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December Portfolio Update

It's been a while since my last portfolio update in April 2020 (You may read it here: Portfolio Update: Staying the Course). At that point of time, my portfolio was down approximately 15% YTD, while it has since recovered to a YTD performance of -6%. While this is nothing spectacular, especially with US indices hitting all time highs, relative to the Straits Times Index which is down approximately 13% YTD, at least there's some outperformance. Accordingly, I intend to allocate a higher percentage of my portfolio to international stocks, especially US/HK tech stocks. I believe that we're in a time when one cannot exclude having tech exposure in our portfolios, given how tech companies have expanded to becoming an integral part of our lives. Indeed, this represents a shift from my value/dividend seeking approach to investing, but I aim to build a balanced portfolio with exposure to both growth and value stocks. 

Here's my latest portfolio as of 11 Dec 2020:

Brief commentary:

DBS/SGX: Not much to elaborate on for these two, as my entry prices provide me with decent dividend yields. DBS and SGX have recently announced a partnership to launch a digital exchange, which could start trading next week. I believe that this is a step in the right direction, and it's good to see these companies embracing new developments in the market. 

SATS: I am still bullish on the medium term recovery of the aviation sector, thus I had averaged down at $2.84 in May. Given my first entry price of $4.49, my average price stands at $3.41. After the news of the vaccine, I had reduced half of my stake at $3.50, which on hindsight wasn't a good decision. I would be looking to increase my position again if the price weakens to the $3.50 level again. 

Do check out my articles on SATS here

CICT: Bought at $1.91 just before the merger. Might be looking to reduce my stake slightly after the strong performance recently, as I believe that retail and office properties still face headwinds. I think that the year end valuation of its properties may be a wake up call for investors - but who knows - valuations may surprisingly go up (similar to Lendlease's mid year asset valuations), as it is ultimately more of an art than science.

I wrote about CICT's valuations here: Should there be Concerns over Gearing and Asset Valuations? 

FPL, Singtel and Jumbo: Re-evaluating these laggards in my portfolio to determine whether to divest any of them. Was waiting for the announcement of Phase 3 to provide some upside for Jumbo, but this seems unlikely for this year.

Cisco: This is more of a value buy, as CSCO's valuations were attractive to me. I think a bright spot would be CSCO's Webex video conferencing platform. Video conferencing market leader Zoom has a market cap of 113B, while CSCO's Webex ranks third in terms of market share. CSCO has also been transforming from a primarily hardware based company to a software company.

Alibaba: New position in BABA at 264 USD. Decided to buy the US listed ADR instead of the HK traded one because of the smaller lot size. The HK listed stock has a minimum lot size of 100, which costs approximately 4.5k SGD per lot. Hence the US ADR gives me more flexibility. I believe that the setback from Ant Group's IPO has been overblown, and while regulatory risks remain a concern, it would not be in the interests of the Chinese regulators to limit BABA's growth, if it wants Chinese tech firms to compete globally against its US peers. Tencent similarly faced some crackdown in 2018, but it eventually blew over as well. Additionally, BABA's cloud computing business is also another gem. I feel that Chinese tech companies seldom get the same premium valuation multiples that their US peers enjoy, and BABA deserves to be the next trillion dollar company.

Chiasma: This is just a punt after reading this post on TTI's blog, and doing some additional research by reading sell side analyst reports. It's a biotech company that supposedly developed a new drug which has received FDA approval. The position represents a small percentage of my portfolio, and would not do too much damage even if thing go south. Will wait and see how this plays out. 

ETFs: My ETF positions are intended for buying and holding "forever", thus I am not concerned about the daily price movements of my ETFs. In fact, I don't even check the prices of my ETFs on a daily basis, unlike my other active positions. What matters more to me are the stream of dividends that these ETFs provide, and at a yield of 3 to 4%, I am satisfied with that. Compared with yields of <1% for government bonds, I believe that holding these ETFs make more sense to me. I reiterate that these represent excess cash that I do not need, thus I am indifferent to the price fluctuations. In the long term, I expect these to deliver capital appreciation, barring a situation of Japan's equity market in the late 1980s, where prices have not recaptured the highs since then.

Divestments: Between the last update and today, I divested Hanwell Holdings and MCT. I sold Hanwell at $0.19, only for it to run up strongly a few months later to $0.29. Again, not the best decision. Sold MCT at $1.91 earlier this year and replaced it with CICT a few months later, as I believe it provided a better risk/reward.  

That's all from me, thanks for reading. Wishing everyone a great 2021!

Disclaimer: This article is intended for informational and discussion purposes only, and do not constitute financial advice. When in doubt, please contact a licensed financial adviser.

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