Portfolio Update October 2021

During October we have seen a substantial amount of companies report their Q3 earning, some have reported record profits while other have disappointed all expectations. A normal quarterly flow of reports, some good, some bad and others do not move the markets. As stocks have their own rhythm there are new investment channels such as crypto currencies, NFTs (non-fungible token) and most likely something I haven't even heard about yet. The new channels have taken people with storm, increasing in value beyond my understanding.  

As my portfolio swing month to month it is interesting to follow-up which are the biggest holdings based on market value.

 Currently my largest portfolio holdings are 

1. Nordea Bank 9,03%
2. Telia Company 8,65%
3. GlaxoSmithKline ADR 6,52%
4. BASF 6,05%
5. 3M Co. 5,72%
   

 The five biggest holdings represent almost 36% of my portfolio while top 10 largest holdings represent over 60% of my portfolio. Many might say it is a risky portfolio and poorly diversified, these people usually interpret volatility as risk while for me volatility is only opportunity. Risk is the probability of losing the investment in any form, meaning either the company files for bankruptcy without any recovery possibilities or the risk that the company loses its competitive edge and therefore sees a significant reduction in its value. There are many other views on risk as many would just use the theoretical systemic and firm specific risk and justify that volatility reflects both. 

During October a few minor changes in Top 5 largest holdings was that BASF dropped from 3rd largest holding to forth, overtaken by GlaxoSmithKline. 3M Co rose to fifth place while The Kraft Heinz Company dropped to sixth place. As I have been increasing my position in Telia it has remained one of the largest holdings in market value even as its market value has dropped.

 More details and current market value can be found on the Portfolio page.

Portfolio changes

 A few changes made during October, as usual just increased positions. Mainly looking at companies that underdelivered to market expectations and are undervalued in cash flow and which most likely could be sold at a premium to current value.

Telia

 Bought 110 shares to decrease the purchase price and to increase the coming dividend. Have a total of 1 440 shares now at a weighted average purchase price of 3,75€ compared to 3,77€ before. 

Telia announced their Q3 earnings which did not surprise me, yet the market was expecting better results based on reactions. 

Kone

Kones share dropped after Q3 publication as investors worried about Chinas impact on future profits. This gave me the opportunity to increase my position to 7 shares at a price of 57,24€, had 3 shares before at 57,25€. 

China is a large and important market for Kone, but I expect Kone to adjust fast to market changes and keep their competitive edge to competitors. A quarter here and there has hardly had a long-term impact on a company, except when they have used fraudulent accounting or deceived the public for a long time. 

Handelsbanken Latin Amerika mutual fund

Bought 30€ worth in Handelsbanken Latin Amerika fund partially driven by the decreased value, also as my long-term view remains the same. Latin Amerika has not recovered from COVID-19 caused issues and there are signals of unrest in some countries. 

Citating Baron Rothschild (not 100% sure he actually said it)

"the time to buy is when there's blood in the streets"

Dividends

October was a good month as Nordea Bank paid out their dividends for year 2019 and 2020 (note 2019 dividend should have been paid in Spring 2020, yet corona interrupted it). Old Republics extra dividend and GlaxoSmithKlines dividend helped reduce the gap to short-term goal yet not able to achieve it this year.

YTD dividends are about 1 600€ which is 600€ from the short-term target. Since December 2020 portfolio has received 1 740€ in dividends and all has been reinvested. The investments made in Bayer AG will hopefully give a return two years from now. Expecting Telia to pay the same dividend of 2 SEK per share next year which will increase my dividends unless SEK falls in value to EUR next year. 

Sampo has gathered some funds from the sale of its Nordea Bank shares and they announced at least a dividend of 2€ per share in 2022 which will help narrowing the gap. 

Portfolio update September 2021, when there is not enough cash

 In September the market did move up and down as if there is a storm coming and some analyst, influencers and other do think so. They might be right, and they might be wrong, it might be the coming interest rate increases or it might have been Chinese Evergrande crisis causing the fear to rise once more. 

If we look at stock market history, we see a lot of fears and "happy joy joy" moments, some crashes and fast rises. This is normal and nothing to be afraid of, that is my opinion, I sleep like a kitten during turbulent times and dream of buying even more shares as the market crash. That's just me. 

The drop in value did create opportunities for me to increase my positions in companies mentioned below. I did invest more than the two scenarios I created to see if possible to reach the goal of 1 million euro portfolio (link to post here), the yield will be the challenging part, however we shall see what the outcome will be. 

Veolia has a rights issue ongoing to purchase the remaining 70% of Suez in which I will participate, yet only 2 shares will be bought (short post about the acquisition).

The graph below displays portfolio development to long-term goal of 100 000 euro, still a way to go as the market value on September 30 was 55 584,23 euro. During September my portfolio fell below the short-term goal of 55 000 euro market value, yet increased above mainly due to my additional purchases. I did want to buy even more shares in all the below companies and some other yet run out of cash. Will have to wait for the coming dividends as well as next paycheck.

Portfolio Changes September

Alibaba (ticker BABA)

Increased my position by 2 shares at $148,90 as the market value dropped, weighted average purchase price decreased from $212,98 to $205,61. I still find Alibaba a good investment in the long run even thought I have heard some negative comments about Alibaba mainly relating to it being under Chinese regulation. The important question to me is, will Alibaba still exist 20 years from now and will they have grown even more and profitable? My opinion is yes, the political risk will not ruin Alibaba so I will hold my position.

Bayer AG (ticker BAYN)

 Increased by 1 share to a total of 38 shares, weighted average purchase price decreased from 61,12€ to 60,76€. Still buying Bayer even if some might have lost hope with all the problems they manage to run into. Bayer has good products that help people and do see a future with Bayer still as a significant player with proper dividends and good growth. 

Telia (ticker TELIA1)

 Bought 30 shares in Telia in the price range of 3,53€ to 3,61€, weighted average purchase price did not move and remained the same at 3,77€ a share. Telias dividend is expected to be paid in beginning of November, will be 1 330 SEK gross and around 1 130,50 SEK net of withholding tax, around 111€. A good contribution and improved reinvestment opportunities.

Telias stock has taken a beating for some years, corruption scandals have hurt Telias reputation. The divestments made might have a positive impact and hope Telias current management is able to improve their reputation and get it on a small growth path.

Dividends

Received a total of 97,83€ in dividends during September, a little more than in June. my position in Pfizer received a full dividend for all 12 share and Wells-Fargo increases their dividend from $0,10 to $0,20. As the graph below displays the biggest dividend months have been April and May, when European companies pay their annual dividends. 

In October there will be a small dividend party as Nordea pays a dividend for 2019 and 2020 as well as Old Republics on-time cash dividend.

Below graph shows the monthly net dividends as well as cumulative net dividends, year to date I have received 1 184,42 euro which is 54% of my short-term goal. The gap will be reduced a bit however not enough to reach the full short-term goal, hopefully next year.

Portfolio Update August 2021

 August was an interesting month, my portfolio value was stable above 55 000 euros which is good from my goal perspective. The increased positions in Bayer AG contributed with better margin to the short-term goal. If markets start to panic then my portfolio will fall below the 55 000 euro threshold, yet in the long run it does not matter that much. 

Focus has lately been to summarize annual reports and find new value opportunities. It has been hard to find value as many companies are valued at high multiples, meaning a long payback period.

I mentioned in my last portfolio update from July that I might consider liquidating some positions. I am still weighting the benefits and costs from having these positions and if some would be liquidated and funds used to increase other positions. The issue I am facing is when to sell and at what price, probably one of the most difficult questions ever in investing. For example, if I would have had some GameStop shares when the stock started to fly I would have exited it way below its high at $483, most likely bought around $2 and sold at $10.

Graph below displays gap to goals in portfolio value. Left axis is for short and long-term goal while right axis is to the ultimate 1-million-euro goal. As you can see the gap to short-term goal is zero.

Markets were behaving interestingly in August, Corona cases, interest rates, employment numbers and inflation pressure has caused some headaches to many. Especially inflation pressure has been a hot topic for a while, and I do see prices rising. Question is then, will prices rise and keep on rising to a extent that forces Central Banks to raise interest rates? It might happen, especially in the USA however Euro area seem to be struggling in different ways that might postpone rate hikes.

Taliban's taking over Afghanistan did seem to impact markets for a second only to be forgotten due to limited impact on global economy. We saw new all-time highs for some indexes, partially supported by low interest rates and good Q2 results but also future expectations.

Portfolio Changes

Small changes during August as still awaiting better moments to increase my positions in a few companies. Was also a bit short on cash at hand which limited the possibility to buy more stocks. In total I purchased shares for 285,64€ in August which is a small amount.  

Alibaba (ticker BABA)

Weighted average purchase price decreased from $216,68 to $212,98 as one share was bought for $159,50, not the best price in August but of value for me. Alibaba has been hit by a lot of challenges, Chinese government, sexual scandal and challenges with US Securities and Exchange Commission. As I have been increasing my position it might be a clear statement that I still believe the value of Alibaba to increase over time. I do see more value in Alibaba then many hype stocks as they have more tangible services and products and are not dependent on hypothetical future development.

Bayer (ticker BAYN)

Bought 3 shares of Bayer AG during August, main reason is that I still expect its future to be brighter than what we currently see. As the legal claims regarding Roundup! and Monsanto acquisition will dissappere the future of Bayer will be brighter and earnings stronger. The weighted average purchase price decreased from 62,14€ to 61,12€ per share. Still a way to go when market closed at 47,20€ on Friday September 3rd. If I would have a average price around 50€ per share I would be happy so will most likely continue to buy more.

Dividends 

In August I received 73,54€ in net dividends and on a year-to-date basis 1 086,59€ in net dividends. Still far from 2 200€ which is my short-term goal, as the portfolio is being built up on a long-term basis (including taking advantage of any short-term bargains) it might be that the dividend goal will not be reached next year. 

 The graph below displays monthly dividends (blue staples) and cumulative dividends from start (red line).

Regarding the dividends, note that AT&T dividend does not reflect the full position of 121 shares as 5 shares were acquired after ex-dividend date. AT&T has also the split of WarnerMedia to come which based on statements will reduce the dividend by around 50%. This will have a negative impact on dividends unless Warner Bros Discovery can compensate. Do see it a bit challenged as Discovery has not paid any dividends on common stock for some time.

 

Portfolio Update July 2021

 During July I increased my positions a bit as all dividends were reinvested. Bought shares in AT&T, Bayer and Alibaba while wondering if any position should be decreased or liquidated. Companies or mutual funds on reduction or liquidation list is Handelsbanken Latin Amerika, DigitalBridge Group and Ventas. Made net investments, meaning I bought more than my portfolio received in cash inflow (dividends and cash from sales). Haven't been that lazy investor lately even though mainly bought companies I already have and which market value is below purchase price. For me the laziness comes from not buying and selling all the time, instead as many times mentioned, looking for value now and not worrying to much about the future.

July was interesting as on Monday 19th global stock markets dropped around 2%. Which is a big movement, I was on the buying side that day covering the pessimistic market. Bought AT&T and Bayer AG however not at their bottom. Afterwards I was disappointed of only being able to invest a small amount. Would like to have at least ten times the money to invest every month.

My Summer holiday started in July with two weeks off, will continue with two weeks end of August. Sunshine and increasing covid-19 cases was the topic of my holiday. Have people not learned anything in the last 12 months? If they just could use a mask and take care of their hygiene, we would be in a better situation today. It did not ruin my holiday or hotel stay but has made me a bit frustrated as every day you see people neglect any form of common sense.

Holiday also started with some additions to my wardrobe, did spend a lot on clothes, almost 500€ in total on a pair of shoes, pants, shirts and jackets. Lloyd shoes and Oscar Jacobsen jackets do have a fat normal price so did what I usually do, buy at discounts and off-season. 

Also spotted that I had forgotten to update my Kone Oyj position, bough one additional share back in May for 65,75€ including transaction costs. Small change yet does impact how much I have left to reach my goals. 

The portfolio return was a bit of due to the swings in currencies, have made some adjustments that will correct for the currency swings to show a more accurate and realistic return. It also corrects the currency impact in invested capital. Return is calculated on EUR basis which is impacted by current market exchange rates as well as market prices in all portfolio currencies. 

Portfolio value at end of July was 55 492,08€ or $58 513,84, have reached my short-term goal in market value however in dividends I am still behind. A short celebration of achieving one of the short-term goals this fast (mainly driven by investments). Now just focus on the dividend part as well as the long-term goal and eventually the 1-million-euro goal (once 1 million is achieve the next step might be a 5-million-euro portfolio). 

 

Portfolio Changes

Alibaba (ticker BABA)

 Increased my position in Alibaba as the price has been lower than my weighted average. Bought 5 shares and have now 14 shares in Alibaba for an price of $216,68 per share. The 5 shares were bought at $200,99 (weighted average), ranging from $209 to $191 per share. 

Main reason for the volatility is the tension between China and USA, Chinese Governments need to show its power over tech companies and US authorities demanding Chinese companies listed on their exchange to follow rules. There is nothing wrong with Alibaba, instead it is the political risk reflected in the price. Compared to Amazon which has less political risk now while higher legal risk. For me the swings are more of a opportunity to add to my position, do not see a huge risk here. Did quickly read Alibaba's annual report and did not see any big surprises or anything that worried.

 AT&T (ticker T)

Bought 4 AT&T shares in July, increasing my position from 117 to 121 shares. Weighted paid price per share decreased a bit from $30,87 to $30,79 as the four shares were bought at a price below $29 a share.

The stock price did fall below $28 after mid-July, however only bought one share… It seemed like the stock dropped after the Q2 earnings report was released and disappointments were revealed from subscription services. Apparently, Netflix lost a lot of subscribers as well. Should be logical if people only used it during lockdown and now are partially returning to their daily life or just want to do something else.

Bayer AG (ticker BAYN)

Increased my holding in Bayer by 13% or 4 shares from 30 to 34 shares. Price paid decreased a bit from 63,69€ to 62,14€. The increase was made before the latest announcement of an additional reserve impacting the result due to legal matter in US (Monsanto acquisition and Roundup products).

Did read Bayers 2020 annual report and it was represented by acquisition failure. I am thinking about Monsanto which Bayer acquired in 2018. Both the Bayer Board and Management Group has most likely lost more of shareholders money than any other legal entity (without going bankrupt). A loss of over 10€ per share, dragging down the profitable segments of Bayer. 

It seems like Roundup has become a chronic migraine for Bayer shareholders. $63 billion is what Bayer shareholders paid for Monsanto and in addition received legal costs and settlements to come and a write down of $10,9 billion. at least $73 billion has the Bayer Management team and Board of Directors caused in cost for Bayer shareholders so far, assume the payback time is more than their combined life expectancy. Let's hope they do not repeat a similar failure in the future unless they do a similar write off their salary and bonus. Yes, I am frustrated about the whole case and would fire the whole management team and ensure the board members are never again re-elected. These kinds of mistakes are hardly treated as they should be, financial damage caused due to neglect and sloppy work usually end in unemployment. Apparently once you get to the management team your failures result in reduction of normal staff while you get a bonus for bad performance. Does sound like the incentive system and responsibilities are far from aligned...

Dividends

In July I got 128,39 euros in gross dividends and net 118,12 euros. From a dividend perspective July was an uneventful month while waiting for beginning of August when AT&T dividend will be booked. Biggest single dividend came from GlaxoSmithKline with net 50,90€ or 43 % of total dividends. Kimberly-Clark was the second biggest payer with 17,06€ or 14,44% and third came iShares Asia Pacific Dividend ETF with 16,41€ or 13,89% of total dividends. Still small amounts coming in every month.

 

 

Struggling to see the possibility of dividends reaching 2 200€ this year, Telias second dividend at the end of October will be 1 300 SEK or around 128€ gross and around 109€ net of withholding tax. That will be one of the single biggest dividends coming in. To reach the 2 200€ dividend goal this year I should invest more heavily in companies that will pay the second half of their dividend this Fall or has at least one dividend payments left. This way I could maximize dividend return, problem is that companies tend to see their price increase before the ex-dividend date meaning the return drops. Lower return means you must buy more to get a significant amount in dividends. I have a tight budget, long-term goal and might therefore do more investments based on longer perspective and not the short-term 1 additional percent gain here or there with a 30% risk (poor risk adjusted return). It does explain my increased AT&T and Bayer position.

Just to make my point, I would need to have a portfolio value of around 61 000 euro with a 3,6% net dividend return to achieve the goal of 2 200€ in net dividends. Notably Alibaba and DigitalBrigde does not pay a dividend which raises the total required invested amount. Looking forward to a cooler August month and hopefully some good discounts in the market.

First company review will be published soon. Just need to finalize a few calculations.

Portfolio Update June 2021 with increased AT&T position

 June was an interesting month as markets are again worried about future interest rates and questions about market valuations has been seen in news. S&P 500 index made a new all-time high, markets are generally showing the increased flow of money pressuring prices higher. This is good for many people as they feel richer. New market highs are not that interesting for me, instead it limits my opportunities to find good companies at attractive or so-and-so prices. I do prefer to pay a reasonable price for a good company than a huge premium which will take a lifetime to get back. 

My portfolio and general market

My stock portfolio (only stocks) has a value of 52 521,62€ or $55 106,92 while my mutual funds have a value of 347,84€ or $411,75 and ETFs are valued at 1 836,79€ or $2 174,27. Total value of my investment portfolio is then 54 706,25€ or $57 692,94. Not a long way to my short-term goal in market value, yet dividends are behind schedule. This is not a full dividend portfolio as it combines index funds and mutual funds representing around 0,6% of total portfolio. My portfolio five largest holdings are (1 July 2021);

1. Telia Company 8,84%
2. Nordea 8,38%
3. Basf 6,78%
4. 3M 6,46%
5. Kraft Heinz 6,38%  

Of the top five holdings Telia and Kraft Heinz market value is still below acquisition price, even though Telia has reduced the gap significantly compared to beginning of 2021. As you can see the top five holdings represent 36,84% of my total portfolio which some would say is a badly diversified portfolio. As you might know, my goal is not to diversify, but to choose good companies that will return a decent profit in the long run. 

There is still a long way to my 2061 goal of a million-euro portfolio and dividends of 55 000 euro. As markets move higher, I usually get less encouraged to invest, this has bothered me, but worked well to reduce any major losses. 

Talks about inflation and economic data from U.S.A. as well as minor inflation in Europe might be a sign of interest rates rising in the future. This would move money from stocks to bonds as investors need compensation for bearing the extra stock risk. I would like to see interest rates rise, as we might see some small turmoil in markets which is equivalent to opportunities. What the outcome will be and will we ever see interest rates of 5% in the future is more speculation. 

Portfolio Changes

No special changes made to my investment portfolio during June, as you can see below AT&T is again one company, I have increased my position in. Made net investments of 259,89€ in June (net of net dividends) as I have difficulties finding good companies at bargain or so-and-so prices. Hopefully the prices will come down at some point. I you look at my portfolio you will see some holding with a negative return now. I will not buy them as I see they could come down a bit more and some might actually have bought limit orders open as I am writing this post.

AT&T (ticker: T)

Increased my position in AT&T with 14 shares at a total cost of 341,13€ or $408,54. Weighted average purchase price for AT&T position as a result decreased from $31,10 to $30,87.

I know many are criticizing AT&T for the coming dividend cut. For me it does not have a significant impact as most likely I will still get over 3,5% dividend yield and have shares in WarnerMedia. Hopefully WarnerMedia will pay a dividend compensating for the difference to current AT&T dividend. 

Apparently I have bought 37 shares in AT&T since start of 2021 for $1 083,99 or $29,30 per share. AT&T has paid me dividends of 63,88€ during 2021 which will drop once they cut their dividend in half. I hope the new combined WarnerMedia and Discovery (Warner Bros Discovery) will start paying a dividend in 2022. Discovery has apparently not paid dividend to common stockholders for a while, which does annoy me as I like companies that can generate some cash flow to owners.

Dividends

Gross dividends in June were 97,44€ and net of tax 81,24€. Compared to earlier months it is in the same range as February and March while May was exceptionally good due to annual dividends from European stocks. One factor impacting June dividends is that some companies who usually paid in June have now paid the dividend in July (or at least booked in July to my account). The impact is small however still the development would look better given they would have been booked in June.

The below graph displays dividend development since December 2020. During 2021 I have received 894,93€ in net dividends. Which is far away from my goal of 2 200€ at a market valuation of 55 000€, my portfolio value is close to the target while dividends are falling behind. One big question is when will banks be able to open their dividend flow to owners, if it will start in September then my dividends this year might come close to the target of 2 200€. Nordea has only paid a fraction of planned and Wells-Fargo still paid only $0,10 while they back in May 2020 paid $0,51 which would be a big increase to current low level. 

Enjoy the summer and will try to have my first company analysis done by end of July.

Portfolio Update May 2021 and Updated My Investment Goals

 Will start this post with a small update to my goals. The long-term goals are a portfolio value of 100 000€ and annual dividends of 4 000€ (equivalent to a dividend yield of 4%) by 2031 and short-term goals are a portfolio value of 55 000€ and annual dividends of 2 200€ (also 4% dividend yield) by 2025. I want to have some goals further into the future and have therefore set a third goal;

Portfolio value of 1 000 000€ and annual dividend of 55 000€ by the end of year 2061. This means I have about 40 years to invest and grow the portfolio from current value of 52 180€, a growth and investments equivalent to 947 820 euros. This will be a more challenging task and will require patience and consistency to achieve.

All goals available on Goals page as well as the updated goal of 1 million investment portfolio.

Back to my portfolio and the update, May was a little busy month with a lot of work and some good investment opportunities for me. Also got proper dividends of which all has been reinvested and additional investments to be done during Summer. Below is shown the portfolio development to long-term target (not the new 1 million euro target), for simplicity the data labels have been removed and you also have access to the google sheets file via portfolio page. Portfolio return is largely driven by the general upside in markets and less on company specific development. Portfolio value was 52 180€ or $56 695,95, which represents a 14,50% return.

 

 

One topic to be touched is AT&Ts decision to split WarnerMedia as a separate company which will be merged with Discovery. As a result, AT&Ts shareholders will own 71% and Discovery shareholders will have 21% own the new joint company consisting of WarnerMedia and Discovery. One of the reasons is direct consumer streaming for global customers, meaning they want to create scale and better compete with Netflix and Amazon Prime. I haven't had time to look at all the details in the transaction, therefore a bit difficult to comment if it is a good or a bad deal for me as an AT&T shareholder. What I can say is that I like the telecom industry and also like the entertainment industry as the revenue channels have increases over the years from only movies to today's merchandise, royalties streams from multiple parties.

Portfolio changes

Increased a few positions during May which will contribute with some additional dividend this year. Unfortunately, the dividend year has basically ended for European stock which pay only once a year a dividend. Rest of the year it will mainly be USA based companies and GlaxoSmithKline (primary listing is in UK).

AT&T (ticker: T)

Bought 3 shares at $29,50 to reduce the weighted average purchase price from $31,14 to $31,10. Some might have sold out due to the divestment news as they see the dividend to be cut to half of what it is right now and as a result based on today's price the dividend yield of 7,11% (Google Finance) would be 3,555%. The challenge here is what will the joint company WarnerMedia and Discovery pay in dividends, or will it pay a dividend? Many shareholders have held AT&T mainly for its high dividend if you are to believe other bloggers and writers in the social media. My view of AT&T is more a stable dividend payer who makes a lot of visible mistakes, acquisitions not in shareholders interest like the DirectTV while TimeWarner was in my opinion a very smart and good investment with good cash flow. 

Now I am also faced with the same dilemma, sell out or what to do? Based on all current information I will hold my position and even increase it, unfortunately I do not have an answer if anything changes then it will impact my judgment of the company.

Alibaba (ticker: BABA)

Bought 5 shares for an average of $222,93 per share which lowered the weighted average purchase price from $227 to $225,40.

I do find Alibaba a good long-term investment which might grow in Asia and even to Western countries if they so want, challenging Amazon in many of its business categories.

Dividends 

It did feel good to get some bigger dividends in to invest more in the markets, even thought a lot of assets seem highly valued on many metrics. The portfolio received 491,34€ in gross dividends and 374,13€ net of withholding taxes. Will have to apply for the withholding from Germany during this year and hopfully claim old taxes from two years back as well. As the picture below shows most of the dividends came from Basf, Fortum and Sampo. These three companies pay only a annual dividend so until next year.

The graph above displays year to date dividends both cumulative as per month split. There are clearly monthly differences driven by European companies and US companies quarterly dividends. 

In market value my portfolio is close to the short-term goal yet dividens are far away from the goal of 2 200€. Five months behind and seven to go, lets see how this year ends.