Portfolio Update (Nov 2018): Rise of the phoenix

After the dreading market sell-off in October, my portfolio jumped and returned about 11% in November alone, rising like a phoenix after getting burned. It was quite an emotional roller coaster seeing my portfolio value going up and down by more than C$3,000 within 2 months.

 Now the portfolio gain is OVER C$16,000!!!

Now the portfolio gain is OVER C$16,000!!!

In past articles, I only compared my portfolio with S&P500 but I will add Nikkei 225 and S&P/TSX60 as benchmark from now on. I figured it may provide a better insight since I invest in American, Japanese and Canadian stocks. You can see that my portfolio (Blue) is still beating all three benchmarks (US: Green, Japan: Purple, Canada: Orange).

Nov 18 vs SPX and Nikkei and TSX.png

There were some notable changes in the portfolio.

  1. Call options on CVS (NYSE: CVS)

    Since the call option on CVS was going to expire in January, I was looking for a good time to close the positions before the expiry. Thinking that the stock may have approached a near-time psychological top (No data to backup, my pure instinct), I made the move when the stock price hit near $81.

    I purchased two call options when the stock price was near $72. I ended up realizing about U$750 gain from about U$2,000 investment (The figures may be a bit off, I’m writing this off top of my head). Not bad but it’s an ok result considering the amount of risk I took It could’ve expired with 0 value (thus U$2,000 loss) depending on the price movement. I probably should stick to regular stock purchase or shorting put options… I’d have to say I got a bit greedy in this trade and somewhat speculated (i.e. a gamble).

    As I wrote in my valuation article, I believe it’s a good stock to own as a long-term investment. I will go into a long position again if we face another market sell-off.

  2. Garrett Motion Inc. (NYSE: GTX)

    As I wrote in my another valuation article, I believe Garrett stock is a great investment at price below $14. When the stock price dropped to near $13, I shorted put options with the strike price of $12.5 and December expiration.

    Netting the premium of the put options, my average effective purchase price of the stock became about $11.5. The stock is now also trading at $11.5 so I’m pretty much at break-even now. I’m looking into averaging down if the stock price drops further. If my investment thesis is correct, the stock could double or triple within 5 years or so. IT’S ALL OR NOTHING! (Just kidding, my portfolio is decently diversified for the moment).

  3. Bear Put Spread on S&P 500

    To hedge against a potential market meltdown, I entered into a short-term bear put spread position (Long put at 2,600, Short put at 2,400, February expiry). If the market keeps going up in future, I may add more positions with longer maturity.

    For those who don’t know what bear put spread is, I may write an article on it later.

Are you curious how my portfolio may perform in long-term? SUBSCRIPE AND STAY TUNED!!!!!!!

Portfolio Update (October 2018): I got burned!

October was certainly a toughest month of my portfolio. The whole market seemed to experience the pain.

 Except from a Moneywatch article

Except from a Moneywatch article

 Except from a Moneywatch article

Except from a Moneywatch article

As the market dropped, my portfolio also took the hit as seen below.

 My portfolio return since inception (blue) vs S&P500 (green)

My portfolio return since inception (blue) vs S&P500 (green)

Although it was still quite painful seeing my portfolio decrease in $1000’s of value in one day or two, I shouldn’t care about such short-term drop as a long-term focused value investor. As long as the underlying business is solid, the individual stocks should perform well in the long-term.

Fortunately, there were some positive development in the underlying businesses of the stocks that I own. I believe these companies can survive and thrive in future even if we face an economic downturn in near future.

1. Gran Colombia Gold (GCM: TSX)

Gran Colombia Gold has grown its trailing 12-month production volume by 23% from 2017 and improved its credit rating. The increased production will increase their cash flow and the improved credit rating should decrease their borrowing cost in future if they need to raise more capital for mining expansion projects in future.

Even if the economy collapsed, the company should do well as long as the gold price holds the current level. If the gold price increases, that’s a bonus.

2. Willplus Holdings (3538: TSE)

Willplus owns and runs multiple car dealerships in Japan. The company announced that it acquired a Porche dealer in the beginning of October. The company has a stringent criteria in choosing its acquisition and has a great track record of improving the performance of the acquired dealers. The acquisition should add more fuel to the company’s growth.

If there is an economic downturn, the company can buy more troubled dealerships at bargain price, turn them profitable and enjoy the accelerated growth during the economic recovery. This is how the company grew rapidly since the financial crisis and I believe the same strategy should work in the next upcoming crisis.

3. Royal Bank of Canada (RY: TSX)

There was another 0.25% BoC rate hike near the end of October. If RBC can successfully increase its net interest margin and the residential mortgage remains stable, it should help them increase its earnings from the retail banking sector.

I may need more research on this topic but based on my understanding, the bank’s capital market division should be able to benefit from the recent volatility of the market. If I remember correctly, the capital market division includes a trade function and the volatile market condition somehow helps them make profit (I suppose they do something like swing trade?).

I somewhat fear that the profit from wealth management division may somewhat decrease as the recent drop in the market may spooked some of investors and may have decreased the volume of the division’s asset under management, which decreases the fee income. I’ll need to watch out for the number in the Q4 earnings release.

RBC’s CET1 Ratio, a ratio which shows the level of the equity buffer again the amount of the bank’s risk-weighted asset, is 10.9% as of 2018Q2, which is more than double of the current minimum regulatory hurdle of 4.5%. The bank should have enough buffer to survive during an economic downturn (unless they found loop holes or tricks to lower the risk-weighted asset…).

Keep following my blog to see if how these companies will do in the long-term! Subscribe and stay tuned!

Portfolio Update: September 2018

To be honest, 2018 has been a tough year for my portfolio. Since the portfolio reached its high in January, the return hasn’t recovered. However, I shouldn’t complain much I still hold about $15,000 gain and the return has still been higher than the S&P500.

Sep 2018.png
 My portfolio return vs S&P500.

My portfolio return vs S&P500.

While my portfolio still beats the market, the gap has been narrowing since January.

 Portfolio Position Summary

Portfolio Position Summary

What’s interesting is that while Japanese stocks have been performing quite well (from 80% - 200% gain), the returns of Canadian stocks have been somewhat mediocre. I wonder if this could be because I have a competitive edge analyzing Japanese stocks or I simply bought the stocks at a good timing. I suppose time will tell as the timing of purchase will matter a lot less in the long-term.

Interested in the future development of my portfolio? Subscribe to my blog and stay tuned!!

Portfolio Update: November 2017 ($14,000 gain!)

In the last update, I noted that I hit $10,000 mark in my profit and I was quite content. Well, I stand corrected. My portfolio somehow managed to hit $14,000 gain this month and I actually want more of it. 

Nov 2017.png
 My portfolio vs S&P 500

My portfolio vs S&P 500

Let me briefly introduce some of new additions to my portfolio. As this is not a valuation article, I'm writing this off the top of my head. Please bear with me if I get some of the facts wrong.

  • Royal Bank of Canada (RY: Toronto Stock Exchange)

RBC is the largest bank in Canada. The bank offers a wide range of services including retail banking, wealth management, insurance, etc. The bank has recently been added to a list of 30 of the world's most systemically important banks.

I added the RBC stock to my portfolio due to several factors:

  1. Cheap valuation & profitable operation [Example: P/E < 15 & ROE > 15] 
  2. The stock price was somewhat near its 52-week low at the time of the purchase
  3. Anticipated improvement on interest margin following the expected rate hikes
  4. The technologies the bank is investing in to cut the operation cost in the long-term [Example: block chain, robo-adviser, artificial intelligence]
  5. The expected growth in the fee business in the U.S. market [Example: the recent expansion of the wealth management team in the U.S.]
  6. It is the only bank I use personally in Canada. If the bank tries improving its profit margin by squeezing money from its customers, including myself (most importantly), I should be able to receive the benefit through increased dividends and price appreciation of the stock, in return
 Since the purchase, the stock price has been gradually increasing while I received my first dividend recently.

Since the purchase, the stock price has been gradually increasing while I received my first dividend recently.

  • CVS Health corporation (CVS: New York Stock Exchange)

I recently purchased 2 call options with 1.5 year expiry on CVS. Though I'm not going into details here, I will write articles on call option and valuation analysis of CVS later on in this blog.

CVS owns pharmacies in the U.S. and also runs a pharmaceutical benefit management (PBM). Simply put, PBM is a service that is offered for health insurance companies/government to reduce the price of medicine by negotiating with pharmaceutical companies. For my beloved Canadian friends, just think of the company as "Shoppers Drug Mart" with some extra perks.

 Stock price chart of CVS Health. You can see it's been quite a ride since the purchase...

Stock price chart of CVS Health. You can see it's been quite a ride since the purchase...

Let's see how these new investments will go.

Please subscribe and stay tune to the new development of my portfolio! (and to learn about value investment, of course)

Portfolio Update: September 2017 (Over $10,000 Profit!)

This month, my portfolio hit an important mark: achieving $10,000 profit (including the unrealized gain). Even though the unrealized gain can fluctuate day to day until all positions are closed, seeing the number made me somewhat happy. 

September snapshot.png
 Portfolio performance vs S&amp;P 500 (benchmark)

Portfolio performance vs S&P 500 (benchmark)

September 2017 Position Summary.png

The main reason for this month's was gain was Gran Colombia Gold (GCM: TSX). As the gold price rose sharply this month, the stock price of Gran Colombia went along. Also there were several positive news (end of the strike, positive drilling result, etc.) were announced by GCM in September. 

 6 months gold price chart (daily)

6 months gold price chart (daily)

GCM september.png

The problem with such sharp price increase is that it often is followed by sharp downward pressure short after. In order to protect my gain in GCM, I decided to buy a put option of GDX. GDX is an ETF which tracks a gold miners index. Should the gold price drops in the short-term, the put option should somewhat offset the loss. Let's see how this works out.

Portfolio Update: April 2017

It was quite a ride in April. As the market's around current political events pertaining to North Korea, the price of my Japanese stocks dropped significantly through mid-April. Thankfully, it has since recovered by the end of the month.

 My portfolio Performance (Blue) vs S&amp;P 500 (Green)

My portfolio Performance (Blue) vs S&P 500 (Green)

Portfolio Updates

  • As I suspected, the price of Aucnet Inc. posted more than 10% gain since my purchase a couple weeks ago (click here for the details).
  • Gran Colombia Gold consolidated their share by 1:15 couple days ago. You can see the price went from CAD 0.1 => CAD 1.5 per share. It really doesn't have any impact on my return since the number of shares also reduced to 1/15 (from 39,495 shares to 2,633 shares).
  • Willplus Holudings Corp split their shares by half, meaning the share prices has halved while the number of shares has doubled. 

Portfolio Update: March 2017

Building on the incredible growth in February, my portfolio return has continued to increase throughout March.

The price of Willplus Holdings (Ticker: 3538, Tokyo Stock Exchange) continued to increase. Though the stock has provided 250% return since the purchase, I still intend to hold the stock as the company has a decent growth prospect (potentially doubling their earnings in the next several years). 

The return of Canadian stocks has been mediocre comparing to Japanese stocks. I still have high hopes for Gran Colombia Gold (Ticker: GCM, Toronto Stock Exchange) as the company's balance sheet has been improving. Let's see how this one plays out.

Portfolio Updates: February 2017

After almost being beaten up by the market, my portfolio return soared throughout February.  

My portfolio (blue) vs S&P 500 (green)

The drastic improvement in portfolio performance was thanks to Willplus Holdings Corp (Ticker: 3538, Tokyo Stock Exchange), showing over 100% return this month alone. 

Portfolio Summary 

2 months price movement of Willplus Holdings Co. (Excerpt from Google Finance)

Since the price increase of Willplus Holdings Co. was very sharp, I probably shouldn't expect my portfolio to keep the return at the current level. However, portfolio performance could continue improve if the gold price keeps increasing at its current pace, as Gran Colombia Gold (GCM, Toronto Stock Exchange) is my second largest holding. Let's see how it'll play out.

Portfolio Updates: January 2017

Even though I'm a long-term focused investor, it is somewhat relieving to see my portfolio beating the market again. 

The performance of portfolio is largely affected by the gold price because of its large exposure to Gran Colombia Gold (GCM:TSX). Let's see how the gold price moves next month. 

 Blue line = My portfolio (Interactive Brokers), Green Line = S&amp;P 500

Blue line = My portfolio (Interactive Brokers), Green Line = S&P 500

 Interactive Brokers Portfolio

Interactive Brokers Portfolio

 Virtual Brokers Portfolio

Virtual Brokers Portfolio

Portfolio Updates: December 2016

I have two investment accounts, one with Interactive Brokers and another with Virtual Brokers. I will discuss the returns of each portfolio separately. 

Interactive Brokers Portfolio

Since Trump won the election, it has been quite a rough ride for my portfolio. I added Gran Colombia Gold (GCM.TO) stock and Fairfax Financial Holdings (FFH.TO) right before the election result, thinking that the gold price will increase and the market will crash if Trump had won as I mentioned in this article. Unfortunately, it was the complete opposite. You can see how much my return dropped since November 2016 (My portfolio return: blue line, S&P 500: green line).

It just reminded me that speculation of market condition is generally a bad idea. You can see that all other stocks, the ones that didn't involve speculation, are doing quite well. The return of Japanese stocks was especially phenomenal at 24.78%. 

Though I failed at speculation/market timing, I'm not too worried about Gran Colombia Gold (GCM.TO) and Fairfax Financial Holdings (FFH.TO) in terms of the long-term performance. I expect the return of GCM to be spectacular as long as the gold price hovers around $1200 per ounce as discussed in this article. The investments made by Fairfax are long-term focus and the company has a great track record of compound annual growth of 20.4% in book value since 1985.

Virtual Brokers Portfolio  

The return of Virtual Brokers Portfolio has been better than the market.

I'm quite confident about the value including Becker Milk, E-L Financial Corp, Torstar Corp, Rocky Mountain Dealership, Noranda Income Fund and Gran Colombia Gold. 

I'm somewhat iffy about Hammond manufacturing co, ltd. Even though the stock is cheap, I haven't done enough research on the stock. 

The rest of the stocks are non-value stocks. I bought them when I first started investing, before I learned value investing. I might get rid of some.

Going into 2017

2017 will be an interesting year. There are many political events in major EU countries including Italy and Germany. Trump will actually start his presidency. US Federal Reserve might keep increasing the interest rate. Let's see how many portfolio will do over the next year.