My neglected portfolio, the Story Fund

My Portfolio

I have a mixture of growth stocks, dividend stocks, REITs, and SSBs in my portfolio (not counting my CPF, T-Bills, cash, insurance, property, etc).

As mentioned here, my portfolio basically consists of a Dividend Portfolio and a Story Fund. The Dividend portfolio consists of 2 parts: the Singapore Portfolio and the Hong Kong Portfolio. The Story Fund consists of US and Hong Kong-listed growth stocks. The stocks within each portfolio might have changed much.

To be frank, in recent years, I have been actively investing and adding to my dividend portfolio, and building up my war chest via the Singapore Saving bonds (and cash). Currently, the dividend portfolio occupies approximately 77.1% of my portfolio value. While the Story Fund portfolio on the other hand only occupies 18.1% of the total value. So yeah, in a way, the Story Fund was kind of neglected.

The Story Fund

Initially, I wanted to create this barbell portfolio consisting of both growth stocks, to capture the future growth and dividend portfolio for cash flow. I got the inspiration for the name ‘Story Fund’ from the financial YouTuber Joseph Carlson.

My Story Fund Stock Portfolio (read here)

It is a relatively small portfolio consisting of both US-listed and HK-listed growth stocks ie. Alphabet, Mastercard, The Trade Desk, Tencent, Pinduoduo, Baidu and Meituan. I got the Meituan stocks as a payout from Tencent.

The performance of these stocks has been rather erratic.

The US-listed stocks clearly are the outperformers here, where I more than 2x my original vested amount with Alphabet stocks. I also have unrealized gains from Mastercard and The Trade Desk.
I divested my Alibaba stocks in around mid-2022 at a loss and used the liquidated amount to invest in Tencent. Currently, my investment in Tencent is at a slight loss (less than 10%).

Among the ‘Chinese growth stocks’, the outlier is Pinduoduo (PDD), which is in positive territory (unrealized gains) due to its impressive earnings. FYI, PDD is listed in the US Market, not in Hang Seng.

The negativity associated with geo-political risks, lackluster property and economic growth in China, and restrictions imposed by the US on China on AI chips seem to have little effect on PDD. Investors appear to focus more on the optimism of the profit growth generated by Temu. In fact, I was rather surprised by its strong stock price performance, it appears to be at odds with the general gloomy outlook. Nevertheless, PDD P/E is only at 20.31 despite its 93% rise in annual profit. I can only imagine what its stock price chart would be like without the macro pessimism.

As per the below chart, the Time Weight Returns (TWR) of my Story Fund portfolio have underperformed the S&P 500’s TWR. I reckon it is due to the HK-listed growth stocks in that portfolio. They are like weights tied to the ankles.

These days, my focus has been more on income cash flow (i.e from dividends primarily and also from premiums via selling options of growth stocks). I guess, as I slowly inch towards the retirement age, my mindset is more on how to replace my active income when I eventually stop working.

Article from Oaktree

I came across this article by Oaktree dated 28 March 2024, which I find rather insightful. Please see below.

The Roundup: Top Takeaways from Oaktree’s Quarterly Letters – March 2024 Edition (read here)

I find section 6 of the article titled “Emerging Markets Equities: Piling On” rather interesting (highlighted portion by me).

I extrapolated the iShare U.S Technology ETF chart and the Hang Seng Tech Index ETF. Currently, the iShare U.S Technology ETF has a P/E (TTM) of 40.59 while the ishare Hang Seng Tech Index ETF has a P/E (TTM) of only 17.14.

As I was looking at the chart and reading the article, my personal feeling is that Chinese growth stocks are just punished despite their improving fundamentals. Perhaps in addition, to the risks mentioned earlier, there is also a certain opaqueness when it comes to Chinese Stocks. As investors, we are always concerned about accountability (esp. when things go south).

The rise of Pinduoduo and Temu: profits and secrets | FT Film (Watch here)

There was a time when Chinese stocks were all the buzz and their prices tracked the rise and fall of their US counterparts (before 2021). These days, the buzz has died down, replaced by the silence of untold losses.

What is measured gets done

As per my earlier post, I have been doing some option selling, and I do see the benefit of doing that while waiting for the Chinese growth stocks to eventually play catch up with their US counterparts. It could be years…

Tracking my Passive Income (read here)

While the annual cash flows of Alphabet, Mastercard, and The Trade Desk (the latter two in particular) have improved in recent years, PDD, Tencent, Baidu, and Meituan’s annual cash flows have also improved. Stock prices did not keep up.

I decided to do a quick stocktake of my past investment moves in my Story Fund portfolio against the above-mentioned charts.

Looking at it, I realized that I made a few purchases of US growth stocks in late 2022, and did not make any US growth stock purchases in 2023, while the US Tech sector prices marched up. After 2021, I have been adding more to my HK growth stocks although I divested from Alibaba and replaced it with Tencent in around mid-2022.

I only made a couple of purchases of HK growth stocks in 2023.

Recently, I sold a put option on Tencent stocks, and the price went below the strike price. I reckon the option should be exercised soon and I will be allocated the Tencent shares.

A small step onwards.

Thank you for reading.

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