1st Qtr 2018 : Dividend and Portfolio Update
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Is time to calculate our dividend income for 1st Qtr 2018 as the financial result for most of the company should have been announced by this time. The market has gone through like a “roller coaster “ ride in 1st Qtr 2008 where it was down by almost 10% at one point and rebounded subsequently. As I mentioned in my early blog post (here ), even with correction of 10-20% from the current high in the US market, I would consider it still as “ expensive or rich in valuation “ and normal correction in any market cycles.
Investor Warren Buffett says good deals tough to find ( from NewsDay.com)
Buffett is sitting on $116 billion of cash and bonds because he's struggled to find acquisitions at sensible prices. And Buffett is unwilling to load up on debt to finance deals at current prices.
In his annual letter to Berkshire shareholders on last Saturday, Buffett lamented his inability to find big companies to buy and said his goal is to make “one or more huge acquisitions” of non-insurance businesses to bolster results at Berkshire. Buffett said his goal is to make 'one or more huge acquisitions' of non-insurance businesses to bolster results at Berkshire.
Buffett also said finding things to buy at a “sensible purchase price” has become a challenge and is a major reason Berkshire is awash with US$116 billion of low-yielding cash and government bonds, whose average maturity was 88 days as of the end of 2017.
With $116 Billions of cash & short term bonds/ treasuries bill in hand which is about 22.4% of the total BERK’s market cap, I think it makes sense for us to increase our war-chest to take advantage of any major market correction ( which is unpredictable of course ). I hope to increase my war chest to 20% if possible from the current level of around 16%.
Total Dividend to be collected in 1st Qtr 2018 = $34,339.
*this is a bit lower than last year same period of $36,593 as I have divested more REITs and moving towards blue chips and some other value stocks to diversify more from REITs.
** I have also mentioned in last year that I would like to reduce my exposure to REITs/ Biz Trust from around 69% of my total portfolio in the end 2016 to maybe around 50% ( now is at 54 %).
*** I would expect to get more dividend in 2nd and 3rd quarters as most of the blue chips are paying their dividend in these 2 quarters.
Portfolio update :
Total holding in my portfolio reduced 1 to 44.
Keppel Corp and First REIT remain my top 2 holding same as last quarter but Accordia GT ( 5.9% -> 1.9%) and Capital Comm( 4.4%-> 3.2% ) has reduced substantially due to its own reason. For Accordia GT, it is mainly due to in-consistency of dividend pay-out and membership withdrawal issues ( guess this is also many investors concern as well, the most important thing is that I wanted to sleep well at night ). As for the Capital Comm the decision to sell was due to high valuation when it hit $2 level, as I have mentioned in my blog post (here ) with regards to valuation and reversion to mean.
We knew that REIT’s income is more or less fix and predictable not like any other growth business where we may expect double digit profit increase in years ahead, but for REIT, below 5% yield may not be compelling for me as the rental may need to increase much to push up the yield or either way, the price would have to adjust downward. Nevertheless , Cap Comm still is one of the best blue-chip REITs in term of asset quality and management capability, I may add more to my position when the price is right.
I have increased my holding of SIN TEL to 5.5% ( 3rd place ) and same time disposed of STAR HUB with a loss of -$2407 (including dividend). For me, I think the sources of revenue and FCF from SIN TEL is more diversified as compared to the other two tel-co.
I have also get rid of another blue-chip which gave -12.6% XIRR where I think I have caught a falling knife as digital disruption to their media business was much severe that my initial thought. It's going to be tough for such business transformation to take place and continue to be a challenging one, it may take time to rebuild the business model. Venturing into healthcare sectors may yet to see the result and as what others investors think SPH= Singapore Property Holding, but how far their property sector can grow and expand is also a big question mark for me….
Starhill Global was one of my holdings since GFC 2009 and it paid off to buy during the crisis , with XIRR of 14.2% since 2009. With more and more luxury shopping street coming up in Asia, especially cities in China, I think the growth for such high-end shopping street may not be that prominent.
I have started a small position in FU YU in mid of 2017 and decided to let it go in early this month with a “tiny” profit of $733. FU YU is just another “asset play” counter with the potential of going private, but sometime it may take much longer time to unlock the value where I have decided to swap with other stocks. No doubt, the balance sheet remains strong but the profitability seems challenging in past two years.
Obviously, not all investment turns out to be profitable and sometimes we made a wrong judgment in term of RISK or severity of factors which affecting their underlying business.
As usual, in investment, you win some and lose some ….
Added 4 new counters into my portfolio, I will not elaborate the reason why I add these counters here as we only have 1 reason to buy into any stocks, which is to make $$.
Quote Of The Day :
"There is simply no telling how far stocks can fall in a short period. Even if your borrowings are small and your positions aren't immediately threatened by the plunging market, your mind may well become rattled by scary headlines and breathless commentary. And an unsettled mind will not make good decisions." Warren Buffett's annual letter to Berkshire Hathaway shareholders 2018