Wednesday, March 14, 2018

PC is back?

Several stocks linked to personal computers (PC) have gained significantly in last 30 days or so:

Micron up whopping 47%
Western Digital up 28%
Intel up 18%

A bit more modest gains for Nvidia (up 7%) and AMD (up 3%).


What's going on here?

In my opinion atleast three tailwinds.

1) Market has revised pricing for Micron, Western Digital and Intel - rightly so.

As I wrote in December Micron, Western Digital and Intel seemed really inexpensive compared to peers and overall market. Especially so when considering how well these companies are positioned in their respective markets and with respect to growing demand for what they each produce.

2) Even though these companies contribute to much wider market, the "death of PC" narrative since iPhone and iPad came out has caused these companies to be priced at discount compared to the more "trendy" technology stocks.

3) Semiconductor sector overall continues to be red hot

The PHLX Semiconductor SOX ETF, which houses 30 chips stocks, has surpassed its record highs of March 2000 and is up nearly 16 percent in 2018. I recommend reading the linked article and watching the embedded video (contains Micron vs. NVIDIA commentary).

--

To drill a bit deeper to the "PC is back" theme, I would like to quote Jim Cramer from his recent "The personal computer is back" commentary:
 "The action off a return to growth of the PC, the steady burgeoning data center and the gaming business is now too great to ignore. This group is back and it's way too cheap. It's time to buy the breakout, as I believe the numbers are too low and the valuations are just plain out of whack with the rest of the stock market."

PC gaming has been somewhat shadowed by raise of mobile gaming and steady march of the consoles. Now it's raising back to focus thanks to e-sports and hit titles.

I am consuming games over all the mentioned platforms, but I have always liked PC gaming the best. It's the customizability of hardware and software, faster time-to-market of new games and cost of games when compared to console titles.


Disclosure: Author owns shares in Micron, Western Digital and Intel.

Thursday, January 4, 2018

Allocations for 2018

At the start of the year 2018 our portfolio was allocated on high level in pretty much same way is it was last year:

Stocks 98,7%
Gold 1,3%
Cash 0,1%

No bonds. We simply substitute bonds with quality dividend payers in our portfolio.


Geographical Allocation (stocks):

Europe 59,4%
North America 30,1%
Emerging markets 10,5%

Actually, place of incorporation is pretty meaningless for most corporations we have invested in. Most operate and sell globally.


Sector Allocation (stocks) - in order of weight in portfolio:

Technology (Other)
Financial
Technology (Semiconductor)
Healthcare
Clean Energy
Basic Materials & related services
Industrial Goods


Top 5 positions - in order of weight in portfolio:

Siili Solutions (Finland)
Berkshire Hathaway (USA)
Fortum (Finland)
Citycon (Finland)
UPM (Finland)


19,4% of all stock positions are done via ETFs out of which 7,7% are allocated to broad emerging market ETFs. Rest are sector-specific ETFs.

Monday, January 1, 2018

Portfolio performance 2009-2017


Happy New Year 2018!

It's once again time to check how our portfolio fared in the previous year against passive index investing.

The year 2017 was a mixed bag. Our global ETF and U.S stock positions delivered very good results. Micron with +82,36% gain was by far our best performing position and generally technology stocks were having a very good run. Our Finnish large caps were not having a good year, but luckily the small caps gained nicely (on average >30%).

Overall our portfolio gained 12,1% vs. benchmark investment 7,3%. The "benchmark investment" is an imaginary passive ETF that closely tracks the performance of MSCI all country world (ACWI) index in euros (more info here).

In terms of cumulative yearly gains, we are now 11,2% above the benchmark investment:

Portfolio performance 2009-2017.
 Note: "Difference" column uses exact values as input rather than figures rounded to 1 decimal that are displayed.

Cumulative gains of our portfolio (blue line) vs. benchmark investment (red line). 31.12.2008 = 100.


In the year 2017 we had very good tailwind from euro which raised against U.S dollar from 1,054 to 1,201. Our portfolio contains significantly more European stocks than the ACWI index and we measure gains in euros, and therefore, EUR/USD exchange rate matters a lot.

Going into 2018 we continue to be almost 100% invested into stocks. I will cover our allocation in the next post.

Saturday, December 23, 2017

Own positions compared to those of famous money managers

In continuation to my previous post I wanted to see how our positions in stocks listed in U.S. compare to those of 64 money managers followed by Dataroma.com.

Ownership count among the 'superinvestors':

Berkshire Hathaway Inc. (BRK-B): 16
General Electric Company (GE): 11
Intel Corporation (INTC): 3
Micron Technology, Inc. (MU): 3
Nokia Corporation (NOK): 2
Western Digital Corporation (WDC): 3

It's somewhat surprising how small the ownsership count is in the tech stocks I have selected. Especially in U.S. based companies like Intel, which are leading companies in their industries and trading at very reasonable valuations.

I also wanted to see which money managers have selected same plays.
Robert Torray is holding currently 3 out our 6 stocks: BRK.B, GE, INTC.

There are quite many which have 2 out of 6 common (five money managers). From those I raise the names that have selected min. 2 out of our 4 tech stocks, because those are the most interesting to me.

Robert Olstein of Olstein Capital Management has position in both INTC and WDC.
Meridian Contrarian Fund is long in NOK and MU.
David Tepper of Appaloosa Management holds both MU and WDC.

I think I just found more money managers to follow besides the two I mentioned in my previous post ..


Thursday, December 21, 2017

The only stock both Warren Buffett and David Einhorn have in their top 10 holdings

I follow many money managers. Two of my favourites to watch are Warren Buffett of Berkshire Hathaway and David Einhorn of Greenligh Capital.

After comparing their top 10 holdings side by side, I noticed they have only one stock in common: Apple (AAPL).

Their history on Apple ownership is, however, very much different. Einhorn initiated position in Apple as early as in Q2 2010* where as Buffett's position in Apple was disclosed in Q1 2016*.

Einhorn has reduced his position in recent quarters. Apple used to be his top position still in Q4 2016*. Now it's 5th largest*. In Berkshire's portfolio Apple is currently* 3rd largest investment.

Despite following both closely, I don't share any of their top 10 holdings currently. I admit I have considered Apple multiple times and regret for not hopping on board then.


(*) Reference for positions and their history: Dataroma.com.