic of low numbers, Micron and Kraft Heinz gave me a time-weighted YTD return of 50% and 38.88%. I got so very lucky, that even Kraft Heinz’s price at the end of 2019 recovered pretty well. Kudos to the management for taking extra measures to keep the company back on track.
Let’s start with the good news, shall we?
The obvious big winners of my portfolio are Micron Tech and Valuetronics.
Micron Tech has proven itself to be a value play, with a PE of as low as 4 when I bought it at $33 per share. With an EPS of $6.34 for FY19, that brings my PE to 5.2 despite a 23% drop in revenue.
Does a double-digit drop in percentage points worry me? No! Not when the FY20 CapEx guidance of $7~8B when they end of FY19 with net cash position of $3.4B and liquidity of $13B. They can survive for a couple of years more even with zero business/growth at all, though I’m not sure how that would be possible. Not only that, this is after repurchasing of their own shares. Even if earnings do slide by 50%, that brings my PE to a mere 10.
That being said, the key here, I believe, is to have a well-balanced demand/supply situation with DRAM/NAND. Micron does have some influence to that holding a chunk of the overall pie, but they need to be able to predict well what is to come in the near future.
It is reflected that I didn’t do anything to Valuetronics, but I actually did try to buy more shares in October when the price dropped to $0.60 per share. Unfortunately, I was too greedy and kept trying to buy it at a lower price even when nobody was willing to sell them to me, and the next week it went up to $0.68, which was close already to my buying price. So I gave up adding shares to my portfolio.
A quick skim through their FY19 annual report reassures me to keep my position. Debt is still non-existent on their balance sheet. Not only that, liquid cash takes up >50% of total assets and >100% of all liabilities (current, or non-current). Granted, there was a small slip in EPS by 4%, but a more detailed study in their cash flow statement shows a healthy business and a net cash increase of HKD$220M. We cannot help if Mother Nature punished them in 2018 but the recovery is amazingly well handled, including a dividend payout of 54% from total earnings.
What can I say about this stock? “Suay”. Considering that I thought it was fairly valued at my initial buy price of USD$7.48, apparently the market said this stock was disgusting and dropped 15% 4 months later.
Well okay, fine, I thought to myself that an opportunity was presented to me. So I averaged down and got it at an average price of USD$6.83 per share.
And then market said, this stock was truly disgusting and now it went down another 16% to USD$5.74.
Was it because of the recession in Hong Kong, because it’s called “HongKongLand”? -_-
I wouldn’t consider this to be bad news, just that the price came at a wrong time. I am not willing to average down more because it already holds a significant percentage in my portfolio, and instead I bought Chip Eng Seng for more diverse reasons. But oh well, we’ll see what else happens in the next few months.
This stock didn’t disappoint me for 2 years, and I believe that it will continue to do so in years to come. Now it may not be delivering the best results in terms of earnings and profit margins, but I stayed vested for the same reasons as my position in Micron.
Tat Seng will have a problem with competition, especially with their expansion into the China market. Despite that, they were still able to repay most of their borrowings that were used in CapEx for their new plant in Nantong, and kept long-term debt levels close to zero. PE is still at an attractive number, and dividend yield is yum yum yum. I have to continue to observe how they maintain profitability in 2020. Balance sheet is still really strong but I’m hoping on more growth in the right directions.
I did try to average down on this counter, but again did not manage to at full scale because of the volume and liquidity. I hope more people will see value in this counter, and I am waiting for a higher volume sale before I execute my buy at the current price of 50 cents per share.
I still feel a slight pinch for my sell trade in AEM which happened too quickly, in my opinion. Back in February, I decided to sell my holdings, locking in a 40% profit. Well we’re at the end of 2019 and if I did not sell it, it could have been a 270% profit for me by now. I guess you win some, but you can also win big. I trained myself to have more patience and have more conviction to go long. It was probably because it was my first profitable sell that I got excited about, but nevertheless I hope that I can get the same chance to perform a similar trade.
There were also a few other counters that I was watching for a long time, but never did execute any actions. Some I felt were only fairly valued, but not attractive enough to buy. They ended up getting rallied up by almost 20% to 50% this year.
So that pretty much sums up my investment journey and portfolio in 2019. I hope yours was more exciting than mine.
I think that I mainly learned how to stay calm in my holdings, and just kept adding on capital. In fact, over this year, my portfolio actually doubled in value. Obviously I don’t expect to also double again next year but I am trying to find reasons to allocate my capital better. I still have a lot of trouble trying to decipher what’s good and bad in an annual report. There is so much information to take in all the time, and it’s really hard to keep track of even just a small portfolio of 10 stocks! It’s almost like having a part-time job to monitor stocks on a daily basis.
More updates upcoming when the new year arrives!
Miss Niao xoxo