Portfolio Investment Principles & Watchlist Update

Portfolio Updates

Every end/beginning of the month, I provide a portfolio update of the following:

• Portfolio progress (in USD)
• Performance update (TWR: Time weighted returns)
• Portfolio % Allocations of my Positions (Premium subscribers)
• Watchlist buy levels (Premium subscribers)
• Overall strategy of what I'm doing next with my capital (Premium subscribers)

I try to keep updates no more than once a month, because I don't wish to give the impression that this is a short-term / actively traded portfolio nor to encourage anyone that it is.

My goal is to beat the S&P500 on a TWR basis over 5 & 10 years. I do not use cumulative returns, Money-Weighted returns or care about YTD returns. What matters most is the 5 and 10 yr annualized TWR (with preference for the latter, sometimes sacrificing the former).

Portfolio Principles

On buying:

Since I started the portfolio, I have only made 67 transactions and almost all of them were during periods of deep pessimism in the general market or for a particular company.

I never buy when a stock or the market is experiencing optimism and prefer to wait months, sometimes years, until bad news hits the company once again and enough pessimism is baked into the price and at valuation levels I deem as under-valued - what I term as a "fat pitch".

It's important of course, to firstly qualify that the stock has a competitive sustainable moat and passes some of my other selection criteria before I even consider an entry (more on this in a separate article).

The result of this modus operandi is that I may underperform the market from time to time, but I am ok as long as I beat the market on average over a 5 & 10 year period.

On selling:

Some of my positions have either nearly doubled or tripled since I bought them 2-3 years ago. However, I never sell a company on valuation concerns. A 5 bagger stock doesn't reach 5 bag status if you sell it when it doubles or triples. This is the greatest fallacy of people wanting multi-bagger stocks, yet selling on the first instance of short-term over-valuation - Short-term CAGR may be optimized, but not the long-term performance.

The only reasons I sell are if:

• I need money (for living expenses or for key milestone purchases like a house/children's education)
• My long term fundamental judgement of a company has changed
• I find a company that has a stronger long-term competitive moat, grows fundamentally faster and is more value-priced than the position I intend to trade it for

Otherwise, apart from the above reasons, my portfolio has barely any sell activity (as you can see with the 'B' flags far overwhelming the 'S' flags in the diagram above).

In other words, I see myself as an owner of a business and my theoretical timeline to hold onto ownership is forever.

On allocation sizing:

My portfolio has consistently been <10 positions since inception and I prefer concentration over diversification for diversification's sake. The 3 investors that best represent my philosophy are Chris Hohn, Nick Sleep and Dev Kantesaria.

The reason for said concentration, is because,

• I don't believe in investing in my 10th best idea
• There is an opportunity cost if I let a new 'B-tier' stock take up capital instead of allocating to a better 'A-tier' stock I'm already invested in. 'A-tier' stocks are rare, and naturally, a portfolio can only contain so many of these. I prefer to never let any B-tiers near my portfolio.
• I believe this is the best way to beat the market, specifically the S&P500, long term.

Watchlist Update & My Next Investment Steps:

Note: The following does not constitute financial advice/recommendations and is merely a journal of my own portfolio investment actions.

See below: (🔒Unlock with premium tier):

Portfolio allocation (in USD) by market value currently stands as follows: