After a short blackout period where I took a total break from looking at public markets, and a pretty long break from writing posts, here’s an update.
I’ve turned over a chunk of my portfolio, added a couple of new ideas, and shut down some others. The biggest call was getting out of Kogan after the FY18 numbers were released at $6.18, then buying back in progressively at an average price around $3.30 – that’s worked out pretty well for me.
I’ve shifted my strategy slightly towards a less actively managed, “Sit on your ass” portfolio, as Charlie Munger would put it – well-managed companies with strong long-term growth prospects that will compound at a rate higher than the market.
A couple of reasons for this:
- I’m much better at picking good buys than I am deciding when to sell those buys
- I’m too busy for investing to be a part-time job which is what you need to research higher-turnover stocks
- I’ve turned over much of my portfolio in the past 12 months. Holding periods above 12 months incur less CGT (10% instead of 15% within Superannuation)
The bigger bets that I’m holding for the long term are below:
DDR (Dicker Data): Exceptional management by the majority owners and founders over a period of 40 years. Compounding well above the market and strong dividend payer, excellent returns on capital. Distribution is a tough business but being the most efficient is a tremendous moat.
KGN (Kogan): I’m not as big a believer as I used to be but there are so many new income streams coming on with 100% margins that Kogan will do well long-term.
REH (Reece): Virtually unstoppable in Australia and now expanding overseas. Will continue to grow steadily, in my view will be less affected by a real estate crash than many think.
WEB (Webjet): Very efficient business with extraordinary growth. Webjet will continue to scale, and the Thomas Cook contract appears to be going well. Great scale opportunity, particularly in business travel.
TCL (Transurban): Diversified asset base with many long-term contracts and reliable sources of revenue. Huge upside if they expand into other North American cities. Very well-positioned to capture future opportunities in Australia.
DMP (Domino’s Pizza): Backend system is best in the world, and could easily be expanded beyond pizza. The opportunity for Japan is huge, and they are creating new market segments with their budget range targeting worker lunches.
I’m almost 100% invested, and will keep shovelling excess money into these ideas. What are the common themes? Companies are all extremely data-driven and dominated by tech workers (Transurban for example has close to 50% of their workforce in technology roles).
There are other companies with bigger upside but which require more oversight and have more associated risk. All of the above companies are profitable, with strong track records of growth. An easy no-brainer portfolio where I can keep compounding my knowledge of these companies.
Performance FYTD is 14.85% vs the ASX300 index at around 7.56%.