My Story Fund Stock Portfolio

My portfolio is more skewed towards dividend stocks. I guess it is because I enjoy the process of slowly building up a stream of passive dividend income. Over time it gives me great satisfaction in seeing the cost yield + dividend income + portfolio size slowing building up.

However, having said that, I feel that I would be missing out if I just focus on dividend income stocks (typically mature slow-growing companies). If there is anything that the pandemic has taught me, it is that the world is constantly changing, and new technologies and businesses are ever-evolving.

Hence, I would also occasionally add some capital into my Story Fund portfolio. Basically a basket of stocks which does not necessarily gives me dividend income, but which I feel has more growth potential. Not all are fast growing companies. Some I would consider as mature mega tech companies, while others have businesses which are affected by the pandemic or regulatory policies.

The downside to adding growth stocks is that it will lower the overall yield of the portfolio.

So far the 3 yr TWR (Total-weighted Returns) of this Story Fund portfolio has been above the S&P500 ETF. See below.

The key metric I look at when reviewing the growth stocks is revenue growth. Yes, balance sheet, income statement, valuations are important, but the over-riding metrics will still be revenue growth and the growth narratives.

My small Story Fund portfolio now has 5 stocks. See below.

See below for their recent quarter revenue performance.

1) Pinduoduo Inc. (PDD)

Pinduoduo Inc., through its subsidiaries, operates an e-commerce platform in China. It operates Pinduoduo, a mobile platform that offers a range of products.

It has a market cap of USD149.39B.

Its 3 year CAGR for revenue is an impressive 189.63%!

For the 4^th Quarter 2020, its total revenues in the quarter showed an increase of 146% from the same quarter of 2019.

2) Alphabet Inc. (GOOG)

Alphabet Inc. provides online advertising services, and offers performance and brand advertising services. It operates through Google Services, Google Cloud, and Other Bets segments.

This is a mega tech (Market Cap of USD 1.7T). Nevertheless, its growth is still good. See below for the annual revenue chart. The 5 year CAGR of the total revenue, gross profit and EBITDA averages around 19.5%, 16% and 17.5%.

For the 1^st quarter 2021, its total revenue jumped nearly 46 percent from the same period last year.

Digital advertising is one of the strongest secular growth trends today, and Google is one of the primary beneficiaries of this transformational shift towards digital ads due to its monopolistic dominance in the “Search” and “Ads” markets across the globe, combined with ownership of great assets such as YouTube.

However, the US Mega techs – Facebook, Apple, Alphabet, and Amazon.com all face state and federal regulatory, legislative, and legal issues in the U.S. and around the world. In spite of this, in the long term, I believe Alphabet stock will be a long term holding.

And seriously… it’s Google!

3) Alibaba Group Holding Limited (9988.HK)

Alibaba Group Holding Limited, through its subsidiaries, provides online and mobile commerce businesses in China and internationally. It operates through four segments: Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others.

Another mega tech (Market Cap of USD 603.407B), and likewise, its growth is amazing (for its size). See below for the annual revenue chart. The 5 year CAGR of the total revenue, gross profit averages around 50% and 33%.

For the quarter ended March 31, 2021, its total Excluding the consolidation of Sun Art, the revenue would have grown 40% year-over-year.

The stock price of this e-commerce titan is down over 30% from peak levels, having been walloped by regulatory investigations in the U.S. and China. Nevertheless, I see this as an opportunity (similar to Charlie Munger).

4) The Trade Desk, Inc. (TTD)

It is a recent addition to my portfolio.

The Trade Desk, Inc. operates as a technology company in the United States and internationally. The company operates a self-service cloud-based platform that allows buyers to create, manage, and optimize data-driven digital advertising campaigns in various ad formats and channels, including display, video, audio, in-app, native and social, and on various devices, such as computers, mobile devices, and connected TV.

It has a market cap of USD36.482B. Another fast growth company. The 5 year CAGR of the total revenue, gross profit and EBITDA averages around 49%, 49% and 33%.

For the 1st Quarter 2021, its total revenues in the quarter showed an increase of 37% from the same quarter of 2020.

I personally like the business model of TTD. I like to think of as blending a business of selling advertisement with a trading platform – literally combining two very lucrative businesses together. In addition with the shift towards apps, mobile devices and connected TV, I do believe it is huge potential moving forward, while the greater adoption of connected TV especially.

TradeDesk operates a self-service cloud-based advertising platform where ad buyers can manage, create and optimize data-driven digital advertising campaigns across different advertising formats and channels.

TTD generates revenues by charging its clients a platform fee that is based on a percentage of the client’s total advertising spend. The company also earns revenues through providing data and other valued-added services (VAS) and platform features.

5) Mastercard Incorporated (MA)

Mastercard Incorporated, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally.

Compared to the others, its growth is not as stellar and in 2020 / 2021, its growth has been impacted by the pandemic induced lockdowns (and the numbers show).

The coronavirus hit the company hard last year. Businesses cut spending and consumers spent more time at home, causing point-of-sale transaction volume to fall 4.4% worldwide in 2020.

Even worse, the reduction in international travel led to a sharp decline in cross-border payments. That’s particularly noteworthy because cross-border fees accounted for 22% of Mastercard’s gross revenue in 2019. Collectively, pandemic-driven headwinds caused Mastercard’s top line to drop 9% last year.

However, consumer spending is set to surge now that the pandemic appears to be ending and life is normalizing. I foresee better days ahead. In fact, I also consider it as an ‘re-opening / recovery’ play.

It has a market cap of USD 371.672B. The 5 year CAGR of the total revenue, gross profit and EBITDA averages around only 11%, 11% and 10%.

For the 1st Quarter 2021, its total revenues in the quarter showed an increase of 4% from the same quarter of 2020.

In gist

The stock performance of these stocks are more volatile compared to my dividend income stocks. Nevertheless, I do believe in the long run, it would be worth the while to also have some of my assets in growth stocks.

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