Portfolio One Updated April, 2022

Portfolio one is 20 1/2 years old. The beneficiary contributed $10,000 (net of withdrawals) and the trustee $20,000 for a total of $30,000. The current value is $82,037 for a gain of $52,037 or 173%, which is 8.3% / year when adjusted for the timing of cash flows. Go to the link or here to see details.

This portfolio is down with the others and we can look at a few stocks:

  • Block (SQ) – this is an interesting stock but was hit hard in recent SAAS / payment stock re-valuations
  • Pinduoduo (PDD) – the Chinese tech stocks have been devalued by Chinese government actions, tensions with the USA, and a general re-evaluation of tech stocks
  •  Meta (FB) – Meta’s challenges are well documented as they pivot to Augmented reality – but they still make a lot of profits and have great assets worldwide
  • Rocket (RKT) – we sold half our rocket when they hit a “meme stock” high which is good in hindsight.  The stock pays a strong dividend but is hit hard by the impending raise in interest rates which chokes mortgage growth and refinancing
  • Alibaba (BABA) – like PDD this stock suffered from a triple whammy
  • Paypal (PYPL) – one of the most perplexing on the list, PayPal fell instantly out of favor with analysts after stopping guidance the shares cratered without a significant negative event in the business
  • OKTA (OKTA) – this software company had an acquisition the market didn’t like and then was hit with the overall re-evaluation of software companies valued by growth not profits

Portfolio Two Updated April 2022

Portfolio Two is 17 1/2 years old.  The trustee contributed $18,200 and the beneficiary $27,000 for a total of $45,200.  The current value is $72,659 for a gain of $27,460 or 60.8%, which is 6.7% / year when adjusted for the timing of cash flows.  Go here or to the link for more details.

This portfolio contains a mix of ETF’s, cash and individual stocks.  The ETF’s mainly track the market and cash is even so let’s talk about some of the stocks, as follows:

  • Meta (FB) and Alibaba (BABA) are down significantly.  Meta has been hit with the tech downturn and Apple privacy changes and Alibaba has been hit by regulatory and tech crackdowns in China
  • Cloudflare (NET) is an innovative tech company with a high valuation (in terms of price to sales, one of the highest for tech companies) and it has been variable recently, although it has bounced back from recent lows
  • Nike (NKE) and L’Oreal (LRLCY) are relatively recent purchases that are in the consumer product space and they are down since we bought them (although not as big as the tech drops)

Portfolio Seven Updated April 2022

Portfolio Seven is 6 1/2 years old.  The beneficiary contributed $3500 and the trustee $7000 for a total of $10,500.  The current value is $12,542 for a gain of $2,042 or 19%, which is 4% / year adjusted for the timing of cash flows.  See here or the link on the right for the details.

This portfolio was hit by some recent stock drops.

  • PayPal (PYPL) had a bad earnings call and limited forward guidance of profits and the stock dropped a lot.  We will be re-evaluating this stock.
  • Recent acquisitions Block (SQ) and Nike (NKE) fell with the market after we bought them
  • Alibaba (BABA) the massive Chinese e-commerce company has been buffeted by the deteriorating relationship between China & the USA and a crack down on tech companies in that country as well

We will look at what to do about these stocks.

Portfolio Five Updated January 2022

Portfolio Five is 12 years old.  The beneficiary contributed $6500 and the trustee $13,000 for a total of $19,500.  The current value is $40,195 for a gain of $20,695 which is 106% or 9.9% / year adjusted for the timing of cash flows.  Go here for a summary or to the link on the left.

This year we had three sales – Alibaba (BABA) for a small gain, Sumo for a small loss, and Baozun (BZUN) for a larger loss.

We purchased 6 new stocks – Appian (APPN), Activision / Blizzard (ATVI), Intel (INTC), Snap, Block (formerly Square) (SQ), and Tesla (TSLA).

Generally the portfolio has been doing well.  There are 19 stocks in the portfolio and it is quite diverse.

Recently we’ve seen declines in some former high flyers Cloudflare (NET), Paypal (PYPL), and OKTA (OKTA).  We saw some new highs with Infosys (INFY), Union Pacific (UNP) and Procter and Gamble (PG).

Portfolio Two Updated October 2021

Portfolio Two is seventeen years old.  The beneficiary contributed $27,000 and the trustee $18,200 for a total of $45,200.  The current value is $79,546 for a gain of $34,346 or 76%, which is 7.6% / year adjusted for the timing of cash flows.  For details go here or to the link on the right.

The portfolio is generally doing well.  There is a core of ETF’s and some individual stocks.  Cloudflare (NET) has been doing well and the others mostly purchased recently.  Alibaba (BABA) is up from recent very low prices caused by Chinese politics and a deferral of the Ant IPO, but we are holding on for now.

This portfolio has over $20,000 in cash and the total bond fund (BND) ETF which reduces risk but also reduces total return opportunities.  1/4 of the fund is invested in cash or low risk equivalents rather than equities. 

Portfolio Seven Updated July 2021

Portfolio seven is almost six years old.  The beneficiary contributed $3000 and the trustee $6000 for a total of $9000.  The current value is $15,466 for a gain of $6,466 or 71%, which is 15.7% / year adjusted for the timing of cash flows.  Go here for details or to the link on the right.

The portfolio is doing well overall but we are looking at Alibaba (BABA) which is a giant company doing well but buffered by changing regulations in China, and Baozun the e-commerce enablement firm in China as well.  Will look at plans and may consider selling them.

Portfolio Five Updated July 2021

Portfolio Five is almost 12 years old.  The beneficiary contributed $6000 and the trustee $12,000 for a total of $18,000.  The current value is $38,767 for a gain of $20,767 or 115%, which is 11.4% / year adjusted for the timing of cash flows.  You can see the details here or at the link on the right.

The stocks in the portfolio are generally doing well.  Alibaba and Baozun have been hit with headwinds out of China.  Right now there is $7,452 in cash, mostly from the sale of Appian (APPN), which rose quickly and we sold and have not yet reinvested the funds.

It is minor and doesn’t impact value but we moved these portfolios from UTMA to owned by the beneficiary and the provider flipped all the individual stocks to reinvest dividends so now we have a lot of fractional shares.  I turned that off and it is minor in the grand scheme but an annoyance because I work here to tie out to the penny.

Portfolio Two Updated July 2021

Portfolio two is almost 17 years old.  The beneficiary contributed $13,000 and the trustee $17,200 for a total of $30,200.  The current value is $61,439 for a gain of $31,239 or 103%, which is 8.2% / year adjusted for the timing of cash flows.  Go here or to the link on the right for more detail.

The portfolio is doing well overall, with mostly ETF’s and some single name stocks.  BABA is one of the single name stocks that has hit trouble recently with Chinese regulation, but it is a good long term holding.  The portfolio has 23% of assets in  cash, bonds, & gold which reduces risk but also has held down returns that have risen recently after the March 2020 markets scare.

June Performance Summary

Stock_Performance_July_2021

Our portfolios continue to perform well, like the overall market.  We are up about 30% over the last year, net of contributions.   US markets are up around 40% during that period, but our portfolios are about 20% cash / gold along with non-US stocks so it is roughly equivalent.

There are a few stocks that haven’t performed as well as the market as of late; Alibaba (BABA) the Chinese internet giant, SUMO Logic (SUMO) the cloud analytics company, and Baozun (BZUN) the Chinese e-commerce fulfillment company.  However, the performance wasn’t terrible for these 3 companies, just not nearly as good as the overall market.

We are looking at companies to consider buying for the summer investment round.  I am performing research now on candidates.

This year we moved three of the accounts over to “limited agency” status from trust funds; this has become necessary as the beneficiaries get older.  This is a one-time effort that took some time given that the steps are not simple nor clearly laid out.  Even today I noted that many of the individual stocks were set to reinvest dividends, which I turned off because it causes challenges in tracking and is minor in the grand scheme if you reinvest cash regularly (as we do with new investments).

April Performance Review

Performance_April_2021

Since our last updated in mid-February (approximately the market “top”), the value of our positions has declined by about 5% overall, with some portfolios hardly moving and others declining over 10%. The differences were driven by:

  • What percent of the portfolio is in cash or bonds – 25+% portfolio two, 30+% portfolio three, 20%+ portfolio four, with the heavier the cash and bond weighting the lower the decline
  • Amount of high growth stocks in portfolio – certain stocks that have been great performers that are considered “growth” and generally trade as a multiple of sales (say 20-30x sales) such as Tesla (TSLA) and Cloudflare (NET) and Sumo (SUMO) fell as the market moved from growth to value in the first quarter

Given that these portfolios represent a log-term investment for each of the participants and would be a portion of their total net worth (i.e. they often hold other cash in savings or other accounts), we try to be reasonably heavily invested in the market, but each participant has their own risk tolerance.

During this rotation into value stocks, some sectors which had been battered such as energy (Exxon-Mobil and Chevron) and Financials and some general retail have come back strong. There are many of these stocks in the portfolios (such as Coca-Cola, Procter and Gamble, and many others) but they generally represent a lower portion of the total “value” because the tech stocks have risen so much that their position size is much bigger.

We also see variances by region, with Chinese stocks rising and US stocks generally rising (at least in some sectors) but European stocks stagnant. Since these portfolios seek to choose both US and overseas stocks, we also will see changes in value based on changes in currencies and country-specific dynamics. We do not intend to “predict” which ones will rise and fall, but we encourage a balanced mix of stocks by sector and region / currency where possible.

Some specific stocks have fallen and are “on watch”, including:

  • Alibaba (BABA) – a well run Chinese company with huge cloud presence (like AWS) and a giant financial arm (called ANT), this group has run afoul of regulators and Chinese politics.  It is down about 25% from its high
  • Cloudflare (NET) – Cloudflare runs an advanced online system and trades for more than 30x revenues… making it susceptible to falling when it doesn’t perform exceedingly well in revenue growth or when interest rates increase.  It is down about 20% off its high
  • Tesla (TSLA) – the grand-daddy of all stock high flyers is down about 20% from recent peaks
  • Sumo Logic (SUMO) – SUMO has lost about half its value from peak recently.  While SUMO is still growing quickly, it recently acquired a company and is not exceeding expectations
  • Baozun (BZUN) – Baozun, the Chinese e-commerce support company, is down about 30% off recent highs.  The company was part of a short squeeze and impacted by US / China relations overall, but core operations are solid
  • Gilead (GILD) – this large pharma stock has lost about 20% of its value, despite having high earnings and dividends.  It does not play significantly in the covid space and is a bet for focus on other drugs and treatments in the post-covid era.

By portfolio:

  • Portfolio one -BABA, NET
  • Portfolio two – BABA, NET
  • Portfolio four – TSLA, NET
  • Portfolio five – SUMO, NET, BABA, BZUN
  • Portfolio six – BZUN, GILD, SUMO
  • Portfolio seven – BABA, BZUN, SUMO
  • Portfolio eight – BZUN, SUMO

Portfolio One Updated November 2020

Portfolio One is our longest lived portfolio.  It is 19 years old.  The beneficiary contributed $5000 and the trustee $19,000 for a total of $24,000.  The current value is $72,519 for a gain of $48,519 or 202%, which is 8.6% / year adjusted for the timing of cash flows.  You can see details here or at the link on the right.

Portfolio one has 20 stocks.  The major gains have come from Taiwan Semiconductor Manufacturing (TSM), PayPal (PYPL), Nvidia (NVDA), and Procter & Gamble (PG).  Other winners include Alibaba (BABA), Accenture (ACN), Infosys (INFY), Toyota (TM), and American Electric Power (AEP).  Stocks hitting recent bumps include EA (earnings), CME (ZIRP), SAP (earnings), and BABA (delay of ANT IPO).

Portfolio Two Updated November 2020

Portfolio 2 is 16 years old.  The beneficiary contributed $13,000 and the trustee $17,200 for a total of $30,200.  The current value is $54,779 for a gain of $24,579 which is 81% or 7% / year when adjusted for the timing of cash flows.  Go here for details or at the link on the right.

The portfolio consists of mostly ETF’s with some recent stock purchases.  The portfolio is doing OK overall but Alibaba (BABA) went down recently due to the deferral of the ANT IPO by China.

Portfolio Five Updated November 2020

Portfolio Five is 11 years old.  The beneficiary contributed $6000 and the trustee $12,000 for a total of $18,000.  The current value is $31,765 for a gain of $13,865 or 77% which is 8.5% / year adjusted for the timing of cash flows.  Go here or to the link on the right for more detail.

Gains in the portfolio have been driven by Appian (APPN) which has had a huge run up lately, Cloudflare (NET), Nvidia (NVDA), OKTA (OKTA), Paypal (PYPL), Alibaba (BABA), Union Pacific (UNP) and Procter and Gamble (PG). There are 17 stocks in total in the portfolio, the others are doing OK or are too new to rate. SAP (SAP) was hit recently with their earnings report but is still up overall, and Alibaba (BABA) is still up significantly but fell with the deferral of the ANT IPO.

Portfolio Seven Updated November 2020

Portfolio seven is five years old.  The trustee contributed $6000 and the beneficiary contributed $3000 for a total of $9000.  The current value is $13,919 for a gain of $4,919 or 57%, which is 13% / year adjusted for the timing of cash flows.  Go to the link on the right or here to see the details.

Portfolio gains have been driven by Mastercard (MA), Alibaba (BABA), Taiwan Semiconductor Manufacturing (TSM) and PayPal (PYPL).  There are 10 stocks in the portfolio.  The other stocks are doing OK or it is too early to tell.

Portfolio Performance As of May 2020 and Replacement Stock Selections

The stock market has recovered almost all of the losses incurred with the pandemic.  From peak to trough (Feb 2020 to March 2020) we lost about 23% of our value.  Today, we are down about 7% from peak.  Our percentages do not completely align with the market because some portfolios hold up to 20% cash and some bond investments (BND ETF from Vanguard) and Gold (IAU ETF ticker).  This performance generally aligns with riding the market down and then back up again.Portfolio Performance May 10 2020

Whether by luck or design, our portfolios did not hold most of the industries that bore the brunt of the Covid impact, like airlines, hotels, and commodities. We did have some stocks that we recently sold in some of these hard hit areas.

I reviewed the rest of the portfolio and we are continually “pruning down” the list of stocks that we hold. There are about 30 stocks held across the portfolio right now, down from about 40 or so in the relatively recent past. This does not include ETF’s.

The stocks that have driven the most value in the portfolio that are not bought across all the portfolio (because every beneficiary selects individually) are:

  • Electronic Arts (EA) – videogames
  • Mastercard (MA) – electronic payments & credit cards
  • CME Group (CME) – financial services
  • Alibaba (BABA) – Chinese e-commerce giant
  • Nvida (NVDA) – semiconductors
  • OKTA (OKTA) – SAAS provider of security services
  • Paypal (PYPL) – electronic payments
  • Procter & Gamble (PG) – iconic brand company
  • Taiwan Semi-conductor (TSM) – semiconductors
  • Union Pacific (UNP) – Railways
  • Gold ETF (IAU) – tracks price of gold

If the portfolios that are selecting new stocks don’t currently own one of the stocks listed above, they may want to consider buying them.

New stocks for May 2020:

  • Carrier (CARR) – manufacture and sale of Heating and cooling systems (HVAC).  Recently spun out from a conglomerate
  • Facebook (FB) – owner of Facebook, Instagram, and WhatsApp seems to have recovered from past controversies
  • Cloudflare (NET) – security and edge networking has been growing with the crisis

Stocks To Pick:

Portfolio Four – select three stocks

Portfolio Five – select two stocks

Portfolio Six – select one stock