‘Tools’ I used to track my dividend & bond interest income

I am sure many are way more advanced than me in tracking their dividend, but let me share a bit on how I do it for my own portfolio.

However, before I begin, I would like to highlight that to me personally, the focus on any stock/REIT investment should not be just on or primarily on the dividend yield or payout amount. The focus should be on the fundamental of the companies (behind the stock) and industries they are operating in as well as the narratives of the business.

A long term consistent growing dividend income (or capital gains) should be a by-product of companies which managed to increase their earnings and which fundamentally alright.

These sites are just tools for me to track these income which I hope will consistently grow over the years.

1) Dividend.sg

A good website to track Singapore listed stocks dividend payouts is Dividend.sg.

If I am wondering if I have missed any of the dividends of my stocks (yeah sometimes I too lazy to remember, and wonder why got cash deposit in my bank account), I might drop by this website to check on the dividend payout dates and amount of the stocks I own.

For instance, if I am thinking about DBS, I will go to ‘Quick Search ‘and click on DBS.

It will show the ex-dividend dates, the payout dates and payout amount for DBS stocks.

If I am concerned about upcoming dividend for this month, I will click on ‘Coming Dividends’ to check out which counters are paying dividend for this month.

2) Investing Note

Well, I always felt that Investing Note is more of a social platform for traders and investors.

However, there is a function there for you to track the dividend of the stocks you own.

First you have to create a watchlist of the stocks you are interested in. Click on ‘Watchlist” at the top bar. By the way, you can create new watch lists with different names.

Let’s use DBS as an example again. Add DBS (D05) to be part of your watch list.

Then go back to the main page. Go to the right and click on “Stock Calendar”.

Click on ‘My Watchlist Only” or the name of the new watch list you have created.

You can view events by month, and you should see DBS dividend action in April 2021.

3) Tiger Brokers

I am still new to Tiger Brokers, but this is what I have found out.

If you go to the desktop version, in the charts, there are boxes with the letter ‘D’ within as shown along the chart line (using DBS as an example again). Click on that and it will tell you the ex-dividend date and payout amount.

Alternatively, you can click on ‘Filings’ at the top and it will bring up the list of company announcement much like what the SGX Company website does and you can find the dividend payout announcement.

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

4) StocksCafe

StocksCafe is by far my favourite site to use to track my dividends. With this site, I seldom use the above three mentioned sites.

First, you must first create your portfolio of stocks and bonds (number of shares/bonds and when they were bought or sold).

Once you have done that, it is kind of easy moving from there. Go to the top bar, under your user name, click on ‘Portfolio’ then go to the bottom bar and click on ‘Dividends’.

You can track the ‘Announced dividend ex-dividend date, pay date and amount’. This also applies to the interest payout from bonds (in my case, Singapore Saving Bonds);

The ‘Projected dividend ex-dividend date, pay date and amount’. By the way, this may not be exactly accurate, but it does give you a feel of what you can expect for the next 12 months, and they do help to tally up the total amount of dividend base on what you currently own.

The ‘Due/Paid dividend’ page. In this page, it will show the amount already paid to you for the various years (summary page). As well as the ‘Soon to be due dividend ex-dividend date, pay date and amount’ for the various counters. Those up-coming dividend due dates are highlighted in orange.

There is also a chart that plots are the yearly dividend amount. So you can track your progress over the years.

Yes, from this page I can see the amount I have received so far; the page I like the most….Muahahaha!

I can check on the dividend income from stocks listed in Singapore and from other markets (eg. US, HK, Malaysia, etc), and then I can have an idea of the projected income and the due amount in the coming weeks. And finally I can see what I received so far (in SGD) from the past days, to the past weeks, to the past years.

You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

In Summary

Well, that’s is basically what I normally do. Actually there are many more sites, but these four are the usual ones I normally use.

Let me know how you track yours, drop a comment below.

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Posted in Dividend & Yield | Leave a comment

Shifting of my HK & US-listed Stocks to a Low cost brokerage

Up until recently, I have been using two brokerage accounts, one with POEMS and the other with UOB Kay Kian.

The years 2019 and 2020 was a key turning point as I have invested more in that year and has expanded my portfolio to include more Hong Kong and US listed stocks.

With the increase in foreign market listed shares, there are increases in the custody fees and dividend charges. See below example of the fee structure from UOB Kay Hian.

See below example of the fee structure from POEMS.

Initially, there was not much charges as I was buying (and selling) stocks more often in 2019 and 2020. In 2021, with the rising markets, my trading activities have slowed, or rather stopped. Consequently, with my trading inactivity, the fees have kicked in.

At first, I was not really concerned about these fees as many of my counters are primarily dividend plays and their dividend payouts more than cover for these fees. Moreover, typically, these brokerages issue the custody fees every quarter. Hence most months I do not get any fees (except towards the end of each quarter).

In addition, I am starting to see more greens (unrealised gains) in many of these counters as markets continue their upward march. In fact, to me, the key focus I reckon in any investment should be on the fundamentals of our investments (the companies behind the stocks) rather than the small parts about fees. Why spilt hair? So yes, these do not really bother me (or so I thought).

However, with the proliferation of low fees brokers in Singapore, and many of their offering low commission ($0 commission in the case of moomoo) and attractive sign up promotions (eg. Interactive Brokers, Tiger Brokers and moomoo), I am starting to question why am I paying these fees.

Tiger Brokers Review: Low Commissions And Attractive Sign-Up Promotions (read here)

Moomoo Review (2021) & Comparison: Super Low Cost Brokerage Showdown (read here)

I treat my Hong Kong portfolio primarily as a dividend portfolio. While the US portfolio primarily as a Story fund (Growth portfolio). Hence I am primarily holding these stocks long term. What is perhaps the major push factor, is the recurring custody fees, then next will be dividend charges (by UOB KH and POEMS). Ultimately, over the long term (years), they do add up. What have I got to lose? Think of it as a perennial mosquito bite itch, which happens every quarter and every time I receive a dividend payout (from my US or HK listed stocks).

Heck, I might as well use the money I paid for the custody fees to pay for my mobile phone bills :p

For my case I will be selling my HK-listed and US-listed counters progressively from UOB KH and POEMS and buying them back using Tiger Brokers. Yes there are fees incurred in doing so.

The other method is to transfer the shares out.

I am not aware of the fees involved for UOB KH (see below).

This image has an empty alt attribute; its file name is 5.png

However, in the case of POEMS, the fees for doing so is shown below.

Perhaps many of the local brokerage here can start assessing their fee structure, to keep up with the competition.

Nevertheless, I feel that many of the low cost brokerages here (and even the more established brokerages) here in Singapore can do more to enhance the user experience. I have seen the interface in M1 Finance, and how one can customise their portfolio (or create various sub-portfolios) using the platform there. One can track the monthly overall value of the portfolio to the monthly dividend payout amount, and set up orders to automatically purchase stocks in undervalued ‘sub portfolios’. In addition to assessing the technical/financial data of the stocks and companies, and of course, the low fees.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

Shopee

Hi there! I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!


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Do subscribe to my Patreon page.

Posted in Investing methodology | Leave a comment

Singapore Reits, Rising interest rates and the Pandemic

This is not a new topic. In fact, when I think of Sg Reits in general, this appears to be a perennial matter on my mind. What is perhaps significant and new now, is the context. However, the conclusion will probably be the same. That could be the eventual conclusion, but there are a few key points I like to highlight. Things after all have evolved, and the Reits sector with the pandemic context as a whole has evolved (I try not to use the word ‘changed’).

For the beginning part of the article, I will be quoting many articles found online. This first part of the post is rather long. Subsequently I raised a few questions for all of us to ponder. So you can skip the first and go to the second part.

Before we move on, I just want to highlight that there are many things I like about Reits eg. their relatively high tax free dividend yield, stable assets backing the counters, not as volatile in terms of price movement. These are after general statements. There are of course exceptions such as Eagle Hospitality Trust, Sabana Reit, First Reit, etc. Then again, ultimately no Reit investment is risk free.

Eagle Hospitality Trust stuck in limbo after unitholders vote against change of manager (read here)

Is it time for Sabana Reit to be euthanised? (read here)

First Reit FY2020 DPU down 51.7% to 4.15 S cents (read here)

1) Rising Interest Rates and Reits

In many way, I view owning Reits very close to owning an investment property, while excluding the headaches of dealing with tenants, agents, etc. In addition, it is pretty close to a bond like investment, with quarterly or semi annual dividend payouts.

So naturally many people would compare Reits to bonds and are concerned about yield, and how the rising yield (or interest rates) affect the dividend yield of Reits.

S-Reit investors need not fear rising rates (read here)

How Higher Interest Rates Impact REITs (read here)

I think the above 2 articles are good in explaining the matter. Let me summarise some of the key points below, while adding some other points from other sources.

To quote the second article: “Over the past decade, interest rates have fallen to historically low levels. This has created a challenging environment for income investors who previously enjoyed healthy, low-risk returns from money market funds, CDs, and Treasury bonds. In fact, since the darkest days of the financial crisis, many yield-starved investors have been forced to search elsewhere for their income needs, driving up demand for bond alternatives such as REITs.”

The below shows the U.S. 10 Year Treasury yield chart dating back to 1962. As you can see, yield peaked around 1981 and since then has been trending down. Today it is around 1.69% (at the time of writing).

Interest rates have never been this low for this long, making many of the academic studies about rising rates potentially less relevant. 

To quote Howard Marks in his latest memo:

“Through bond buying, the Federal Reserve grew its portfolio by $2.7 trillion, or roughly 55%, and the U.S. Treasury funded roughly $4 trillion in grants and loans.

Unlike the credit crunches that accompanied many past crises, capital flowed like water. High yield bond issuance for the year was $450 billion, up 57% from 2019 and well above the prior record set in 2013. Investment grade debt issuance totaled $1.9 trillion, up a similar 58% from 2019 and also ahead of the previous record, set in 2017.

Rising economic confidence and the increasing pace of economic development and growth, even if it comes with inflationary pressures can be good for REITs.

After the Fed cut its federal funds rate target to between zero and 0.25%, bond prices rose as bond yields fell in parallel. At year-end, the average A-rated bond yielded just 1.52%, and the average yield on high yield bonds (ex. energy) was just below 4%.”

As mentioned by Howard Marks, the Fed targets the federal fund rates to be between zero and 0.25%.

So how will it impact the 10-year interest rate? No much perhaps.

As mentioned, in the article below:  “In contrast, the interest rate on a 10-year Treasury bond does not appear to move as closely with the fed funds rate. While there appears to be some co-movement, the 10-year interest rate appears to follow its own declining path.

How Might Increases in the Fed Funds Rate Impact Other Interest Rates? (read here)

In fact, we have recently seen a spike in the U.S. 10 Year Treasury yield. Treasury bond yields (or rates) are tracked by investors for many reasons. The yields are paid by the U.S. government as interest for borrowing money via selling the bond. 

The 10-year Treasury yield is closely watched as an indicator of broader investor confidence. This is because Treasury bills, notes, and bonds carry the full backing of the U.S. government, they are viewed as the safest investment. The 10-year is used as a proxy for many other important financial matters, such as mortgage rates. 

When confidence is high, prices for the 10-year drop, and yields rise. This is because investors feel they can find higher-returning investments elsewhere and do not feel they need to play it safe. But when confidence is low, bond prices rise and yields fall, as there is more demand for this safe investment. This confidence factor is also felt outside of the U.S.

So why does the yield rate or more specifically interest rates matter to Reits?

To quote this article:

“There are two reasons why interest rates matter to REITs, and both have to do with the underlying business model of this high-yield industry.

1) REITs exist so that the companies that own the properties can avoid paying corporate taxes as long as they distribute 90% of taxable income as unqualified dividends.

This means that REITs aren’t able to retain much of their earnings or adjusted funds from operations (AFFO – similar to free cash flow for a REIT).

Thus, in order to grow, REITs need to raise external debt and equity capital from investors. As a result, higher interest rates increase a REIT’s cost of debt and make it incrementally harder to achieve profitable growth. That’s especially true because REITs frequently use secondary offerings (i.e. they sell new shares) to raise growth capital…..

However, when interest rates rise, bonds, including risk-free Treasury bonds, decline in value, causing their yield to rise. REITs compete for new capital with bonds, as well as savings accounts, money market funds, and CDs. Some investors who own REITs today might be inclined to sell their shares if rates rise because they can now achieve similar but less risky yields elsewhere.

2) To put it another way, because REITs are often seen as bond alternatives, higher interest rates could mean decreased demand for REIT shares, causing a REIT’s yield to rise. While that’s great for dividend investors looking for new places to put money to work, it can also be a problem for the REIT’s long-term growth prospects.


That’s because the higher a REIT’s valuation (i.e. share price), the less new shares it takes to raise growth capital.
In other words, the less dilution to existing investors is needed in order to continue growing a REIT’s AFFO, and thus its dividend.

Think of it this way. Suppose a REIT currently yields 5%, and management is able to buy new properties at a capitalization rate (annual net income / purchase price) of 7%. Even if the REIT has to raise 100% of the capital to buy a property by selling new shares, then AFFO per share will still increase, and so will the dividend.
And if the REIT buys the property with a 50/50 mix of equity and debt (with an interest rate of 4%), then the amount that AFFO per share increases is even more due to less dilution and an even lower weighted average cost of capital, or WACC.
However, if interest rates increased to 6% and a REIT’s shares fell enough to raise its dividend yield to 8%, then suddenly the ability to buy that property with 100% equity capital disappears.

The 8% yield a REIT would have to pay on its newly issued shares is more than the 7% capitalization rate it earns on its property, destroying shareholder value.
In other words, the REIT’s cost of capital has risen high enough to not make the deal accretive.
REITs essentially have an optimal growth sweet spot, in terms of their yield. If shares are too expensive, then the yield is too low for investors to earn the income they need.
But if shares are too cheap for too long (due to higher interest rates, for example), then the REIT gets cut off from growth capital and can’t expand its property portfolio and dividend.”

So as what I mentioned earlier, many people compare Reits to bonds. The rise in the bond yield stems from fears over inflation escalating as the economy recovers amid huge fiscal stimulus and ultra loose monetary policy. In Singapore, the 10 year government bond yield has also been rising (see below). The Singapore 10 Years Government Bond has a 1.715% yield (last update 3 Apr 2021 10:15 GMT+0).

So yes, a rising interest rate might (a) push investors to safer investments (eg. bonds) that offer similar yield and (b) with the shift away from Reits, share prices drop and their dividend yield increase, reducing the ability for Reits to access growth capital and expand its property portfolio and dividend.

Ok these are not new worries. Remember we already have a prolonged period of dropping rates and low interest rates / U.S. 10 Year Treasury yield.

As with all investments, everything is relative. The attractive of the relatively risky assets like Sg Reits are often compared to other safer investments in Singapore.

S-Reits generally trade at a decent spread to the 10 year government bond yield, typically in excess of 250 basis points.

At the point of writing:

1) Lion-Phillip S-REIT ETF currently has a dividend yield of 4.29%;

2) NikkoAM-StraitsTrading Asia Ex Japan REIT ETF currently has a dividend yield 5.04%;

3) Phillip SGX APAC Dividend Leaders REIT ETF currently has a dividend yield of 3.27%.

And as mentioned earlier, the Singapore 10 Years Government Bond has a 1.715% yield. So items 1 and 2 show that there is a spread of in excess of 250 basis points (or 2.5%).

By the way, for item 3 (Phillip SGX APAC Dividend Leaders REIT ETF), most of the REITs in this ETF are concentrated in Australia, followed by Singapore, Hong Kong, and Thailand. So technically it is not very representative of Singapore Reits (as compared to items 1 and 2).

Savings in CPF accounts pay an interest rates of 2.5% (OA) per annum or more.

The April issue of the Singapore Savings Bonds provide a yield of 1.15% per annum over a 10 year period.

The oversubscribed Astrea VI Class A-1 bonds issued by an entity of Temasek Holdings Azalea Asset Management offer a yield of 3% per annum assuming they are called after 5 years.

So with the above mentioned taken into consideration, the price / yield of Sg Reits in general appears acceptable.

S-Reit investors need not fear rising rates (read here)

As per the article above, the conclusion is that with rising economic confidence and pace of economic growth, even if that comes with inflationary pressures and rising yield of long dated government bonds, this is not bad for Sg Reits. With incremental demand for real estate that stem from growing business growing and consumer spending increasing, the income of business and households will rise and tenants of Reits can afford higher rents. Retail and hospitality Reits stand to gain the most from further opening of economies and borders.

This conclusion is not new when the matter of increasing interest rates is mentioned. Way before the pandemic happen.

To be honest, I do not totally disagree with this argument, and as I have Reits in my portfolio, I do hope this is right.

2) Questions moving forward. The key word is “Unprecedented”

This is where it gets interesting.

There are a few questions on my mind, and we have to consider these questions together, not individually.

Let’s go back to the Singapore 10Y Bond Yield chart (see below). This time, let us go back further, to 1998. As you can see, the yield has been in a very consistent long term trend – which is down. This is also similar to the U.S. 10 Year Treasury yield chart – a long down trend since 1981.

The first listed Reit in the Singapore stock market is CapitaMall Trust (now CapitaLand Integrated Commercial Trust), which was listed on 17 July 2002.

So historically speaking, Singapore listed Reits have always been trading within this long term downtrend yield period (macro trend speaking). The macro yield trend did not change.

Howard Marks raised a few interesting questions in his latest memo titled “2020 in Review”. Yes, beyond the unprecedented flow of cash in the system, the loose fiscal and monetary policies environment we are in:

Question 1: The biggest risk of all is the possibility of rising interest rates. Rates have declined quite steadily for the last 40 years. This has been a huge tailwind for investors, since a declining-rate environment lowers the demanded returns on assets, making for higher asset prices. The linkage between falling interest rates and rising asset valuations is a good part of the reason why p/e ratios on stocks are above average and bond yields are the lowest we’ve ever seen (which is the same as saying bond prices are the highest).

But the downtrend in rates is over (if we can believe the Fed’s assurance that it won’t take nominal rates into negative territory). Thus, while interest rates can rise from here – implying higher demanded returns on everything and thus lower asset prices – they can’t decline. This creates a negatively asymmetrical proposition.

Question 2: The Fed says rates will be low for years to come, but are there limitations on its ability to make that happen?

Question 3: Can the Fed keep rates artificially low forever? On longer-maturity bonds? And what about inflation? Can the 10-year Treasury note still yield 1.40% if inflation reaches 3%? 

Since Howard Marks like to talk about odds, think of it this way, looking at the yield charts (be it U.S. 10 Year Treasury yield chart or Singapore 10Y Bond Yield chart), we have been in a really long period of downtrend. Yes, there is a possibility that we may go into negative interest rate zone, but that is a very low possibility (and seems to create more problems than good, looking at past precedents in other countries eg. Japan). What is the odd of that? I think it is rather low in the long term.

We are likely moving towards an inflexion point.

So that leaves us with basically 2 scenarios:

1) Scenario 1: A change in trend, eg, rising rates.

2) Scenario 2: A long period of stable rates or range bound rates.

Or put in another way, Scenario 1: Upwards, Scenario 2: Sideways.

As per the first part of the post, conclusion is that rising rates in the context of a growing economic condition is not exactly bad for Reits.

How Higher Interest Rates Impact REITs (read here)

In the US listed Reits context, the above article was able to show how US listed Reits perform historically in times of higher interest rates.

To quote: “The chart below, courtesy of REIT.com, plots the 12-month return of REITson the y-axis, and the change in the 10-year Treasury yield on the x-axis from 1992 through 2017. The blue dots represent periods when REITs earned a positive total return during each of those periods. The red dots signal that REITs lost money.

While an investment in REITs made money in 87% of rising rate periods observed, it is clear that REITs have been positively and negatively correlated with interest rates during different periods of time, indicating that there are other factors influencing their returns.”

However, there are also further questions. If in the context of rising rates or stagnant rates, there is another issue of structural change in the business of Reits. Basically, the 2 key “unprecedented events”.

No. 1: Unprecedented long term up trend (or sideway trend) for interest rates for Singapore listed Reits.

No. 2: Unprecedented structural change in business for many of the Reits tenants.

For No. 2 (yes that is the second spanner thrown), technically we are still not out of the woods from the pandemic. There are companies still practising a work from home system. In addition, travelling between countries is still affected. However, there are nonetheless discussions that there will be permanent changes to how people work, live and play in the future. There is no going back to pre-Covid situations.

A growing list of major firms, such as Facebook, Google, Twitter, Mastercard and Shopify, are now planning a permanent shift to remote working even after dangers of COVID-19 fade and cities lift shutdowns.

Business wise, in the supply chain, there will be a change from just in time model to just in case model. For the hospitality sectors there will also be changes.

For the retail sector, even prior to the pandemic, it is already facing pressure from e-commerce. The pandemic just hasten the change. In 2020, we saw the closure of Singapore’s Robinsons department store, ending an era dating back 162 years.

StanChart unveils permanent move to flexible working from 2021 (read here)

Microsoft is letting more employees work from home permanently (read here)

Goodbye office: Is the future of work in our homes? (read here)

EVERY COMPANY GOING REMOTE PERMANENTLY: MAR 20, 2021 UPDATE (read here)

Moving from Just in Time to Just in Case (read here)

Singapore’s Robinsons department store to shut down after 162 years (read here)

The world wide lock-downs, the large scale shift from office to work from home made possible by the advancement in technology, to the way people socialise, live, work, play, etc are in many ways unprecedented.

As a retail investor, I like to be able to forecast, to extrapolate into the future, while looking at the past. It is easier to do so when I do not have ‘unprecedented’ situations. However, for many retail investors, how fast rates will rise or the future direction of interest rates are beyond their control. In addition, as mentioned earlier, the interest rate on a 10-year Treasury bond does not appear to move as closely with the fed funds rate. So am wondering how will the Fed be able to keep rates artificially low forever.

Many investors are spooked by what they cannot foresee or control, nor have any historical references.

Inflation fears hit markets as Fed sticks with low-rate policy (read here)

In Gist

When we combine these 3 items together, Singapore Reits, Rising interest rates and the Pandemic, many questions arise.

Yes the economy will pick up after the pandemic, but will Reits prosper as well? Or will they be left behind?

There are not many pure play Reits listed in Singapore. Eg. Reits that are purely office, retail, industrial etc. Yes there are, but many of the bigger capitalised Reits have their fingers in different sectors. On another note, some sectors are more impacted by the structural changes (if they do become permanent). eg. Office or hospitality or retail sector. So in a way, many of the diversified Reits will be somehow impacted, unless they managed to off load or adapt in time.

In addition, Reits as mentioned earlier, pay out 90% of their profits, and essentially have an optimal growth sweet spot, in terms of their yield. So if yield rise and they cannot find ways to grow either by asset enhancement or addition of better assets, it is just a continuous downward spiral, while investors look for safer better yielding alternative investments. Are the Reit managers able to find that sweet spot in this environment?

Asset enhancement in the context of rising material prices (fast inflation + rising interest & mortgage rates) and disrupted supply chains is also not going to be cheap. And how willing will landlords be, to be the first to experiment and break through, without government incentives? Or rather what is the likelihood that the notion be approved by shareholders, who may be more ‘short-sighted’ retirees who are more concerned about the next dividend payout amount and date than the long term prospect of the Reit itself. This is not the fast paced disruptive tech start-up sectors we are talking about.

How experienced will Singapore Reits managers be in addressing the unprecedented situations?

jackie-chan-meme1 | Kartun, Inspirasi

I do not think it will be a dead end, and businesses / Reits will evolve and adapt. Nevertheless there are big question marks. However, knowing these few questions is probably the first step in tackling them.

Most people do not get rich by trading in and out of Reits, or holding Reits for very short period of time. It is typically through long holding periods, through the accumulation of dividends and capital appreciation that investors profit. So most retail investors will have to ride the long term trends, whichever they might be.


StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

Shopee

Hi there! I have been using Shopee for a while and think you will like it as much as I do.

Get $10.00 off your first purchase using my code DARREB52.
Download Shopee now and enjoy hot deals at the best prices! Click here.

Happy shopping!


Do like my post if you have enjoyed it!! Click the star below.

Do subscribe to my Patreon page.

Posted in REITS | 2 Comments

Tencent Holdings Limited (0700.HK) share price dropped 20%: 2 Things you need to know now

Someone asked me about my views on Tencent after I wrote about Alibaba. I have been mulling about it.

I mean how does one actually value a company like Tencent?

It is a Chinese multinational technology conglomerate holding company. Founded in 1998, its subsidiaries globally market various Internet-related services and products, including in entertainment, artificial intelligence, and other technology.

Tencent breaks down its business revenue into three broad categories:

1) Value-added services (VAS)—which consist of the virtual goods the company offers, primarily online video games for smartphones and desktops, such as the hugely popular “Honour of Kings”—as well as the special avatars users can purchase in Tencent’s Qzone social network;

2) Fintech, Business Services, and Others: Mobile Payment Services (Weixin Pay/WeChat Pay), wealth management platform, Licaitong, WeBank, Cloud Services (Tencent Cloud)

3) Online advertising: Social and Other Advertising & Media Advertising.

Tencent Stock Q4 2020 Earnings: What Investors Should Know (read here)

As per the charts below, Tencent Holdings Ltd has been a beneficiary of work-from-home tailwinds for consumers (e.g. playing more games and consuming all forms of entertainment, etc.) and digital transformation initiatives for corporates (e.g. growth in online advertising and increased demand for public cloud services, etc.) last year.

For simplicity’s sake, I will just talk about its VAS revenue ( primarily online video games for smartphones and desktops), which represents approximately 55% of its total revenue. Yes the lion share of its revenue.

Tencent is best known for WeChat, its ubiquitous do-everything app in China, and is the world’s largest videogame company by revenue, with hits such as “League of Legends” and “Honor of Kings.”

It is really technically impossible to break down and discuss about every component of Tencent in a single post.

Incidentally, we can also view Tencent as a tech ‘ETF’ in itself with its many investments in other tech companies. The company has bet extensively on Chinese and overseas startups in areas such as gaming, social media, entertainment and electric vehicles. That strategy has paid off handsomely as investors have bid up stocks in fast-growing tech companies and lapped up initial public offerings.

See below showing Tencent’s expansive portfolio of investments.

Tencent owns 5% of Tesla, 12% of Snap, and 9% of Spotify (including a stake through Tencent Music).

On a recent earnings call, Martin Lau said:

Our M&A strategy has always been trying to invest in up and coming companies which have a great management, who have innovative products, and at the same time, they have synergies with our existing platforms. We now have more than 700 companies.

More than 700 companies!

Tencent has been a major winner for its shareholders in 2020. Its share price rose by +50.7%from HK$375.60 as of December 31, 2019, to HK$566.00 as of December 31, 2020. Tencent Holdings Ltd.’s excellent share price performance in 2020 is understandable, once one looks at the company’s key businesses.

Stock price wise, 2021 is a different story. Year to date, the stock is down approximately 20% from its peak.

In fact, Tencent’s share price has been dropping in the past two months.

Why is Tencent Share Price Dropping?

I personally see it from two angles.

1) Rising interest rates and increased regulatory scrutiny

From how I see it, like most major Chinese tech stocks, especially the dual listed stocks in US and HK markets, their stock prices have been trending down in recent weeks due to a combination of rising interest rates and increased regulatory scrutiny in China and the United States.

China tech stocks down US$732b but may not have hit bottom yet (read here)

To quote the above article: Tencent Holdings Ltd, Alibaba Group Holding Ltd, Baidu Inc and NetEase Inc – among the earliest Chinese tech companies to enter public markets – still trade at valuations well above levels that marked the bottoms of the last two big downturns. The four stocks fetch an average 23 times projected earnings for the next 12 months, in line with the three-year average, data compiled by Bloomberg show. The ratio dropped to 19 in 2018 and 18 in March 2020.”

Alibaba, Tencent Stocks Dive As US Delisting Threat Joins Crackdown Fears (read here)

On 12 March 2021, the internet giant’s stock fell 4.4% after it was fined by China’s top antitrust regulator for a 2018 investment deal.

2) Lower pace of growth for the company in 2021

This is perhaps a more teething problem.

Tencent acknowledged at the recent earnings call that “all else equal if this year, we’re back in a work-from-office mode, which we seem to be, then I think it will be natural to expect those two trends to temporarily reverse” in 1H 2021. These two trends are “higher game revenue” and “lower revenue for some of our other activities” like “payments and FinTech” due to “work-from-home conditions” in 1H 2020. In other words, Work-from-Home or WFH tailwinds are likely to normalize for Tencent this year, which is a net negative for the company.

In Tencent’s 2020 FIRST QUARTER RESULTS report (released on 13 May 2020): It has highlighted the below.

At first glance, Tencent’s 4Q revenue (released on 24 March 2021) appears great (see below). From a quarter to quarter comparison (4Q2020 vs 4Q2019), VAS business’ revenue actually grew by +28.0% in 4Q 2020.

In fact, Tencent’s overall 4Q 2020 revenue and adjusted earnings met market expectations, but all eyes are on the -6% QoQ decline in revenue for Tencent’s online games business in 4Q 2020.

With respect to performance by business segment, the continued strength in Tencent’s FinTech & Business Services and Online Advertising businesses was partially offset by a slowdown in the growth of its Value-added Services or VAS business. The FinTech & Business Services business saw its segment revenue grow +28.7% YoY and +15.8% QoQ to RMB38.5 billion in 4Q 2020, and the Online Advertising business also did well with its segment revenue up +21.9% YoY and +15.5% QoQ at RMB24.7 billion in the most recent quarter.

In contrast, segment revenue for Tencent Holdings Ltd.’s VAS business, accounting for close to half of the company’s total 4Q 2020 revenue, declined -4.0% QoQ from RMB69.8 billion in 3Q 2020 to RMB67.0 billion in 4Q 2020. On a YoY basis, the VAS business’ revenue growth of +28.0% in 4Q 2020 was inferior as compared to the segment’s top line increase of +37.9% in 3Q 2020. More specifically, the online games and social networks sub-segments of the VAS business witnessed QoQ revenue declines of -6% and -2%, respectively.

Simply put, it is a good set of results, but just not as great as the previous quarters for the VAS business (gaming). There is growth, but not as fast as before. For some, it is just not good enough.

See below: The QoQ VAS revenue growth accelerated in 1Q2020 then decelerated in 4Q2020.

In addition, with the back to work from office theme highlighted since first quarter 2020 (and again in the recent earnings call), the fast growth in VAS segment seems to be stalling (which is also Tencent’s main revenue contributor).

Yeah, for gamers who have been secretly gaming at home during office hours in the weekdays, life is not going to be the same, as more people start to go back to the office full time during the weekdays. Yeah.. probably sucks big time!

Up to 75% of staff can return to office from April 5; working from home no longer default mode (read here)

In gist

Actually when I look at the current  Price/Earnings ratio and Price/Cash flow ratio of Tencent, it does not appear expensive.

However, when we go down the list and look at the Price/Forward Earnings ratio and PEG Ratio, historically speaking, it is not cheap, rather expensive in fact, relatively speaking – or put it another way – it can do better. I reckon, this is after factoring the lower growth / earnings ahead. Hence, I might think twice before investing a large sum to this stock.


StocksCafe

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Tiger Brokers

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Stock price of Alibaba Group Holding Limited (9988.HK) continues to drop… What should I do?

First of all this post is really my own thoughts and my own situation, and it might or might not relate to you.

To set the context: I first invested in Alibaba near the end of 2020 after reading up more on it.

Which is also in the context of:
a) The failed Ant IPO;

b) The State Administration for Market Regulation (SAMR) said in an online statement in Dec 2020 that it had launched a probe into the “choosing one from two” practice under which merchants are required to sign exclusive cooperation pacts preventing them from offering products on rival platforms.

At that period there were queries circulating in the media questioning about the whereabouts of Jack Ma as well. The sudden disappearance of the normally outspoken Jack Ma was linked to intense speculation about the escalating scrutiny over his internet empire by the Chinese authorities. It was only in 20 Jan 2021, that Ma’s re-emergence helped quell persistent rumors about his fate while Beijing pursues investigations into online finance titan Ant Group and Alibaba Group Holding. 

My intention was to take this as a long term holding in my stock portfolio (albeit still a small one), and slowly over time add to it. Basically a long term investing strategy.

That was then. Check out my thoughts then in the post below.

Alibaba Group Holding Ltd (HKG: 9988) share price crashed 26%. Is it worth buying? (read here)

Since then the share prices of Alibaba continue to be volatile, at one point it was much higher than my initial buy price. However, today it is trading in the red (slight unrealised loss).

There have been more ‘news’ since the end of last year.

Chinese tech stocks hammered as U.S. law threatens to delist firms from American exchanges (read here)

China’s dual-listed tech giants lost $60 billion in market value over three days as delisting threats loom (read here)

On 24 March 21, the U.S. Securities and Exchange Commission (SEC) adopted a law called the Holding Foreign Companies Accountable Act. Certain companies identified by the SEC will require auditing by a U.S. watchdog. These companies will be required to submit certain documents to establish that they are not owned or controlled by a governmental entity in a foreign jurisdiction. Chinese companies will have to name each board member who is a Chinese Communist Party official. Ultimately, the U.S. regulator could stop the trading of securities that fall foul of its rules.

The adoption of this law is on top of the stricter regulations happening in China as well.

Consequently, major dual-listed Chinese technology shares trading in Hong Kong were hammered . China’s dual-listed tech giants — Alibaba, Baidu, JD.com, and Netease — have collectively lost billions in market value in just days.

There is also the constant worry about the rising yield on the 10-year US Treasury note (which acts as a benchmark for global borrowing rates) or rather the unusual fast rate of increase, resulting in tech stocks sell off. Or rotation towards banks and value stocks from tech stocks.

The recent tech sell-off: Opportunity or a Wake up call? (read here)

Dow, Tech Stocks Rally As Treasury Yields Jump; Boeing At New Buy Point, While Tesla Slides (read here)

So there are ‘jitters’ through much of the tech stocks, not just highly valued speculative lost making tech stocks but also established mega techs like Facebook, Alphabet, Tencents, JD.com, Baidu etc… Some of them have more specific issues (eg. the battle between Apple and Facebook over privacy).

What did I do?

Basically there are 2 key things which I did.

Number 1: I relooked at my original thesis.

Sure there could be potential hiccups in the near term. However I do not feel that most of the news now are new (with reference to Dec 2020), and the fundamentals of the company remain strong. From a bottom up review, I feel that the thesis and the business of Alibaba remains intact. I believe it is a good compounder stock.

Yes the adoption of the Holding Foreign Companies Accountable Act is recent, however this was raised during the Trump administration period. So markets are well aware of this.

The scrutiny by the Chinese regulations is also a known factor and there are talks that the Ant IPO could go ahead, albeit at a lower amount and with more restrictions.

Ant Group IPO could get back on track if it resolves issues, China’s central bank governor suggests (read here)

Number 2: I have been spending less time tracking the stock prices, and in fact, I have been doing more binge watching of Youtube hahahaha. Just do something else.

Let’s face it, no matter how hard and how long we stare at the screens and at the stock prices, it will not change anything. It will not magically go up (or down, if we are shorting) as per our wishes. We are ultimately price takers. I would take the approach of waiting for the prices to drop below my target prices, rather than chasing prices (if it trends up).

I believe Alibaba is a quality company with a growing ecosystem. Alibaba is the largest e-commerce organization and the strongest brand operating as the leading intermediary organization in C2C, B2B and B2C segments, with 58% market share in China.

Alibaba Group is also the biggest company in China by market capitalisation, with a market cap of about US$597.2 billion (S$831.5 billion) at the time of writing.

One notable bright spot for Alibaba is cloud computing. Founded in 2009, Alibaba Cloud is China’s biggest cloud computing services provider, mainly focused on enterprise businesses.  The growth of Alibaba’s cloud business outpaced Amazon and Microsoft in the quarter ending in September 2020. That’s a 60% year-on-year rise and its fastest rate of growth since the December quarter of 2019.

In March 21, Alibaba Cloud launched its first personal cloud product Alibaba Cloud Drive, challenging established players like Baidu and Tencent Holdings in China. The service, which opened for public testing on Monday for both Android and iOS systems, offers users up to two terabytes of free storage and “unlimited” uploading and downloading speeds.

Alibaba cloud growth outpaces Amazon and Microsoft as Chinese tech giant pushes for profitability (read here)

Alibaba Cloud launches its first personal cloud product, challenging Baidu and Tencent (read here)

In gist

Ultimately, the key is to be patient and not to be myopic about the short term macro issues.

If its stock price drops further I may add on to my existing position.

The P/E ratio of the stock (HKG: 9988) on 28 March 21 is 26.03. The Price/Sale ratio is 6.12. Data taken from POEMS.

Historically and relatively speaking its valuation is not expensive.
If we want to compare its valuation over a longer period I would have to look at its US listed counterpart (Alibaba Group Holding Ltd ADR BABA), see below. Since it was only on November 2019, that Alibaba offered a secondary listing on the SEHK with ticker symbol HKG: 9988.

Yes, as per table below, Alibaba stock is still relatively inexpensive.

Of course, if it is from a trading strategy with a stop lost price, the approach will be vastly different.

StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

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Use the above referral code to enjoy the below benefits.

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The Five Titans of InvestingNote

With the proliferation of social media online, there are many blogs, forums, and online platforms (inclusive of Facebook groups, Telegram chat groups, YouTube videos, TikTok posts, etc) for like-minded investors and traders.

Among these, one of the prominent and vibrant online platform in Singapore is InvestingNote. It is a free online platform, and in its site, it states that it is the largest and most interactive platform for investors and traders in South East Asia.

Personally, for me I find it more of a platform for sharing of trading ideas. One function within it is that it allows users to make estimates for the target prices of specific stocks within a limited period. During market corrections or crashes, I notice that there will always be a flurry of posts there.

On the other hand, if you go to other sites, they may discourage users from discussing about specific stocks (and more gear towards long term investing methodology and personal finance).

Nevertheless, from time to time I will see super long posts on long term investing ideas (general or towards specific stocks). It is also a site where users regularly post news, investing related articles, SGX announcements relating to certain stocks, etc.

Frankly, I myself do not spend a lot of time in InvestingNote (IN), so I am not really familiar with the long time / frequent users there. Moreover as per how the platform is structured, top investors seldom share their portfolios or performances there but merely exchange opinions (often on particular stocks).

For some of these mentioned users, it was easy to find information about their portfolios, as they have blog posts or readily available portfolios in StocksCafe. For others, I could not find any records online. So I had to ask around and do some investigative works. Thus this list itself may not be the most comprehensive one. Ultimately, it depends on how much they want to reveal. Please feel free to leave your comments below if you feel that my post is incorrect or if I have missed out anyone. In addition, the users may not really post much about his own portfolio recently, so yeah.. not very comprehensive.

Eventually, I found the below top five titans (recommended by the users in InvestingNote. Thank you, guys). These users may not technically have the best performing or biggest portfolios. However, from what I understand, they are popular and often offer good advice. A few of them have many followers. Nevertheless, they do have big sizeable portfolios from the records I found. All of them are millionaires; assuming the information gathered are correct.

1) Grandpa Lemon (click here)

In his profile, he mentioned that he has been entertaining since 1965, so I am assuming he is born in 1965, which means he should be 56 years old this year (2021).

He considers his style of investing as 100% towards fundamental investing and is dividend-play investor.

In his 20 Jan 21 post, he mentioned the following when talking about SG REITs:

“The moral of the story is if you are an income investor, plan your moves and avoid herd mentality.  The typical buyer’s decision is usually heavily influenced by the actions of his acquaintances, neighbors or relatives. Thus, if everybody around is investing in a particular stock, the tendency for potential investors is to do the same. But this strategy is bound to backfire in the long run. Proper research should always be undertaken before investing in stocks.

COVID has set a period for low or near zero interest rates for a long time and this could provide the tailwind for continued outperformance of REITs. I am avoiding office & hospitality & US Reits for now, things could change if my guts tell me otherwise.”

In addition, he also posted his SG REIT portfolio (see below), although he left out the market value.

Nevertheless, I did some basic calculation base on the market prices on 19 March 21 (at the time of writing), and his REITs portfolio alone is worth around SGD 3.2 million (assuming he did not buy or sell much since Jan 21). See below.

It appears that his REITs portfolio is heavy on REITs like Keppel DC REIT, Keppel Infrastructure Trust, Parkway Life REIT and Ascendas REIT. Very high conviction in Keppel DC REIT (but could be due to its share price increase).

Many of his IN posts are pretty long. I feel that his 20 Jan 21 IN post is good, however it is perhaps too long to show the whole post here. Below is just the first portion.

2) theintelligentinvestor (click here)

In his profile, he mentioned, “Through various chances, through all vicissitudes, we make our way….Aeneid. Buy the right stock (Qualitative) at the right price (Quantitative)”.

He considers his style of investing as 100% towards technical investing but his trading strategy is that of a value investor.

In his StocksCafe portfolio, its total value (as of 19 March 21) is around SGD 2 million, and in 2020 he received a total dividend income of SGD 75,451 (which is approximately, SGD 6,287 per month). His top 3 holdings are DBS, Mapletree Log Tr and Ascendas Reit.

In his 12 March 21 IN post, he mentioned the following:

In his 15 Jan 21 IN post, he mentioned the following:

3) ThumbtackInvestor (click here)

He also has a blog, and was covered in one of my previous post.

In his blog, he mentioned this about himself:

“I am a Singaporean male in my mid-30s, and this blog chronicles my investing ideas and activities. I hope to search for and find contrarian and deep value investing ideas and will chronicle all these ideas here, both the successes and the failures. (hopefully less of the latter)

As the focus is on deep value situations, I’m mentally prepared for my portfolio to show great volatility. In some years, I should outperform the indices spectacularly. In others, I should underperform spectacularly as well. Over a multi year period, I hope to achieve above normal returns.”

In IN, he stated that his style of investing as 95% towards fundamental investing, 5% towards technical investing and his trading strategy is that of a value investor.

In early Feb 2020, he wrote that he has set up a new, much smaller fund, ThumbTack Fund (TTF), to trial a highly concentrated approach with only 5 core holdings. Over time, he thinks this new fund and concentrated approach will be his key focus, and will likely form the bulk of of portfolio in future.

Well, Feb 2020 as we all know is near March 2020 when stock markets bottomed… you can read his subsequent blog posts about how he thought about the impact his fund then and how he manage his portfolio and overcome the impact subsequently.

As per his 7 Feb 21 blog post,

His ThumbTack Fund (TTF) which was incepted at the beginning of Feb 2020 has a NAV of USD 408,474.88.

His top holdings for his fund are:

1. Broadcom (AVGO)

2. Ligand Pharmaceuticals (LGND)

3. Nio Inc (NIO)

4. Alibaba Group (BABA, 9988)Facebook (FB) —–> (tough toss up between this and PSTH)

By the way, the above TTF is just one of his ‘portfolios’. I do not have the complete break down of his net worth. If I not wrong he owns a number of properties, and his 13 Oct 2019 post below does give a clue of his different portfolios / assets then.

+1,680% IN 4 YEARS! (read here)

In the above 2019 blog post, he mentioned:

– Total portfolio value in SG markets is SGD 243,092;

– The bond portfolio is approximately SGD 550,000;

– The total portfolio value (in US markets) is SGD 2,196,369.

– The property fund has about SGD 600,000 worth of liquidity. 

That is in Oct 2019. The current values of his portfolios, properties and business would be worth much more now.

4) bart23 (click here)

He also has a blog.

He considers his style of investing as 50% towards fundamental investing, 50% towards technical investing and his trading strategy is that of a dividend-play investor.

In his 4 March 21 blog post, he mentioned that his liquid net worth (excl properties/CPF) continues to hit an all time high of more than $1.8 millions due to injection of salary/bonus and vested stock option.

In his 2 Jan 21 blog post, he mentioned that his Investment Portfolio valuation on 31st Dec is $1.023 million (gain 0.8%, +6.36% inclusive of dividend). FY2020  Investment Portfolio Dividend/Interest collected in 2020: $56K.

In his 2 Jan 21 blog post, he mentioned that his portfolio consist mainly of dividend seeking Property(REIT), O&G, and Finance(Euro) counters which did not fare too well in 2020. In the last few month, he has been doing a lot of portfolio rebalancing by selling almost all his high risk O&G MLP and low grade REITs counters which resulted in a huge realized loss of 52k. In replacement, he has bought mostly large cap index stock from LSE and HKSE and some ETF from SGX which helped to narrow the losses in 2020. Overall transactions have resulted in more 1/2 million of investment sold and bought which was quite a nerve racking experience to him. The entire 2020 pandemic crisis actually taught him a lesson to buy only quality company and not to chase after high yield.  He hopes the new portfolio will be more resilient in 2021 even though he knows that he still have some risky counters to trim. 

See below for his annual dividend payout through the years.

His liquid net worth distribution: 

IMO, he has a rather large proportion of his net worth in cash, 41%. That was in Jan 21.

In his 4 March 21 blog post, he mentioned the following:

“Whether you are a retiree or you just want to be financially independent, you need a strategy that should meet the following goals:

1. Produce sufficiently income to meet basic needs.

2. Preserve capital in bad times. 

Therefore, when I reviewed my monthly passive income for the last 4 years and the huge emergency fund built up, I am ready to retire and leave my job. However, I am still appreciative about the regular income that is coming from my current job.   As I am planning to cross the finish line toward retirement, every income boost will build a stronger buffet.”


5) Happily (click here)

He considers his style of investing as 90% towards fundamental investing, 10% towards technical investing and his trading strategy is that of a value investor and dividend-play investor.

Unfortunately, I can’t find any record of his portfolio. Understand from a user in IN that his portfolio is REITs heavy.

However, I was informed by a user, that Happily’s peak paper loss during March 20 lows was more than $800k. So if we use some reverse calculation, we can estimate that his portfolio should exceed SGD 3 million.

Image 1

In his 16 March 21 IN post, he mentioned the following:

In his 11 Nov 20 IN post, he mentioned the following:

In his 28 Oct 20 IN post, he mentioned the following:

Notable mentions (should be one of the titans):
1) Alphie (click here)

2) Corydoras (click here)

3) Dividend Warrior (click here)

4) Jun Yuan Lim (click here)

5) ThinkForwardInvestor (click here)

6) 3Fs (click here)

7) Turtle_Investor (click here)

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In Summary

It appears that most of them are dividend investors with big sizable portfolios.

Nevertheless, I cannot vouch for the accuracy of the above mentioned figures and they prefer to remain anonymous. I reckon what is important is to learn about their investing strategies and thought process. They are active users in the IN community and often drop nuggets of wisdoms in their many posts there. I am sure we can all learn something from them.

Beyond InvestingNote, I have also wrote a post about investor bloggers with sizable portfolios and users with amazing results in StocksCafe. See below.

Singapore Investor Bloggers with min. 1 SGD Million Stock Portfolios (read here)

Top 5 Performing Shared Portfolios in StocksCafe (read here)

Paid Make It Rain GIF by State Champs - Find & Share on GIPHY

To me investing in many ways is more of an art than a science, and in many ways, the psychological aspect of it plays a big part. There are really many ways to achieve alpha results. There are different strategies depending on one’s current situation and inclination eg. age, character, risk tolerance, net worth, etc. We are all different in some ways or others. One can be purely a dividend or value investor, or growth investor or momentum trader, etc… or a mixture.

If one has a big portfolio, maybe looking at how someone else manage their asset allocation and a big sum portfolio is useful (among the millionaire investors through their blog posts or their posts in Investing Note).

If one is thinking about growth investing, perhaps studying what are the stocks in the better performing shared portfolios in StocksCafe is useful. In addition, reading what were the thought processes of these investors when they buy these stocks might reveal more insights.

StocksCafe

FYI I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

Tiger Brokers

For the Singapore market, Tiger Brokers currently waive the minimum fee and only charge a 0.08% trading fee. This drastically reduces your cost as the minimum fee from other brokers (ranging from SGD 8 such as FSMOne and SCB, to SGD 25 for local brokerages) does add up and can eat into your returns.

Tiger Broker Referral Code:: GPE59H

Sign up here.

Use the above referral code to enjoy the below benefits.

Do like my post if you have enjoyed it!! Click the star below.

Do subscribe to my Patreon page.

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Top 5 Performing Shared Portfolios in StocksCafe

“You should take the approach that you’re wrong. Your goal is to be less wrong.” Elon Musk

In the online world, we are constantly flooded with endless information. These days, it is not hard finding success (and failure) stories.

Personally, for me I enjoy reading news, blogs, forums, investing platforms. While visiting investing platforms, eg. Valuebuddies, Investing Notes, StocksCafe.. I always like to take a look at what others are investing in. How are their performance, what have I been missing out and how I can improve myself when it comes to investing.

As per Elon’s quote above, I feel that we should view our path towards financial freedom as a learning journey, and to take little steps towards being less wrong.

Singapore Investor Bloggers with min. 1 SGD Million Stock Portfolios (read here)

Often I come across stocks which I am not familiar with. For me, I am more familiar with Singapore listed stocks – the usual REITs, banks, consumer staples, and some growth stocks. However, the universe of stocks is much bigger (esp. in the US and Hong Kong markets), and there are countless strategies.

If I am thinking about Growth strategies specifically (aka via capital gains), I would like to know which are the recent high performing stocks. What are the growth stories behind the stocks. One way, is to check out the best performing portfolios shared online. However, havig said that, I am always aware that past performance is not indicative of future results.

In addition, how true is the allocation and figures presented online by often anonymous users, is also questionable. Likewise, the reflected gains may not include past (mega) realised losses.

I am also not here to promote nor shame anyone’s portfolio. I am just looking at the capital gains aspect of it, which in a way, I feel is somewhat limited. For instance, others could be building up dividend portfolios, aiming to build up more passive income. Or to have a more diversified portfolio (with bonds or crypto) that can weather through the ups and downs, high or low inflation, etc.

So yes, an imperfect method, but good to know nevertheless.

In StocksCafe, there is a long list of shared portfolios. In this article, I will go through the Top 5 performing portfolios, base on their 3 years percentage performance/gains. Data were taken on 17 March 2021.

Personally, I view 3 years as a sweet spot. Although I do like to have more years considered when viewing portfolios, however the next jump is Time (All), hence, there is no specific time frame. On the other hand, any time span less than 3 years, I feel is too short to evaluate the performance.

By the way, I will be referring to each of these investors as a he/him, although I do know the person could be a she/her (just for simplicity sake).

As you can see above, the top 5 performing portfolios belong to the following user names:

1) zhengkanglovetvb

2) CosmicPubes

3) MyInvestory

4) zacharyteo

5) s11r0069999

What are in their portfolios?

1) zhengkanglovetvb

For this investor, his portfolio seems rather condensed and focused. His top holding is Novavax (more than 60%), followed by cash, then Qualcomm. The rest are small holdings in China Tower Corp Ltd and many Singapore Saving bonds.

Let’s just focus on Novavax since base on the figures presented, he managed to achieve an astounding 1627% overall unrealised profit (including dividends). The average buy price is $12.864. This outsized performance dramatically pull up his whole portfolio.

He probably did not buy all his Novavax stocks at one go. However, if we are to assume he bought most of his Novavax stocks at one go, it would be sometime in early 2020, near the bottom of the market in March 2020. In all of 2020, Novavax shares skyrocketed north of 2,700%.

Novavax, Inc., a biotechnology company, focuses on the discovery, development, and commercialization of vaccines to prevent serious infectious diseases and address health needs. The company’s vaccine candidates include NVX-CoV2373, a coronavirus vaccine candidate that is in two Phase III trials, one Phase IIb trial, and one Phase I/II trial.

Is Novavax Stock A Buy On Its Leading Covid Vaccine Effectiveness? (read here)

To quote the above article:

” On 12 March 21, the company said its coronavirus vaccine was 96.4% effective against mild, moderate and severe cases of Covid-19 caused by the original strain. The vaccine was also 48.6% effective in a midstage test in South Africa where mutated strains are dominant.

Last month, Novavax inked a deal with Takeda Pharmaceutical, which will run Phase 1 and Phase 2 testing in Japan. The company also completed enrollment of final-phase studies in the U.S. and Mexico.

Numerically, that puts Novavax’s vaccine ahead of authorized drugs from Pfizer with its partner BioTech, Moderna and Johnson & Johnson. The Novavax drug also outperformed the coronavirus vaccine from AstraZeneca.”

2) CosmicPubes

Hahahaha… can’t stop laughing at this user name. This person has a sense of humour.

Another highly focused (US listed stock) portfolio. His top holding is no stranger to anyone. Well, few people will NOT know Tesla after its outsized stock price performance (7x) in 2020 and early 2021. This is one stock that needs no introduction.

He is super focused on Tesla stocks, at more than 95% weightage with an average buy price of S200.795. This gives him an unrealised gain of 237.10%.

The last time Tesla stocks traded at around $200 was sometime in June 2020 (or back in 2019). I am assuming he did not buy all at one go. By conventional metrix, Tesla stock was never in my opinion cheap… yes $200 was low (in hindsight now), but was it cheap then? I shall leave it to the Tesla’s bulls to elaborate.

Why Shares of Tesla Soared Nearly 30% in June (read here)

So what were the news about Tesla in June 2020? To quote the above article (dated 6 July 2020):

In June, a steady stream of positive news helped fuel the carmaker’s rise:

On June 8, news broke that the Chinese version of Tesla’s Model 3 — which is manufactured in Shanghai — saw record-breaking sales in May. Not only did sales more than triple from April to 11,095, from 3,645, but they also surpassed March’s record of 10,160. That caused a big pop in the company’s stock.

Also on June 8, newly public rival carmaker Nikola, which is also named after inventor Nikola Tesla — announced it would begin taking reservations for its own electric pickup truck, the Badger, on June 29. Considering that Nikola has also been focusing on the semi-truck market, its stock’s outperformance increased interest in — and provided some validation for — Tesla’s proposed Semi and Cybertruck products.

Late on June 9, an internal Tesla email leaked, in which CEO Elon Musk told employees that “it’s time to go all out and bring the Tesla Semi to volume production.”

Musk tweeted on June 21 that a seven-seat, three-row option for the Model Y crossover SUV would likely begin production in 2020 instead of 2021. This cheered investors, as it’s a sign that the company is doing a better job of accelerating production, which should lead to higher growth. 

On the last day of Q2, Tesla’s stock surged as rumors abounded that it might post a fourth consecutive quarter of profitability. That would make it eligible — some even say a shoo-in — for inclusion in the S&P 500 index, which would trigger buying interest from index funds and other institutional investors.

3) MyInvestory

His portfolio consists of all US listed tech stocks, although the iShare Hang Seng Tech ETF is more Hong Kong/ China tech focused. Top holdings being Tesla, Square, iShares Hang Seng Tech ETF and Palantir.

Square, Inc., together with its subsidiaries, creates tools that enables sellers to accept card payments; also provide reporting and analytics, and next-day settlement.

Palantir Technologies Inc. builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. 

As for iShares Hang Seng Tech ETF, see below for the top 10 holdings in this ETF.

Personally, looking at the unrealised gains from all his holdings, I am wondering how he managed to achieve an overall unrealised 3 years gain of +386.23% for his portfolio.

4) zacharyteo

His portfolio is more diversified with some Singapore listed REITs in addition to the US listed tech stocks.

His top holdings are Digital Turbine, Palantir and Nio.. In addition, he is not too heavily focussed on anyone unlike some of the above examples.

His average buy price for Digital Turbine is $11.466. This gave him an unrealised gain of 593.44%. Again, I am assuming he did not buy all at one go. However, if he did, he would have bought it just when the stock price skyrocketed.

Digital Turbine, Inc., through its subsidiaries, provides media and mobile communication products and solutions for mobile operators, application advertisers, device original equipment manufacturers, and other third parties worldwide.

Why Digital Turbine Stock Jumped 44% Last Month (read here)

To quote the above article:

“The stock has been a huge winner over the last year, and the latest report helped show why as it’s benefiting from a number of trends, including increased spending on programmatic advertising and as companies placed a premium on content discovery during the pandemic.

While those gains faded over most of the rest of the month, the stock got another boost at the end of February when it announced its acquisition of AdColony, a mobile advertising platform with 1.5 billion users, which will increase mobile advertising revenue. Digital Turbine said it will pay $350 million to $375 million in the deal, which is expected to close in the current quarter.”

5) s11r0069999

He has 19 holdings in his portfolio (relatively more holdings compared to the other four). His top holdings are US listed tech stocks. Will be just showing his top 5 holdings.

His top 3 holdings are Digital Turbine, Magnite and Trevena.

His average buy price for Digital Turbine is $6.11. This gave him an astounding unrealised gain of 1201.31%.

His average buy price for Magnite is $8.278. This gave him an impressive unrealised gain of 447.21%. Again, I am assuming he did not buy all at one go. However, if he did, he would have bought it just when the stock price skyrocketed.

Magnite, Inc. operates an independent sell-side advertising platform in the United States and internationally. The company’s advertising platform enables publishers to monetize various screens and formats, including CTV, desktop display, video, audio, and mobile, as well as allows agencies and brands to access brand-safe ad inventory and execute advertising transactions. 

Trevena, Inc., a biopharmaceutical company, focuses on the development and commercialization of novel medicines for patients affected by central nervous system disorders. Its lead product candidates include OLINVYK (Oliceridine) injection, a G protein biased mu-opioid receptor (MOR) ligand for the management of moderate-to-severe acute pain; TRV027 for the treatment of acute lung injury contributing to acute respiratory distress syndrome and abnormal blood clotting in patients with COVID-19; TRV250, a G protein biased delta-opioid receptor agonist that has completed Phase I clinical study for the treatment of acute migraine; TRV734, a small molecule G protein biased ligand of the MOR that has completed Phase I clinical study for the treatment of moderate-to-severe acute and chronic pain; and TRV045, a novel S1P modulator for managing chronic pain. 

Top holdings

Looking through their portfolios, we can see that many of them have highly concentrated portfolios. Many have only a few stocks, and their top holdings typically occupy more than 30% of their portfolio.

In addition, typically they invest in high growth US listed tech or biopharmaceutical stocks (see below). In general, the pandemic has provided a huge tailwinds for these stocks.

1) Novavax, Inc

2) Tesla, Inc

3) Square, Inc

4)  iShares Hang Seng Tech ETF

5) Palantir Technologies Inc

6) Digital Turbine, Inc

7) NIO Limited

8) Magnite, Inc

9) Trevena, Inc

On another note. for me, sometimes by looking at other people’s portfolio, I discover new stocks which I was not aware of previously.

Connecting dots

” You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever.” Steve Job

I know I am repeating myself again, but shall say it again, part performance is not indicative of future results. With high growth tech stocks, they are generally more volatile than value stocks. In addition, with the general rotation from growth tech stocks to value plays, the near term stock performance is anyone’s guess.

IMHO I believe investing is really a personal endeavor, others’ portfolios may not suit you or me. For example I can invest in exactly the same stocks as them, but I may not have the same conviction as them. When the stock prices drop, I may not be able to hold or may not know enough to invest more.

They could be at a different stage, eg. could be younger with longer runway. Or their portfolio is just a fraction of their net worth. Or they have different risk tolerance, etc.

I like to think of this as an initial step to find out more about these stocks and the companies behind them. To study their financials and business growth. Does their values and narratives resonates to me, can I relate to them. Finding more dots to connect to using this as the first dot. It might also lead to other companies and stocks.

The other step which I think is important is to understand their thought process when they invest. Some of the people who shared their portfolios do post their thoughts in blog posts. Unfortunately, I don’t see any blog posts from these top 5 investors.

As mentioned earlier, I will from time to time go through online forums and online portfolios to check out what others are discussing about and what they are investing in. StocksCafe being one of them. Well, maybe just being a busybody or like how gamers who peek at how other top players managed to break the high scores.

I find StocksCafe useful for the tracking of my own portfolio, and especially like to use it to track my portfolio stock dividend / bond interest payouts (projected and due). You can use my referral code: apenquotes. Just click here. Upon signing up using the referral code, you will get to enjoy being a Friend of StocksCafe and test out all features for free for two months!

Please follow me at StocksCafe, via my StocksCafe profile page.

By the way, this is not a sponsored post by StocksCafe, although I would like to thank Dr Evan Koh (founder of StocksCafe) for letting me post the contents taken from StocksCafe here.

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The recent tech sell-off: Opportunity or a Wake up call?

I have been reading about the tech stocks sell-off and its relation to the rising yield on the 10-year US Treasury note (which acts as a benchmark for global borrowing rates).

Many people are asking what they should do, and should they be concerned.

My personal view and quick answer to the above question, is one should not be too concerned. However, as with everything that is related to stock investing, the longer answer needs a bit more elaboration.

The yield of the 10 year US Treasury note as of writing is now 1.591%, and has been steadily increasing since Aug 2020. Since the start of 2021, the rate of increase has accelerated.

Why this rate-driven sell-off is hitting tech stocks hardest (read here)

The above article helps to explain why the increasing yield has a pronounced effect on tech stocks, namely:

1)  The market is a discounting mechanism, and using the Discounted Cash Flow model, the higher rates go, the lower the present value of the future stream of earnings of companies. This is more pronounced for high-growth equities like many technology stocks.

2) Bonds are competing with stocks as an investment, and with rising rates, bonds are starting to become more attractive.

It appears logical. Oh dear.

Past History

If we look at the recent yield chart of the 10-year US Treasury note, we can see that over a 1 month period. it has been increasing upwards. See below.

On the other hand, if we look at the tech heavy Nasdaq, over a 1 month period, it has been trending down. See below.

So given all the news that we have been reading it does appear that 10-year US Treasury note yield has an effect on tech stock prices.

However, let’s extrapolate these two charts further back: Using the 5 year charts for both (10-year US Treasury note yield & Nasdaq). See below.

As you can see there is an ‘almost’ smooth upward trend for Nasdaq, with some ‘hiccups’/ low points in Dec 2018 and March 2020. However, in the case of the 10-year US Treasury note yield there is really no consistent trend.

Next if we superimpose both charts, it is really hard to find any defining pattern.

True, there are periods whereby a rising yield trend led to a drop in the Nasdaq (see period 1 – before 2018, and period 2 – Sept 2018, and a dropping yield is in step with the rise in Nasdaq (see period 3 – after early 2019). See below.

However, we could also argue that in the periods A (2017 to 2018) and B (mid 2018), yield was range bound but Nasdaq kept rising. In period C (late 2018), a dropping yield did not result in a rising Nasdaq. In period D (which we are more familiar with), a rising yield did not result in a dropping Nasdaq.

In fact, throughout history there are many market corrections and crashes, and these are caused by a myriad of factors. The 10-year US Treasury note yield does not factor much in those, more of an after effect, IMHO.

In addition, many of us are unable correctly predict what will cause the next crash or correction.

Way forward

My opinion is that we are all different (in character and with regards to our portfolio). There is really no one strategy that fits all.

Nevertheless, there are a few points which I think we as investors should ask overselves.

1) Do you view this tech sell off as an opportunity or as something that keeps you awake at night. For me as I have only a small percentage of my portfolio in tech stocks, I view it as a blessing.

If you feel that it is something that keeps you awake at night, and fear further drops, perhaps you have too much of your portfolio in risky speculative tech stocks. Hence, it might be advisable to adjust your stock portfolio proportions. To have a more diversified portfolio (between more speculative and less risky assets). Eg. include a mix of bonds, REITs, slow growth dividend stocks, etc.

2) Do you have high conviction in your holdings. Typically I believe in a bottom up approach. For example, I need to know the financials and business of the companies behind the stocks before I invest. So that I have more conviction in holding it long term and not be swayed by macro market movements and negative outlooks, provided the fundamentals of the companies are still sound.

The issue with tech stocks, especially small, newly listed, high growth but loss making tech stocks is that it is hard to value these stocks.

Why you shouldn’t use the P/E ratio to value every stock (read here)

In the article above, it mentions that we should look beyond P/E ratios and look at price-to-cash-flow (P/CF)  ratio. For a company that generates a consistent cash flow but low earnings, it’s more appropriate to use the price-to-cash-flow (P/CF) ratio to determine the intrinsic value of the company.

Now, even with this, at these times, with many popular high growth tech stocks, even using the P/CF ratios, they still appear expensive. For instance, looking at The Trade Desk, the P/CF ratio is 97.4 (at the time of writing) as shown in this site. Compared to the April 2020 ratio, it is low. However that is only till April 2020. In addition, 97.4 does not appear cheap to me. See below.

If we compared its P/CF (and for that matter its other valuation metrics) to the industry and sector, it appears high. See below. Click here.

So yes, hard to value, and what do you rely on for conviction?

Moreover many of these tech companies’ headquarters are in the US, and their operations / business are not as transparents to us retail investors in Singapore. For instance, I would say I am more familiar with Sheng Siong as a company than The Trade Desk. The former business is more transparent, tangible and easy to understand.

Of course, different people have different circumstances. For example, you may be working in the tech industry, so it is within your circle of competence.

3) Your past experience could have an impact. Another way of saying, is anchoring bias. Let’s use an extreme example. There is this group of investors, some call them the 2020 Spring investors. Typically young newbies who just started investing from March 2020 onwards. Their timing is impeccable, and they chose the right sector (tech) to invest. So it has been a rather smooth journey until the tech sell off recently.

There is a saying – they say the worst that can happen to a newbie gambler is to win big on his first time in Vegas. He get lulled into this belief that high rewards is easy. Everything he touches will turn to gold.

Well, on another note, there is a difference between investing and trading.

So back to these group of investors, perhaps they are not used to such volatility given their past experience (probably less than a year). In addition, many really did not know how to value tech stocks nor understand what they are investing in (or shall I say trading in).

4) We can’t predict yield. There are many factors that affect the treasury yield rates, and really it is beyond us. To put it simply, we can only fret about stuffs we can control. Yield rates are like the weather. Well, on the other hand, you can choose to go down the rabbit hole and ponder about what will move rates next (see below article).

On another level, as mentioned earlier, many factors influence the stock market movement not just yield rate.

Understanding Treasury Yield and Interest Rates (read here)

In gist

I am just sharing my thoughts. Your situation might be different from me eg. age, portfolio proportion, past experience, etc.

Personally for me, my approach will be to take this as an opportunity, and slowly DCA into tech stocks which I have a high conviction in. Nevertheless, my warchest is low and hence, I would prefer to wait and see.

Even recently, there are news to include more tech stocks (eg. Sea Ltd and Razer Inc) into the MSCI Singapore, which will make it more current and up to date (thought more volatile).

Potential listing of Sea on MSCI Singapore will bring tech exposure and visibility to Republic (read here)

Tech Stocks Slowly Gaining Prominence in Singapore’s Market (read here)

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Thoughts on my portfolio

It has been some time since I wrote a post, or more specifically, a post about my portfolio. With some time on hand, I reckon I should pen down my thoughts for my current portfolio, which technically did not change much. The key purpose is perhaps how I should frame my thoughts moving forward.

By the way, I do view writing a blog post as a form of indulgence… since most of the free time I have is spent with the family / taking care of the kids (esp. during the weekends) and going for my weekly swim. For instance, like now, when I am writing this post, it is late at night on a Saturday.

I did write a post about the break-down of my portfolio sometime in March 2020 (wow.. times really fly).

Portfolio Update (read here)

Basically I still view my overall portfolio as a sum of parts. The below pie chart shows the breakdown of my net worth excluding the property (fully paid for) which my family and I are staying in.

Of the different segments, the segment which typically change a lot is the stocks portion. Typically the insurance cash value and CPF portfolio is fairly untouched.

In addition, if I zoom into the proportion of stock portfolio vs war-chest, my war-chest is still rather low.

For the stocks segment, I generally spilt it into 2 portions – Dividend Portfolio vs Story Fund. Actually, to some, this is a wrong way of thinking. As what Warren Buffett has mentioned before about ‘value’ and ‘growth’ stocks. Which I don’t really disagree, however, I tend to view the companies in relation to which stage of growth they are in (eg, Start-ups vs late growth vs cyclicals). It helps me to organise my thoughts at times, especially this recent period, with the pandemic situation still not under control.

“Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth.” Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing. We view that as fuzzy thinking (in which, it must be confessed, I myself engaged some years ago). In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive.” Warren Buffett, 1992

Warren Buffett: Forget About Value vs. Growth Investing (read here)

The Dividend portfolio consists of 3 parts: Singapore Portfolio / Hong Kong Portfolio / Malaysia Portfolio.

The Story Fund is still relatively small. As the name suggest, I am focusing more on the narratives of the company / business behind the stocks here.

Personally, my strategy is always to establish a dividend portfolio first. This acts as a base from which I can grow the Story Fund. Well, given the past year, whereby growth (Tech) stocks have in general out-performed traditional / recovery stocks… I might have been better off doing it the other way round (eg. focus more on growth then dividend stocks). Oh well. Nevertheless, that was the basic principle then (before Covid-19 outbreak happened).

Although I do not believe in timing the market, I believe there are periods whereby the odds are in my favour and I would allocate more funds into the stock markets.

For example, in later half of 2019, I started allocating more funds into the Hong Kong-centric stocks given the social unrest in the city. In the early part of 2020, I started to allocate even more funds into Singapore listed dividend counters as well as some HK & US listed stocks. See chart below.

Dividend Portfolio

Basically, in recent weeks, there was a marked improvement in the HK counters (in relation to the SG counters) – stock price wise. In addition to the sector rotation from tech to recovery stocks, the Singapore and Hong Kong Portfolios have been holding up relatively well. Although the recent Friday sell off was a let down.

Overall, in 2020, the overall dividend income from the dividend portfolio & bonds, comes in at around SGD 18,566, which translate to around SGD 1,500 per month, after omitting the fees involved. This amount per month definitely come in useful, regardless of the stock price fluctuations. You can check out the dividend income breakdown by portfolios and year here.

I reckon that I have yet to see the full potential of the dividend portfolio passive income, given the on-going pandemic. The dividend pay-out of banks are in general still capped (eg. HSBC, DBS). It is still not back to business as usual for many REITs, developers, utilities and consumer Staples stocks. Hence, DPUs are still not back to pre-pandemic levels or even close to it. Of course, we could be in for a structural change for some sectors (eg. Office / Hospitality, etc), and the DPU levels could remain suppressed for a long time. However, in the coming years I do expect things to get better.

Notable changes in 2020 include the divestment of Colex Holdings (in Aug 2020), initiation in Straco Corporation Ltd (in Dec 2020), divestment of Dairy Farm International Holdings Ltd (in Jan 21). This is on top of addition to my existing holdings in Ascendas, Mapletree Log Tr, Parkwaylife Reit, IH Retail, HSBC, DBS and Lam Soon in the later part of 2020.

Within this portfolio, I tend to classify the stocks into Cyclicals stocks, Recovery stocks, Extreme recovery stocks, and Beneficiaries of the Pandemic stocks. By the way, this is my own personal classification, there is really no right or wrong… so feel free to let me know your thoughts in the comment section below.

Cyclical stocks: Typical business that goes through long periods of ups and downs – typically commodities stocks.

Recovery stocks: Most are traditional business (brick and mortar REITs or banks) impacted by the pandemic. No doubt their businesses are not at a standstill, but it is not business as usual and revenues are under pressure. The future growth is also going to be bumpy. Or in some cases, some divisions of their business is impacted, while others are still doing alright (eg. ST Engineering). I would say the majority of the stocks in my dividend portfolio falls into this basket.

Extreme recovery stocks: I classify businesses which have been extremely impacted by Covid-19 to be within this segment. Depends on how one sees it, it could the sector that is the most compressed at the moment. Any positive news will render a big rise in stock prices (and vice versa). I think of it like a spring that is compressed by an anomaly. A pure office Reit or hospitality Reit, or companies heavily dependent on tourism or the aviation sector will be allocated here.

Beneficiaries of the Pandemic stocks: It is rare but not impossible to find traditional slow growth dividend paying companies that benefitted from the pandemic. No doubt they are generally more expensive (higher P/E), but if the fundamentals are good and growth is there, I don’t like to avoid them. Who knows how long the pandemic will drag on. Or will there be a twist to the recovery story.

It is difficult to time the market, or even to allocate funds into different sectors at the right time. It is also hard to time when economies will recover from the pandemic, it is even harder to time stock price changes (which tend to run independent from economic development in the short term). Eg. some people would argue that the big stock price rise in cruise line or aviation stocks despite their dismal earnings performance is irrational.

So instead of timing, why not focus on quality companies (the better ones in their class)? Although I would say Golden Agri is not one of them (it is one of the big unrealised loss I held on for years).

Nevertheless, I like to read up and observe if there is anything critically wrong with their practices and earnings (while taking into context the pandemic), before doing some purchases (or selling).

In terms of performance, the Hong Kong portfolio, given the unresolved social issues there, has underperformed the STI Index.

On the other hand, the Singapore portfolio has outperformed the STI index for the past 1 year period,

Story Fund

As the name of the fund suggests, in this portfolio, I tend to focus more on the narratives of the business behind the stock here. Price or P/E although still a factor, it is not top in the check-list here.

It is still relatively small proportionally when compared to the dividend portfolio.

Notable changes in 2020 and 2021 include addition to my Alphabet holdings (in Sept 2020), initiation in Alibaba (in Dec 2020), and addition to my Pinduoduo holdings (in Feb 2021).

I have been reading more and more into potential growth stocks which I can dip into. Tech stocks are generally still expensive, the recent sell off allowed me to dip a bit into Pinduoduo, and adding to my current holdings Nevertheless, my point here is to do up a shopping list, and not actively buying. My strategy is always read up, mull over it and build up my conviction before any purchase. In addition, I tend to buy in bits not in one large chunk.

Again, the key words here are “create a shopping list”. Not actively buying.

Sure I could be missing out on opportunities by buying late, and incurring more fees by buying in small amounts. However, we never know if there will be a deeper tech sell off, and with low cost brokers like Tiger Brokerage, it makes trading less costly (although I have yet to use it hahaha).

I like to go for companies that would still continue growing (at a good pace) even after the pandemic induced shift towards tech. So it is not really due to any one time event. The business model must already have an edge or competitive moat (over their competitors) even prior to the lock downs and the worldwide shift online due to the pandemic.

I believe there are many gems in this sector if we are to think long term. Although I am not vested in these, but I have been reading up on stocks like The Trade Desk, Crowdstrike and Door Dash.

Trade Desk for one is profitable (even before the pandemic given its relatively short listing history) with high growth potential in the online advertising segment.

Here’s Why We Think Trade Desk (NASDAQ:TTD) Is Well Worth Watching (read here)

Door Dash has been overtaking Uber Eats in the US in terms of growth due to its focus on giving value to the restaurants. Its scale and the resulting economy of scale over its smaller competitors (eg. Uber Eats, Post Mates, Grubhub and Post mates) is worth noting.

Which company is winning the restaurant food delivery war? (read here)

CrowdStrike’s platform integrates machine learning and cloud computing, creating a product that effectively stops even the most sophisticated attacks. CrowdStrike and Microsoft are regarded as leaders in the endpoint protection market. While Microsoft is much larger and more profitable, CrowdStrike offers the benefit of being platform-agnostic. This means its software is not biased toward any particular operating system — it works equally well in Linux, macOS, and Windows environments.

Why CrowdStrike Now Matters More Than Ever (read here)

Performance wise, I like to view the Story fund from its time weighted return (TWR) performance (or that of the individual stock), which in this case I typically compared it to the S&P 500 ETF.

If I am to just look at the overall percentage gain of each stock, I might be affected by an anchoring bias. For example, my position in Pinduoduo is relatively small, but its stock price performance is exceptional. In fact it is a 2-bagger in my portfolio. Looking at the recent quarterly earnings I feel that fundamentally the business is intact and even performing better than expected, and perhaps I would like to add on to it (even after considering its stock value). However, by adding on to this position, the unrealised gain percentage will be lowered (no longer a 2-bagger). I am anchoring to the recent price and also the percentage stock price gain (or loss). Consequently, this short term mentality might affect my judgement.

However, if I am to consider how the potential of this stock/company might benefit the portfolio from the TWR angle, I believe long term, this stock / company has the potential to outperform the S&P500. In other words, I don’t want to be too much anchored mentally in the past purchase or sell prices. Then it might help me in making a better judgement.

So far, for the past 1 year period, the Story fund has managed to edge out the S&P 500 in terms of its time weighted performance, and outperformed the STI index.

“Investing is a game of skill – meaning inferior players can’t expect to be above average winners in the long run….But it also includes elements of chance – meaning skill won’t win out every time.” Howard Marks

Cryptocurrency

Like most people, I do feel a sense of FOMO (Fear of missing out) looking at the astronomical rise of bitcoin and ether’s prices.

The general thesis floated around now is to have a small portion of your portfolio in crypto to act as a form of diversification and to capture any potential upside. In the event of a crash, you just lose a small portion of your portfolio.

Frankly I did some reading up, created a Binance account and BlockFi account. I also read up on ways to earn passive income (more than 8%) via lending and staking crypto (Ether).

Again the key words here are “creating accounts”.

Crypto investing is still a wild wild west sector, and crypto-currency by itself have no intrinsic value (my personal view). I view this sector as speculation, and driven mainly by psychology.
Nevertheless the relative short history offers many learning points, and ironically the main buy point (at least for me) is the extreme volatility of the crypto price. I don’t really believe in the idea that crypto will act as a counter investment or low beta counterpart to stocks. It is this extreme volatility that makes patience critical, but at the same time, I definitely will not bet the house on it. It is also something, one must be prepared to write off. I am not sure if I will see the same volatility as what has happened to bitcoin price in 2017 again, but it is always possible.

It serves as an alternative to fiat currency investment nevertheless, but it is really hard to pin any intrinsic value to it. I also believe that there are still many (regulatory) hurdles infront of it, prior to widespread acceptance. Depends on how one sees it, it can be good or bad. Again, from a pure psychological point of view, the best time to buy is always the ‘hardest’ time (mentally) to buy.

In the foreseeable years, bitcoin and ether will not disappear, but the next crisis (be it financial, technical/hacking or regulatory) would present a good time.

In view of the actions by the Fed Reserves and the US government in the past recessions (2007-2008 Great Financial Crisis and the current Covid-19 pandemic), I do anticipate some form of loose monetary and fiscal policies again, in the next crisis. In fact, it has always been an uphill task to raise rates (looking at the past decade plus). Having said that every crisis is different, and deeper thought is needed for the resulting volatility (in relation to its context).

Tracking it, reading about it, but yet to pull the trigger.

In summary

I guess I was not really trying to make any point here, but rather to sort out my own thoughts and perhaps to strategize. By categorizing the different stocks into various segments, it does help in organising my thoughts and perhaps let me think on where I can allocate my funds better.



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Whether to have a Concentrated or Diversified Investment Portfolio

I just read Kyith’s recent post titled “Having Enough Humility in Investing & Managing Wealth” (read here).

In it, he mentioned about having a concentrated portfolio vs a diversified portfolio. Concentrating in our portfolio is safer if we have the investment sophistication to do deep research on investments well. The question is really if we have the investment sophistication to do deep research.

Recently someone reached out to me and asked me why I stopped posting articles about Sarine Technologies, and he was thankful for my previous blog posts pertaining to that company. He himself is heavily invested in Sarine Tech, but is currently having a big unrealised loss (to the tune that the amount is big enough to buy a car). He believes in doing deep research and having a concentrated stock portfolio.

The different stages

I know what I say would not change anyone’s thinking, and I am not trying to. I don’t claim to be an expert and I don’t think I am. Nevertheless, perhaps let me share my thoughts.

I think at different stage of our life we do think differently. Our thinking evolved over time, so to speak. Two key factors are in flux. One is your overall net worth and the other is the runway you have left to have a full time job and earn active income (without really a need to dig into your passive income / investments).

To quote Kyith:

“Your net worth is $50,000 and your annual savings from work is $25,000 a year. You can sink $50,000 into 2 stocks. If you lack sophistication and one of them blows up and left you with $30,000, it is not a catastrophe. In a year’s time, you have new capital coming in. You can learn from this experience and get better.

Now, let us say the same advice is given to someone with a net worth of $1 million. Her future capital injection is $150,000 a year but she is scheduled to stop work in 1 years time. If the same thing happens and her portfolio is left with $600,000, how would she feel? It is likely to affect her quite a fair bit.”

When we are in our 20s or 30s, with our limited budget, it does not appear that rewarding holding a basket of stocks (probably slow growers / late stage dividend stocks), earning 3% to 4% annual yield. Heck, even a mixture of growth and dividend stocks would pale in comparison when we think about the growth potential of a concentrated portfolio of a few super high growth speculative stocks.

At that time, we may have to worry about paying off our student loans, mortgages, childcare expenses, setting a sum aside for our parents’ allowances etc… a budget of say $10,000 will just yield $300 to $400 annually assuming a 3% or 4% dividend yield (divide by 12, that is only $25 per month), and assuming we have no capital losses. In addition, when our budget is small, it is really hard to buy individual stocks (heck, for some stocks, the min. lot costs more than $10,000). There might be a better chance in achieving a better result, if we aim for and focus our limited budget on fast growing (non dividend paying) growth / speculative stocks.

I totally get it.. I have been there, done that. When I first started investing, ETF or Index funds were not that prevalent. Back then, unit trusts were more common, and the fees was always a factor to note. And yes, it was not easy to buy individual stocks with my limited budget and the strategy of building a dividend income wasn’t that attractive when my invested amount is small.

On the other hand, when the budget is more than $500,000, with much less runway left, management of the portfolio or portfolio allocation becomes increasing important. And with more experience in investing, and after being through a number of market corrections and crashes, we may tend to be more defensive in our thinking. A small percentage drop to that amount would also mean a bigger absolute amount. After all, we may not have that many opportunities to make back what we have lost (unlike the younger you). However, suddenly that 3% to 4% annual dividend yield does not seem that little. A budget of say $500,000 will yield $15,000 to $20,000 annually assuming a 3% or 4% dividend yield (divide by 12, that is min. $1,250 per month),

To quote from the movie Pacific Rim: “There are things you can’t fight, acts of God. You see a hurricane coming, you have to get out of the way. But when you’re in a Jaeger, suddenly, you can fight the hurricane. You can win.”

On another note, eh yes, either you win big or lose big (if you have a concentrated portfolio).

At some point of time, I have very concentrated positions in some stocks. Some did well, and some didn’t. There was always no problem when things go my way. The issue arises, when the tide goes against me. Or how Kyith puts it (when having a concentrated portfolio)- if one blows up.

For me, the ones that did crashed spectacularly in my then concentrated portfolio are Golden Agri and Sarine Technologies. For the former, I can totally attribute it to the lack of experience in my younger years and listening to my parents (who are also not experts in stock investing). For the latter, at one time, Sarine Tech was a high flying growth stock – I did read up on it, but perhaps I was too complacent. Fundamentally, it was not a terrible stock, but the industry changed (and many other factors). By the way, the stock price run-up of Sarine Tech has been amazing in recent days and weeks.

All I can say is, luckily I wasn’t too concentrated in those 2, and I live to invest another day.

The stock market always have a way of humbling us.

“I’ll never put my life savings into a single investment that could go to the moon. But being a diversified investor means I’ll never put my family in the position of being completely wiped out by a single position.” Ben Carlson, portfolio manager at Ritholtz Wealth Management LLC (read here)

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I once heard someone mentioned that in history there is no ‘IF’. We can look back at history with 100% certainty. If only investing is that easy. The thing is, we all know that the stock market (and any individual stock) is forward looking. So, there is a BIG ‘IF” when we think about any stocks. It is always at the back of my mind.

Some people say stock investing is akin to ‘Informed Gambling”. No doubt there is always an element of luck (or lack of it) when it comes to stock investing – nothing is certain.

Doing Deep Research

I am sure many investors would agree that it is important to know what we own. We all read what Peter Lynch, Warren Buffett and Charlie Munger said.

However, I am sure many people do not really know much about the stocks (or the companies behind the stocks) they own. In many of the articles and books I read, in the surveys, many people highlighted that did not read the annual reports / quarterly reports of the companies they invested in (for various reasons – no time, not interested, don’t understand….). Many of us hold full time jobs and our jobs don’t entail doing research on companies. Investing is like a part time job for us.

So unless you are in the management team of the company you are invested in, or have spent many hours researching…. very few of us can say we have an edge.

More evidence that few read annual reports (read here)

We all know that Warren Buffett, in his early days, was heavily influenced by Benjamin Graham’s thoughts and methods of value investing – the so called ‘cigar butt’ investing. At that time, information was not readily available to the general public, and was probably only accessible to a few fund managers. Even then they have to request and wait for a copy of the annual report to be mailed to them. To read up on the financial data of a company would probably entail going through stacks of the Moody’s manuals in the library. Yes that was the Warren Buffett and Peter Lynch’s era.

At that time, it was possible for them to have an ‘information’ edge if they put in the effort.

Over the past 2 to 3 decades, with the rise of the internet, information is readily available. Perhaps too much information. We are constantly faced with an onslaught of information. We can now screen though the long list of publicly listed companies via a few clicks of the mouse. We can set the parameters for companies with the best track records, best balance sheets, etc…. and viola, shortlisted stocks / companies will appear on the screen.

So much so that having an edge (in readily available information) is starting to become a myth. In terms of financial data, finding hidden good companies is not that difficult (unlike in the 70s to 90s).

Then there is another school of thought highlighted by Monish Prabai. Doing deep stock research could adversely influence our thought processes, and yes impact our financial health. We are all prone to mental biases unconsciously. When we spend too much time reading and thinking about any particular company, it kinds of get drummed into our mind (like how worshippers kept reciting phrases in the Bible or the Quran), and blinds us from the flaws. And the worst part is – we may not be aware of it.

Doing deep research will not move stock prices. However, it can prevent us from making rash moves or uninformed decisions. Or as mentioned by Monish Prabai, it can adversely influence us.

Knowing the numbers will not make me an Alpha investor, but it can minimise downside risks. At least I know I am not investing in a fundamentally bad company. However, I also know I cannot influence the narratives, the future and there is always a BIG ‘IF’. What if the narrative change; what if the whole economy changed. Before 2020, very few would have imagined the impact of Covid-19… well I didn’t imagine the extend of the impact would be as it is. However, there is always a possibility.

Having said that, on the other hand, it also does not mean that one should not do any research at all prior to investing or just blindly entrusting his/her hard earned money to others to invest (or how Kyith puts it – having too much humility). We still need to do our due diligence.

Without taking the effort to be informed, it is not even “Informed gambling”, it is just gambling.

In gist, ask ourselves if we have read the financial data, annual reports or quarterly reports of the companies prior to investing or was it based on some random YouTube or Tik Tok videos talking about the quick rise in its stock prices.

What is your Edge?

Many times, I have to remind myself that psychology plays a big part in investing. I have to be mindful of anchoring bias, endowment effects, fast vs slow thoughts (2nd level of thinking) etc.

As mentioned by Peter Lynch, the stock does not know that you own it and neither does it care. As small time passive retail investors, we don’t influence the stock prices. Beyond the IPO stage, movements in stock prices don’t really influence the company performance as much, unless the company is seeking to raise capital via issuance of equity, etc. We are price takers, not price movers. We are not big time activist investors like Carl Icahn or Bill Ackman, who holds key or majority stakes in the companies.

When I read about how some long time investors mentioned the reasons they invested in Tesla was to support Elon Musk .. I was scratching my head and trying to comprehend how is it so. Perhaps their stake (shareholdings) is really very very big (or well, at least they are not shorting the stock).

For myself, the question will always be what edge can I offer here, prior to investing? Since investing is technically a zero sum game. What makes me think I have an edge over people who are selling when I am buying (and vice versa). After all, I read the same news as you guys (maybe some from different sources), and at about the same time.

For me, I can humbly say that I do not have much technical edge, and I cannot influence stock prices. However, there are general principles which will always be important… the importance of thinking unbiasedly and considering a wide range of information. So yes reading broadly and from different points of views is important. To not just act on impulse and slow down to consider. Perhaps I may be able to see things from a different angle while reading more. Lastly execute if odds are in my favour, but acknowledge that I can still be wrong.

Or to put it in another way, think of how Peter Lynch / Howard Marks would put it… People study many years and then practise many years to become a professional in their job eg. a doctor, a lawyer, etc. However, many people think that they can become professional stock investors (or fund managers) in a very short time without putting in much time and effort. They can somehow pick a few stocks and these will just be multi-baggers after a while. Yes, Warren Buffett and Charlie Munger advocates holding concentrated portfolios, but how many of us can really say we are on par with them?

More often than now, I will have to wait for the market to instruct me on my next move.

Howard Marks likes to view investing as playing with odds. Yes, there is no certainty in investing. However, at times, the odds are in our favours (and at other times, they are not). Even if the odds are in our favour, we may not always win (and vice versa). We can be so right in the odds, but still fail eg. end up picking up a red ball from a bag with more black balls than red balls.

There is really no right or wrong. Even if I made 5 or 6 times my investment, there will always be ‘what’s next’. Will my investment thesis be always the same (provided that I have one to start with in the first place)? Will I be lucky every time?

We can really spend a lot of time thinking about what will move stock prices and the stock market in general. However, often it is beyond our comprehension.

I came across the concept of the Keynesian Beauty Contest, and how the stock market is like it. Short term price volatilities can be attributed to the assumption of what most investors think others are doing. Headache……!

Keynes’s ‘beauty contest’ (read here)

To quote the above article: “Instead, Keynes thought that professional money managers were playing an intricate guessing game. He likened it to a common newspaper game “in which the competitors have to pick out the six prettiest faces from 100 photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole: so that each competitor has to pick, not those faces that he himself finds prettiest, but those that he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view . . . We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth, and higher degrees.”

Is the Stock Market Really Just a Beauty Contest? (read here)

The influence of online (Social) Media

In the past, the media (or in general, news) was more straight-forward. We have the major sources of news from major news vendor. Most people get their daily dose of news from the mainstream TV network or hardcopy newspapers.

However, these days, we consume information from many sources. And we fear fake news.

The rise of social media in the past few decades has been unprecedented. In the video above, Joseph Carlson, mentioned that there are increasing videos in Tik Tok from people stating how easy it is to make money in the stock market (without much details), with one stating how she made $4,000 from $1 via trading.

Many of these videos are from unqualified influencers advocating being concentrated in speculative stocks to reach specular results, and these are watched by millions… and we can be sure that out of these millions, some of the people who have watched these videos will be influenced by them (and act on these ideas).

People like to search for Get Rich Quick videos or articles. After all, it is not as sexy as building wealth via the slow painful way of investing in diversified stock portfolio of fundamentally strong companies.

After all, we have countless examples of the so called people with ‘dumb money’ becoming instant millionaires. Who is anyone to say they are wrong?

In addition, when we think about the social media, there are always algorithms that direct more of similar content to users based on what they have searched for (or have watched before). In short, the media on the internet gives us what we want to consume. We are now the products.

In summary

I don’t think I am in any position to say if anyone’s method is right or wrong. However, I would need to think if their strategy suit me currently and I would think twice before acting on what I have watched or read on the internet.

If we intend to have a concentrated stock portfolio, we need to really ask ourselves if we had done our due diligence in doing deep research, considering all unbias factors and if we indeed have an edge.

Also, if we are ready for the risks involved.

Otherwise, it be be a better strategy to have a more diversified portfolio made of fundamentally strong companies. Or having different asset classes.

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