Monthly recap August 2023
Portfolio Movements and ideas
Manual deck (watchlist)
The newsletter got organised into sections, following the model of: Portfolio updates, Ideas in developed markets and ideas in emerging markets. This is visible on desktop only.
There are now 2850 subscribers. pretty cool. This is just a number but I am excited for 3000. I know that some high quality newsletters have very low subscribers counts due to time or low exposure, this is why I give them a chance with guest posts from time to time.
I had two guest posts for your enjoyment, who brought unique ideas. I may do one and support new writers from time to time, maybe around December next time.
In terms of results, First Pacific that I wrote up is firing on all cylinders. It will be a bit conservative with the dividend (stable) to help pay down some debt at the holding level.
A South East asian real estate cash cow I presented earlier is experiencing good results but would be better closing a loss making segment or at least putting it on hold. The capital allocation is not optimal, despite being a value play. A new generation of owners took over the company and could shake things up in the loss making segment. This is something I am trying to balance in the portfolio: Cheap with average allocation versus more expensive with great allocation?
PayPal change of CEO for a more product oriented one. I don’t think the past CEO was really bad but he lacked ambition product wise, and did weird acquisitions. However if you listen to his call transcripts he really understands the business future and vision. PayPal aggressive share repurchases are the correct capital allocation. But Share goes down= CEO bad. Share goes up= CEO good. Most people commenting don’t read the transcript or don’t understand it. Hey I don’t understand NVIDIA :). A more ambitious development plan based on the wallet and the customer would do great for monetization.
This month I wanted to show a the filter for the highest market caps in my developed countries watchlist. I don’t have megacap or Faangs in there but you all know them.
This would be a proxy for the more quality safe companies that I have shortlisted with the help of many twitter users or writers.
Investor AB and Investment AB latour are a holding companies and I did not analyse them so I have no idea if they are fair value.
Healthcare support firms Eurofins and Charles River Laboratories and biomerieux look like decent value, but they had a covid boost. I recommend this review by oscar of the industry: https://oscar100.substack.com/p/life-science-tools-and-services-sector
Legal and General looks like good value from the metrics but it may not be a defensive growth company.
Sutl is a bit unclear on future plans, but it’s very interesting and a great find.
In movements, I added to another ultra cheap defensive position in terms of earnings in the UK nanocap space. So cheap that it sounds too good to be true. Maybe it is and it will collapse, I don’t know, that’s what we find in microcap land. But I like the products. This is not for everyone, with illiquidity and a owner in place. Time will tell. This is why I diversify in small caps.
Overall, less movements than usual, and moving forward towards a not selling strategy for the growth companies. I read a lot about coffee cans, about multibaggers, and about grandmothers beating the market with old stock certificates in a safe, and I now understand that the only thing standing between me and future great returns is potentially ..me. Some companies will do good and some will do mediocre. I will avoid the bubbles that populate indexes with the quality value framework. But it’s true that with active investing you also miss fast growers like Nvidia or Tesla that beat the odds.
I also cleaned up the deck and added many ideas from other writers or from my watchlist in Koyfin
full details below:
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