Friday, July 20, 2018

Q2 2018 Portfolio Update

Time flies. I didn't even realize that Q2 2018 is over; I must have been too engrossed with reading, prospecting stocks, and gaming lately. =P

Dividend Income


Q2 2018 SGD Dividend Income

Dividends received from my SGD-denominated portfolio in Q2 2018 fell, when compared to the same quarter last year. This could be attributed to weaker performance from my less-fundamentally strong yield stocks and plenty of divestments I have made in earlier periods.

In retrospect, it seemed like a good decision to take profits when people were starting to bid up the price of yield stocks, including the weaker ones. It made me realize that when a decision has to be made between two "fairly comparable" counters, I would be more inclined to take the lower yielding one. The higher yielding one, based on what I have experienced thus far, tends to disappoint. The slight increase in yield is ephemeral. The juice may not be worth the squeeze.

Q2 2018 USD Dividend Income

Q2 2018 dividend income from my USD-denominated portfolio broke the record for all-time high! In absolute dollars-terms, it is still pretty meh (look at the y-axis). The increase is mainly due to capital injections last year, which has finally taken effect now. As my positions are still minuscule, I can't really discern the "dividend growth" in my supposedly "dividend growth USD-denominated portfolio."

Transactions
In this quarter, I scaled in further into Thai Beverage when the price dropped to a level which I have previously determined that I will scale in to. This is part of my risk management strategy where I position size my counters in such a way that, even after scaling in, that particular counter would not take up an inordinate amount of weight in my overall net worth. As it is, said risk management strategy is still provisional and I am still tweaking it as I go along. Since then, the price of Thai Beverage has fallen even further, but it has yet to hit my second scale-in price, so I am not going to do anything about it. The same goes for Singtel which has seen its share price beaten down recently.

I did quite a bit of pruning on my equity positions this quarter. I divested my entire stakes in Starhill Global REIT, Neratel, and Kingsmen Creatives. Starhill Global REIT's performance has been average thus far and the funds could be better allocated elsewhere. After including dividends and taking into account transaction costs, I made a small loss in Starhill Global REIT.

After the sale of its payment solutions business to Ingenico Group, I actually had no reason to hold Neratel for its dividends anymore. Still, I engaged in mental gymnastics, telling myself that ooonnneeee day, I will go and read up and familiarize myself with its other businesses. Well, I don't think that day will come and, besides, my limited mental energy could be better spent on analyzing areas that I am more familiar with that has more ROI. It's not just capital allocation only; as a white-collar worker, what mental energy remains after office hours needs to be strongly guarded and judiciously allocated towards appropriate channels.

I digress. Anyway, I sold my Neratel at a loss. On the first day, only 100 shares were filled. On the second day, all except the remaining 100 shares were filled. On the third day, the remaining 100 shares were filled. For those who are into illiquid shares, stuff like this may happen, so be prepared.

I divested Kingsmen Creatives at a loss for the following reasons: (a) they have been under-performing, (2) I need to exert even more effort to read up on their businesses (when that effort could be better spent elsewhere), and (3) the funds could be better spent elsewhere.

In this quarter, I averaged up my position in Parkway Life REIT when its price corrected from its recent high. Post-purchase, my position size in Parkway Life REIT is still kept at manageable levels.

Let me digress once more. There is this tendency to view healthcare-related counters as defensive. In our local context, this adage seems to hold true for counters such as Parkway Life REIT and First REIT. However, my experience with US healthcare REITs are a different story altogether. A couple of months back, the US healthcare REITs sector was hit by a triple whammy of rising interest rates, change in healthcare policies regarding long-term care payment, and the flu epidemic. US healthcare REITs that predominantly served the long-term care population were hit the hardest as fewer people wanted to stay in nursing homes and people who were staying in nursing homes wanted to get out owing to the increased probability of flu spreading from one patient to the next in close proximity.

SG-listed healthcare REITs are a bit........too peaceful? I admit that they are doing good, but my risk management system demands that I do not fall in love in them. Curve balls do come; it is not a matter of if but of when. Hence, they should not be granted exceptions in matters pertaining to position sizing.

I initiated a new position in Mapletree Commercial Trust when the price corrected in this quarter. It is a small position which I intend to build upon further during the next rights issue.

Finally, I added to gold and silver multiple times during this quarter. I wasted money on a graded gold coin I have been eyeing for a long time (there goes a chunk of my bonus.......) and a 2nd hand antique silver bar that was up for sale a couple of days ago.

Portfolio Overview and Capital Allocation thoughts
Both my SGD-denominated and my USD-denominated are in the green with small pockets of red from counters like Singtel, Thai Beverage, and QAF which has gone to the gutters.

My equity allocation still consists predominantly of REITs, reflecting my preference for an income-oriented strategy. It is complemented with property developers, consumer staples and healthcare stocks and a catch-all "others" category. The following lists are not arranged in position size.

REITs/Business Trusts:
AIMSAMP REIT, Frasers Centrepoint Trust, First REIT, Lippo Malls, Accordia Golf Trust, Parkway Life REIT, SPH REIT, Mapletree Industrial Trust, Mapletree Commercial Trust, Capitaland Mall Trust, Frasers Commercial Trust, Welltower REIT

Property Developers:
Hongkong Land, Frasers Property

Consumer Staples:
Dairy Farm, Sheng Siong, Thai Beverage, Yeo Hiap Seng, QAF, Kimberly Clark, JM Smucker, Hormel Foods, General Mills

Healthcare:
Raffles Medical Group, Abbott Laboratories, ISEC

Others:
Japan Foods Holding, ST Engineering, SGX, Singtel, SATS

I have the intention of transforming my equity allocation into a 5-sector portfolio consisting of REITs, consumer staples, healthcare, utilities, and a catch-all others category. As the US consumer staples and utilities sector rebounded lately, I've totally missed out on the action. If you are wondering, the valuation was just merely "fair"; it was not a screaming buy or anything like that.

I foresee the names in the above lists to shrink even further. Some of them have been found wanting for having a poor record.

There are some questionable names in the above lists as well. As I've managed to catch them at their lows, collect multiple rounds of dividends, and take partial profits when they went up, I am quite comfortable holding on to them still, even though their fundamentals are.......questionable. In the event of a rights issue for these questionable cases, I've already planned to either sell off the rights or to subscribe to my allotted rights. For such cases, excess rights are not for me!

In the interim, I am prospecting stocks. From a financials perspective, my Singapore and US watch list has, more or less, been firmed up. The next step is to dig deeper into their annual reports and familiarize myself with their business prospects.

Net worth breakdown
Compared to the previous quarter, there has been some changes to my net worth breakdown. Equity allocation decreased from ~39% to ~34% while cash increased from ~36% to ~40%. Precious metals increased slightly from ~24% to ~25%.

Net Worth Breakdown

As per before, "the pie chart depicts the breakdown in my net worth across the various asset classes in percentage (pie chart neither includes my CPF nor my emergency fund). To be conservative, I computed my precious metals allocation at spot price even though I am holding everything in physicals."

CAPEX
After falling sick quite often and experiencing some form of burnt-out, I dropped out of my 3rd specialist diploma halfway (as detailed in my Q1 2018 post). Since then, I have been enjoying my free time first by casual reading, followed by prospecting stocks, and then by gaming.

Now that I am much more refreshed, it is time to engage in some personal CAPEX again. I have identified University of London's Graduate Diploma in Data Science (by distance learning) as my next education target and will be applying for it soon. The fees are quite economical (SGD $3800 for the entire programme) and the programme is rigorous, so that's good.

I signed up as a NTUC member last year in order to make use of the Union Training Assistance Programme (UTAP). Members enjoy course fee support for up to $250 each year when you sign up for courses supported under UTAP. Well, half of 2018 has gone by and I've yet to make use of UTAP. I've identified a few courses and will be applying and going for them shortly.

There will be some law certification programme that will be held at my workplace. I know it has no link with my current job scope but I went ahead anyway asking my bosses for their blessings. I wanted to acquire practical skills that could help me to be a better investor, but it was not meant to be in this calendar year. After all, they will be sending me to a tech course before the close of this calendar year.

Health
The above is not possible without sustained good health. The results from my annual health checkup concluded that my health is okay, with needed improvements in my total cholesterol levels and LDL cholesterol ("bad cholesterol") levels. I realized that I have been consuming more meat in my diet to cope with stress. I will be more conscious of my reaction to stressors from now on and to incorporate more exercise to my life.

Emergency Fund
I intend to add more to our shared emergency fund. In fact, I topped up our emergency fund with a portion of my bonus. I find that increasing the absolute value of our emergency fund gives me a greater peace of mind, especially in uncertain economic times. Unfortunately, my desktop computer of 9 years died last weekend and my mum wanted to use our emergency fund to fund the new purchase (I know buying a new computer does not constitute an emergency! lol)

Gaming
Some people have been curious with what games have I been playing recently. I normally play games by independent developers (e.g. "indie games") as they have more varied premises, with varied meaning downright weird or interesting depending on how you look at it.

As my words will not do them any justice, I shall let the following youtube videos to do the talking:

Enter the Gungeon


Thumper


Enough with gaming for now. Time to ramp-up my personal development.

RAMP-UP! LIKE A RAMP-UP WAREHOUSE!

(Lol, I created my own tagline liao. Gotten the inspiration from Dividend Warrior's "Power of CD-XD" and Dividend Knight's "Wun wun jiak bee hoon" XD)

11 comments:

  1. Hi UN

    I actually thought kingsmen is on a potentially back to growth story with their nerp which is likely to materialise in the next few years, it’s something which is in my radar back again.

    Other than that, all looks good for you and congrats on the good q2 dividend income.

    ReplyDelete
    Replies
    1. Hi B,

      Thanks for sharing your thoughts on Kingsmen. Back then, I initiated my position in Kingsmen due to its financials, with minimal knowledge regarding the industry it is in.

      I divested my position as it requires comparatively more energy to research an industry that I am relatively less familiar with than industries that I am more familiar with. I am trying to go in-depth to a select few sectors without spreading my wings too far.

      Thanks for the heads-up man! :)

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  2. Hi unN

    Your portfolio is extremely diversified and has many counters! I am impressed considering that you even spent time to analyse them!

    Why not consider buying a low cost ETF or some high performing managed fund to take off some heat of your portfolio? Or are some of these short term trading plays?

    ReplyDelete
    Replies
    1. Hi INTJ,

      Really? Thought I have too many REITs (might be pruning some of the under-performing ones soon though). The time spent on analysis is a function of the particular counter's fundamentals, my knowledge of the sector the particular counter is in, the confidence I have in that counter, and my position size. So, for some counters, I might have minimal knowledge in them except for their financials (which have come back to bite me). I am in the process of refining said strategy to reduce my workload.

      Yes, I have thought of using sector ETFs before and I am still reading up on them. Quite a few of those counters in the above lists will be long-term holdings.

      So far so good, I am having fun thinking and tweaking my portfolio management. :)

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  3. Your portfolio is solid and diversified!

    ReplyDelete
  4. "small pockets of red from counters like Singtel, Thai Beverage, and QAF which has gone to the gutters."

    I can totally feel your pain >.<"

    ReplyDelete
    Replies
    1. >.<

      So how? Wanna join me in Enter the Gungeon and Thumper? Kekeke

      More fun than Monster Hunter World! XD

      Delete
    2. Haha. It has been a few weeks since I played MHW already. I was wondering what games you are playing at the start of the article until you revealed it in the end.

      PC games a bit difficult on my laptop. Playing mostly mobile games.

      Delete
  5. Ooh, where do you buy precious metals from and how's the buy-sell spread?
    I am considering allotting a part of portfolio to precious metals too but just concerned with the liquidity should I need to mobilize some cash from them.

    ReplyDelete
    Replies
    1. I normally buy from either Bullionstar or GoldSilverCentral.

      Hmmm....if you are concerned about liquidity, have you considered Gold ETFs?

      I have never tried to cash out on my physical gold and silver, but based on what I have heard on the ground, physical silver is quite illiquid. At least for physical gold, pawn shops are much more willing to take it off your hands.

      You might also want to consider the premium paid for the various denominations. (e.g. smaller coins/bars have a larger premium since it cost the mint higher fabrication cost compared to larger coins/bars).

      Eh? Email me if you want to hear more. Certain things cannot say publicly one, lol.

      Delete