Saturday, January 4, 2020

Strategic Investor 2019 Review

FTSE STI ended 2019 at 3222.83 compared with 3068.76 a year ago, representing a gain of  154.07 point or 5.02%.  It was a good year for global stock market with US markets leading the top performance of more than 20% for the year.  This happened despite the year long ongoing trade war between the US and China which started in 2018.  After few round of tit-for-tat sparring between the 2, they have finally reached a "Phase One" deal to prevent further escalation.  The deal as of now is expected to be signed on the 15th January 2020.  Much detail on the deal still remain unclear.  Since it is just a "Phase One" and not sure how many more phases it can go on, expectation for the "Phase One" should not remain high and of any high quality.  The following summarized my Investment Portfolio performance for 2019 vs 2018

Non-Strategic Unrealized Gain/Loss              +46.74%         +34.89%      +33.96%
Strategic Unrealized Gain/Loss              +27.34%         +22.20%      +23.15%
Portfolio Unrealized Gain/Loss              +31.37%         +36.59%      -14.27%
Realized Gain/Loss   +29.08%   +10.73%   +171.02%
Dividend Return   +62.60%   +57.15%   +9.53%
Cash Holding   +32.89%   +33.13%   -0.72%   
Portfolio   +123.05%   +104.48%   +17.77%   
STI   3222.83   3068.76   +5.02%

  Annualized (w/o dividend)  Annualized (with dividend)  
Genting SP+4.28%+5.66%
First Reit+4.32%+9.45%
CapitaMall Trust+7.72%+11.75%
Kep Corp-1.05%+0.11%
MapletreeInd Trust  +13.71%+16.58%
Kep DC Reit+15.83%+18.62%
Frasers Cpt Trust+13.65%+17.70%

STI was relatively weaker than regional bourses given its 5.02% rise in 2019 but my Investment Portfolio fared much better than STI compared to being under-performed than STI in 2018.  Some key points for 2019 performance :-

1. The solid performance of CapitaMall Trust, MapletreeInd Trust, Kep DC Reit and Frasers Cpt Trust helped pushed up the Non-Strategic unrealized gain, registering a rise of +33.96%.

2. The Strategic section continued to perform and helping the overall portfolio despite not doing much in acquiring more units in 2019. 

3. Portfolio unrealized gain fell from +36.59% in 2018 to +31.37% in 2019 due to realizing the gain in the Strategic section.  This is why the Portfolio realized gain jumped from +10.73% in 2018 to +29.08% in 2019.

4. Portfolio dividend return continued to provide a constant stream of gain in 2019, contributing a rise of +9.53%.  As such, Portfolio dividend return has exceeded the 60% mark.

5. Cash holding saw a dip from +33.13% in 2018 to +32.89% in 2019 mainly due to preferential offering subscription in Frasers Cpt Trust and Kep DC Reit.

6. As in 2018, there was three stocks (SIA, Kep Corp and SingPost) registered negative annualized return (excluding dividend) and still remained the same in 2019

7. Overall Portfolio return still maintain above the 100% level which was first reached in February 2017 but just a slight below the highest of +125.65% registered in January 2018.  +123.47% was the highest in 2019 registered in November.

The following summarized the Stock Incubator portfolio performance for 2018 vs 2017.

Unrealized Gain/Loss              +40.93%         +48.82%     -16.16%  
Realized Gain/Loss   +32.29%   +32.29%  +0.00% 
Dividend Return   +14.22%   +12.36%  +15.05%  
Cash Holding   +58.93%   +55.99%  +5.25%  
Portfolio  +87.44%   +93.47%    -6.45%   
STI   3222.83   3068.76   +5.02%

Key points for 2018 performance :-

1. Unlike the Investment Portfolio, Stock Incubator Portfolio under-performed STI in 2019, registered a dip of -6.45% due to a -16.16% drop in the unrealized gain.

2. The main culprit for the under-performing was Nordic Group as it closed $0.29 in 2019 vs $0.40 in 2018.  That is a drop of unrealized profit from +283.93% to +183.13%.

3. Creative Technology also contributed part of the poor performance as it closed $3.17 in 2019 vs $3.79 in 2018. 

4. Dividend return continued to cushion the portfolio with a increase of +15.05% compared to previous year.

5. The first bright spot for Stock Incubator Portfolio was strategically reduced the holding price of Creative Technology from $5.4838 in 2018 to $4.0804 in 2019, a reduction of 25.59%, thereby recovering some of the capital being invested.

6. The second bright spot for Stock Incubator Portfolio was finally double the quantity of Valuetronics at $0 cost since first vested in 2017.  This is also the only stock in this portfolio that closed higher than 2018.

7. Due to strategic action in recovering capital, cash holding rose from +55.99% in 2018 to +58.93% in 2019

Based on 2019 performance, the following conclusion can be derived from it :-

1. The effort in the Strategic section which was first built up in 2015 according to 孙子兵法 finally paid off after fully divested in 2019.  Though the total quantity from the 5 stocks that were accumulated was just 21.28% of what was initially targeted, the impact is not something to be ignored in the overall Portfolio performance.

2. For Stock Incubator portfolio, the overall performance was disappointing but it is in a much safer hand than the Investment Portfolio given that both Nordic Group and Valuetronics practically considered vested at $0 cost and Creative Technology is aggressively recovering the capital being invested.

Looking ahead 2020, after several actions to the portfolios in particular the Investment Portfolio, are in a better situation to cushion any financial crisis in 2020 if happens.  This was purely working according to 孙子兵法.

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