They say that you can't beat the market and you should leave your money to the "professionals". I certainly don't believe this and I've spent the last decade learning about the stock market and making my own investment decisions. I've also spent the last few years managing my superannuation portfolio and this is a review of all my investments and speculations for 2017:
Direct Investments
Last year I held two stocks directly: Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL):
FB (1 year return 55%)
Facebook was a no brainer when I bought it, CPM (the cost to advertisers per one thousand views of an ad) was severely lagging behind Google at the time, Gary Vaynerchuk came out stating that CPM's were grossly undervalued and set to bag. Almost exactly one year ago, Facebook's estimated growth forecast was 41%p.a. for the next 5 years based on broker consensus and forward P/E was 24x, this was a PEG ratio of 0.6x. Facebook was an obvious buy and provided an exceptional return.
AAPL (1 year return 48%)
Apple was still beaten up early this year, I held from prior to this and topped up a few times. It was so cheap that even Warren Buffett jumped in for a piece of the action and he doesn't even do tech stocks! I was calling out Apple as undervalued on my Facebook groups and I copped a ton of flak for it. I looked past the shorter term issues and saw a brand with extremely loyal customers that has no problem charging a premium for it's brand and eco-system that is almost impossible for a competitor to replicate, I saw (and still see) so much optionality apart from the upgrade cycle in connected fitness, the connected home and driverless car technology. My bet paid off and I ended up selling my direct holdings but still hold a large position in my superannuation fund. Apple was on a single digit P/E once cash was stripped out at the time of purchase and analyst forecasts were overly cautious.
Superannuation (retirement) fund
My Superannuation fund held (and still holds) the following stocks (from largest positions to smallest):
FB, AAPL, CSL.AX, NVDA, AMZN, GOOG, ALGN, TSLA, CTD.AX, RMD.AX, RHC.AX, ISRG, WFD.AX, NAN.AX, XRO.AX, CL1.AX, UA, NXT.AX, MP1.AX, CAT.AX,
Recent additions: Appen (APX.AX), GetSwift (GSW.AX), Global Robotics and Automation ETF (ROBO.AX) and Global Cybersecurity ETF (HACK.AX).
FB + AAPL
Already covered above
CSL (1 year return 37%)
This stock has always been a bottom draw "buy and forget" investment for me and I had no reason to re-think my investment case this year. It remains a superbly managed company that remains a global leader in blood products, vaccines and immunotherapies.
NVDA (1 year return 95%)
Nvidia stock has more tailwinds behind it than any other company I can think of; from driverless cars to AI and chips for smart devices but a driver that may have surprised many this year was the demand for cards by cryptocurrency miners. Looked expensive when I bought it and even more expensive now, will probably always look expensive as long as it remains the top dog in all these up and coming industries.
AMZN (1 year return 57%)
Amazon is another stock that looks expensive on traditional metrics but a lot of it has to do with the fact that it keeps plowing money back into growth, which is leading to very healthy returns for longer term focused shareholders and better deals for consumers.
GOOG (1 year return 35%)
Google remains the leader in search and video and continues to kick goals, growth drivers were mobile search and Youtube. Longer term, I think the moonshots will start to pay off, it won't be long until we are all wearing Google glasses/contacts.
ALGN (1 year return 130%)
Align Technologies make Invisalign clear teeth aligners as well as hardware that goes with them. The company continues to remain at the cutting edge and is miles ahead of the old orthodontic systems and devices. Misaligned teeth are a massively under-treated condition globally and not only do we understand more about the systematic long-term health effects of not correcting bites but also the "selfie generation" has been a massive tailwind for the company. Great business, investment case has only slightly weakened due to the rise in stock price.
TSLA (1 year return 47%)
Tesla is a true cult stock and it's price has a hell of a lot of growth baked in, luckily my cost base is only a fraction of current value. I truly believe the stock will grow into it's valuation and then some. I am a believer in Elon Musk and truly hope to see the model 3's flooding the streets sooner rather than later. Acquisition of SolarCity made a lot of sense considering the supercharger network, which has continued to grow rapidly. A few speed bumps were hit but to be expected for such an ambitious company.
CTD (1 year return 13%)
Corporate Travel Management is a superbly managed global travel management company for organisations. The company continues to work to consolidate a heavily fragmented global travel market and Jamie Pherous is the right man for the job. Another good year of performance, the investment case remains intact.
RMD (1 year return 26%)
Another great year for CPAP device maker and sleep technology company Resmed. The company remains a leader in an industry with strong tailwinds- mainly under-diagnosis of sleep apnea. The return from getting one of these machines to the right people is truly life changing and of great benefit to society. Investment case remains intact.
RHC (1 year return n/a)
I bought some Ramsay Healthcare when it was sold off late last year. As a well-managed global leader in private hospitals, it remains a solid long term hold for the superannuation portfolio.
ISRG (1 year return 82%)
Intuitive Surgical is a global leader in robotic surgery machines, most notably the da Vinci Surgical System. Hernia repair became the biggest growth driver this year and the company continues it's focus on driving adoption. A new machine was launched (da Vinci X) and another two are in the pipeline, including a flexible, catheter-based robotic system. The company also raised forecasts from 9-12% procedure growth to 14-15% for the year. All in all, this is another top dog, first mover in an up and coming industry with a massive growth runway.
WFD (1 year return 0%)
Westfield recently received an opportunistic takeover offer but I continue to hold just in case it doesn't go through or get trumped, I made a short video on the ASX/NZX Stock Investors group on Facebook recently sharing my thoughts on this wonderful business.
NAN (1 year return -9%)
Nanosonics have developed a machine that disinfects ultrasound probes to a much better standard than the way that many hospitals do at the moment and it's machine has already been adopted by the top hospitals around the world. Partnered with GE and employing a razor-and-blades model, it is still early days for the company as many countries bring their standards of care in relation to disinfection of ultrasound probes up to a higher level to prevent the spread of diseases like HPV. Happy to hold for the moment with a longer-term view.
XRO (1 year return 69%)
Patience is starting to pay off for this boutique accounting software provider. Xero continuing to grow rapidly despite increasing competition from giants like Intuit. Speculative.
CL1 (1 year return n/a)
Picked up Class on some weakness during the year, the company is a leader in cloud-based platforms for managing financial portfolios, a sector with strong tailwinds.
UA (1 year return -50%)
Terrible year for Under Armour in the US, CEO made some controversial right-wing political comments while a lead player that is sponsored made some controversial left-wing comments. In quite a political country it turned a lot of people away from wearing UA. On the other hand, global growth was impressive, including in Australia & NZ. On reflection, I should have probably sold a long time ago but I do really like the brand and still believe in the long term potential. It was also priced for a lot of growth and this is the price you pay when a company priced for growth does not live up to expectations. Will continue to hold, but would not have blamed anyone that sold.
NXT (1 year return n/a)
NextDC is the biggest independant data centre operator in Australia, another top dog business with massive tailwinds (picked up during the year).
MP1 (1 year return n/a)
I picked up some Megaport during the year. There are strong tailwinds behind this "elastic connectivity" provider which provides flexible/on-demand internet-related services to organisations. Bevan Slattery is founder and chairman, he was the man behind the hugely suceessful PIPE Networks (bought out by TPG) and NextDC. Still speculative as it hasn't delivered profits yet.
CAT (1 year return -30%)
Catapult remains the world-leader in sports specific GPS monitoring, continues to aggressively buy up competitors as many investors get impatient waiting for profits. Speculative.
ACX (1 year return 40%)
Aconex was bought our recently by Oracle at a hefty premium, great news for shareholders!
APX (1 year return n/a)
Recently added speculative position, Appen is a leader in machine learning/AI on the ASX that continues to shoot the lights out!
GSW
GetSwift produces software to help companies manage and improve deliveries. The software is well designed and the company has a lot of big names on the client list including Yum Brands and Lion Nathan. I truly admire products like this that actually improves profitability and service for a business once they adopt it, it's a no-brainer for many organisations. Highly speculative.
ROBO
Recently added the Global Robotics and Automation ETF, strong tailwinds for the sector and it makes a nice addition to the superannuation fund.
HACK
Recently added the Global Cybersecurity ETF, very strong tailwinds for this sector and it's extremely difficult to pick winners in this space.
Cryptocurrency
Decided to speculate a little in cryptocurrency this year, I limited my outlay to no more than 1% of my net wealth
Returns:
BTC: 300%
ETH: 200%
LTC: 350%
BCH: -40%
Also bought a few mining contracts through Genesis (Ethereum and Monero) that are doing well, although I would have done better just buying the coins. I bought a mining contract through Hashflare (Bitcoin) but i'm a little concerned about the companies legitimacy after not being able to find any proof of their server farms.
So that's it for this year
A pretty great year and just shows that with some time and dedication, you can greatly outperform the market and fund managers. I plan to stay a little more cashed up and conservative this year but will always keep my eye out for opportunities, which currently seem few and far between. I'm also very interested in learning more about the various blockchain projects like EOS, Cardano etc.
How was your year? If you don't have Steemit, please sign up and join the discussion :) I will respond to each and every one of you.
Please note that this is a journal of my personal investing journey and not advice, please do not make any financial decision based on my post