It’s finally Christmas and it’s the season I look forward to
every year and the time for cold weather travel to ski on powder snow. Unfortunately,
this time is different. I booked a few flights for travel this year and all got
cancelled (including the travel bubble one). If there’s anything good in not being
able to travel is that I managed to save more money. I continued investing in
stocks and I am blessed that my portfolio has done well this year, particularly
my Growth portfolio. Thanks to the circuit breaker, the times spent at home has
allowed me to do more personal reflection, come out with an investment strategy
and act on it.

Despite the US stock market hitting record highs, I believe
next year will still be a good year for equities market. The past few months
rally is fuelled by stimulus rolled out by Federal reserve and government. The next rally
will be underpinned by reopening of business and economies as more people get
vaccinated.

(1) Growth Portfolio

Missing from the photo: Zoom (NASDAQ: ZM)

My growth portfolio had a good run in December. Cybersecurity
companies like Zscaler and Crowdstrike continued to hit new highs after the
earnings report early December since their services are getting more in demand as
cybersecurity concerns mount. Crowdstrike reported 81% year on year increase in
annual recurring revenue. As long as public cloud revenue continues to grow,
Crowdstrike is expected to see growing demand. It also owns a handful of patents:
41 patents in process, and 46 international patents.

https://ir.crowdstrike.com/static-files/547e5c92-3594-4eef-9dfc-9eca37b635f4

Crowdstrike (NASDAQ: CRWD)
Crowdstrike’s latest corporate overview (see link above) shows two
patents: US Patent 9,798,882 (Real-Time Model of states monitored devices) and
US Patent 9,043,903 (Kernel-Level Security Agent) which forms its key part of
the company’s moat. As mentioned in my previous blog, see here: http://whatsbehindthenumbers.blogspot.com/2020/07/why-i-added-crowdstrike-holdings-crwd.html
, Crowdstrike uses AI to scan all the data it gathers from every of its
customers to efficiently search for treats. Once it detects a threat, it
uploads that file to cloud and shutdown the treat, as well as for all its
clients. Hence it truly benefits from network effect like Apple and social
media companies. The more clients they have, the more signals it gets and hence
a better threat graph.

For my growth portfolio, I have initiated new position in
Palantir, Tesla and added back Zoom (after selling it too early for $200 in
May. I plan to add Salesforce as I foresee that it will continue to be a leader
in CRM. If Salesforce’s history shows us anything, is the fact that they have successfully acquired companies in the past and it has proven its ability
to grow and continued to be a leader for CRM Customer Engagement Centre. Sometimes
you just got to place your trust in the management that they can continue to
bring Slack to its ecosystem and sell the services to their current clientele
base.

Why I initiated a small position Tesla (NASDAQ: TSLA)

Investing in Tesla shares is definitely not for the
faint-hearted. Despite astonishing share price rally over the past few months,
I believe in its growth story in terms of its superior technology (electric
motor and battery,) supercharger network and vertical integration are still in the early
stages.

Superior Technology
Tesla’s permanent magnet synchronous reluctance motor (induction
motors in the past) makes it more superior to its competitors, in terms
of price and efficiency. Its battery has allowed Tesla to maintain a grip on EV
market compared to its peers. Its current model 3 has 14% better energy
density. To understand battery energy density, check out this link: https://www.fluxpower.com/blog/what-is-the-energy-density-of-a-lithium-ion-battery#:~:text=What%20is%20Battery%20Energy%20Density,one%20watt%20for%20one%20hour.Currently Tesla’s North American Model S Long Range Plus
promises 402 miles without stopping a charge and Tesla’s Model S can go on
370miles on a single charge.

SuperCharger Network
Secondly, Tesla, like Apple is building its own ecosystem,
where several Mac devices and application are designed to work with each other in
useful ways. Tesla builds its own network of proprietary supercharges that
can fast charge and being proprietary means other EV cannot tap into Tesla’s
network. So, once you own Tesla, everything is designed to work together. Like
Mac, there are no compatibility issues and Tesla holds their owner’s hands
throughout their journey.  

Vertical Integration
Tesla’s vertical integration in terms of manufacturing also
contributes to its superiority in technology. Most of the Tesla’s car parts are
developed in house which means improving its supply chain coordination, better
costs control (no middleman) and faster rate of innovation.

I read articles about Tesla and there are worries that it
faces competition from other new EV players. I see this as a positive for
Tesla, as these new EV rollouts by other companies will help to make electric vehicle the new mainstream.
So when demand of EV starts picking up, consumers will start to compare and
realize that Tesla is the best in class.

(2) Dividend Portfolio

Capitaland Integrated Commercial Trust (SGX: C38U)
I have closed all positions for Tracker Fund of HK 2800, and
divested Capitaland Integrated Commercial Trust .However I am left with fewer
than 100 shares as I didn’t manage to offload in the unit share market on the
same day. The reason for divesting is that I already own a handful of retail Reits
and any sort of diversification is not going to lower my risks. Secondly, it’s because of
its 6% exposure to hospitality sector, RC Hotels, which will face challenges in maintaining its occupancy rate in short and midterm. Lastly its commercial business which consists of mainly Grade
A CBD office may see subdued demand due to prevalence of WFH measures, which I
believe will not go away post-Covid 19. In the face of business uncertainty, tenants
are also asking for shorter term renewals and considering downsizing their
office space.

Ascendas REIT (SGX: A17U)
Unfortunately, I didn’t learn my lesson from FCT and subscribed for 2926
excess rights for Ascendas Reit. I was expecting that Ascendas Reit to perform better
exrights than FCT as its rights dilution is much lesser compared to FCT. But I
still see the acquisition as a positive move, especially it’s DPU accretive and attractive
dividend yield of 5% in such low interest rate environment.

I have also added Mapletree Logistic Trust too. In my view, Reits and Financials stocks that pays good dividend should
continue to do well against the backdrop of interest rates staying low for some
time. For 2021, will be a year to buildup my warchest and any weakness in Reits
is an opportunity to add.

Stock Portfolio Net Worth

Stocks Portfolio= $442,120+$7,036= $449,156

$7,036 is the value of 2,400 shares of NikkoAM STI ETF. Indicative Value as of 126th Dec (divested 2,417 in Nov 2020, and will be divesting in batches)

Cash at hand= $50,600

Total Portfolio Value= $499,756

June 2022’s goal- 85.59% achieved

June 2030’s Goal- 12.78% achieved

Feel free to scan on the QR code 🙂