Q1, FY20 returns

I had a great start to FY20 hitting 12.45% returns against the benchmark of 2.72%. This was primarily realised by KGN, DDR and DMP, which combined, make up nearly 40% of my portfolio. Just goes to show the benefits of concentration.

DDR is hard to value right now as the share price as run hard and we need to see if the business’s kick up in growth is permanent. I’ve remained a holder but trimmed back my concentration – around 12%. I’m confident the business is in great hands.

I am very optimistic about DMP’s continued efficiencies and growth in Japan. With 3Ten and a host of other technology, Domino’s have the ability to buy an established chain in a country and transform it into a dominant force. It is still very early days in Japan, wait until the store count expands and their newly created category (budget pizzas as a lunch option for workers) starts to catch on.

KGN continues to launch new products, including a credit card – it’s impossible to measure the future upside as they add more and more businesses. These ventures carry almost no risk because the partner has all the infrastructure, Kogan simply collects a dealer commission. If a better option appears elsewhere, they can switch providers at the end of their contract.

WEB was responsible for the majority of my losses, the share price having plunged to $10.15 at time of writing from the 52-week high of $17.19. I have the bankruptcy of Thomas Cook to thank for this price fall (which is sad new for all those employed by Thomas Cook) – But I believe the fall to be temporary.

Webjet’s underlying business remains strong, and it’s exactly the low-cost players like Webjet who have contributed to the downfall of traditional players. I expect the business to continue performing well.

I’m not managing my portfolio very actively, and not searching hard for ideas. With markets at or near all-time highs, I’m not putting much effort into looking for new ideas. I’ll build up my cash for the time being.


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