My Portfolio On The 24th Of May 2021

Here’s how my portfolio of publicly listed shares looks on the 24th of May 2021.

As you can see, I culled my holding in ATM and bought some retail stocks (HLG & KMD) and a wafer of MFT stock.

Why I sold My ATM Shares

The thinking behind this was that ATM had indicated that they were looking to return shareholder wealth (attempt to push the share price up) with a share buyback scheme. While this is arguably a more tax efficient way to return wealth to shareholders, I was looking to hold for growth and then a dividend income. So in this very basic way, ATM no longer fitted in my portfolio. I needed to sell.

The next question was when they should be removed. The share price looked like it was still falling, with bad announcement after bad announcement. I had already lost my trust in the directorate during concerns around potential insider trading, but was feeling displeased with what I considered to be flowery words around the strategy in the reports.

The final straw was when I saw the LinkedIn suggestions of all the people working in ATM with “Strategy” in their job title, and my feeling of no strategy being successfully implemented – it reminded me of when I worked in a government IT department that had more managers, analysts, project managers, coordinators, etc. than actual qualified, hands-on IT workers (of which by my estimate, numbered less than 25%).

With this final feeling of frustration and disappointment as it seemed that money was not spent to get more MBS shops in China added to their stockists – which was part of the growth I was hoping to see, I sold my ATM shares a few weeks ago, before the share price dropped below $6.00.

To wrap up my final, final thoughts on ATM, I also have concerns that the price of their milk & infant formula is more expensive than other A2 branded milk. I was also displeased to read how long it would take for the recent acquisition to become profitable.

I believe that ATM have a superior product, but I have concerns that the market may not see it the same as I do, so I sincerely hope that ATM recover their position – my gut feeling is that they will once COVID is gone from the equation and we can see another great Kiwi success story, but that will be at least a year in my opinion – and there are other places I would rather have my money invested elsewhere, in order to enjoy a year or two’s growth and dividends before ATM recovers.


My Portfolio On The 13th Of January 2021

I’ve been stocking up on some Fisher Paykel Healthcare (NZX.FPH) shares over the past few days, so I thought I’d update my pie chart to get a visual representation of my portfolio as it has previously proved useful to me.

The chart isn’t as useful to me as it has previously been because I’m not so fussed about having a balanced portfolio at this stage. This year is mainly about accumulating growth stocks (particularly those growing this year) so I can get as much of a discount as possible to next year’s prices, in preparation of selling up some angel investments to enable my retirement by the end of next financial year.

My case for investing in FPH is because it’s a long term growth stock, which means that even if it falls after proliferation of COVID vaccines, it should recover the position within a few years. However, it’s my believe that this perpetually expensive stock is likely to surprise on the up-side. The reason for this is that the last guidance provided made some conservative assumptions, and the COVID situation has got worse since that guidance was released. Additionally, my research suggests that vaccine deliveries are not happening very quickly when the global population is concerned. I suspect that COVID will be around a long time to come, so FPH is a good bet.

I feel happy to be overweight in FPH and SUM (because of the way the residential property market is going), but am disappointed that I didn’t buy more EBO shares back when I had identified them as good value.


Changing My Investing Strategy – Part I

Past Strategies

I’ve had a number of strategies for investing over the years. Initially I was a property investor who planned to do a FIRE (Financial Independence, Retire Early) type approach to saving in order to buy 5 houses to rent, then give up the aggressive FIRE saving to live a normal life for 30 years until those houses were paid off so I could live off the rent.

The property market changed a few years into my plans, which altered my strategy as each year passed, changing from a strategy to buy and sell to retire, to a buy and leverage to buy stocks, eventually becoming too much of a burdon in the effort to do my tax returns and dealing with bad tenants, causing me to part ways with property and focus solely on stocks.

I then discovered Angel Investing, and have made significant gains investing a number of six-figure sums in a handful of companies in this arena, which has altered my retirement timeframes significantly.

With my retirement timeframe brought forward, I now need to change my investment strategy from investing in growth stocks that will eventually pay dividends in 5-10 years time, to a new strategy that will give me an income and security in my retirement, which will be either next year or the year after – though truthfully I haven’t decided if I want to work for a few more years to get more security, socialize while my friends are at work, or become mega rich (the later is possibly less interesting to me, unless it would facilitate some other interest, such as making a business out of some of my inventions – yes, I’m also an inventor!).

How To Make An Investment Strategy

Having a strategy is something often talked about, but not often explained. People new to investing will always say:

“My strategy is just to make a bunch of money.”

“Buy low, sell high!” – words often proclaimed by the least educated of investors.

“I will invest in shares until I have enough money to buy a house.”

New Investors

Actually to be fair, the last one in the list of quotes there is almost a strategy.

To build an investment strategy, you first need a goal. That goal will most likely be to buy a house or save for retirement, though it could be as simple as buying a car or saving for a holiday. In fact, I would suggest that everyone’s goal should be to save for retirement, and holidays, homes and cars are things that you include in your strategy as interruptions along the way.

Once you have a goal for your strategy, you need to do some financial modelling. This will tell you what you need to do in order to meet your goals.

To do a financial model, first work out how much money you’ll need to attain your goal(s). Then work out how much you can save, how much you’ll need to invest each year, and how much your investments need to grow to attain the goal(s) set out. You’ll need to do several of these models to model what happens if things go right, wrong or somewhere in between. You’ll need a strategy for each scenario (or at least a strategy to deal with the near term issues).

Once you’ve got your models sorted out, you should think about whether they are tolerable. Do they prevent you from having the sort of life you want? If so, perhaps you can make another model that has some compromise? Your compromise should not involve making your financial models rely on your situation becoming more fortuitous than you might realistically expect. Alternatively this might be the nudge you need to put in the effort to get that higher paid job.

Once you have your financial model, you should refine your investment strategy around this. There might be a few investment strategies that fit your models. For example, at for the past few years, my strategy was to save like crazy then put my savings into investments that will grow at a rate that does not require me to save any of my salary – which I then used as a giant leisure budget as compensation for my time spend saving. Of course this was balanced by a backup plan which involved my savings being redirected back to investing if things didn’t go to plan.

You should always have at least one backup plan.

In fact, not only should you have backup plans, but you should have multiple plans that phase in and out of existence as situations change, much like my car keys seem to when I’m looking for them.

My Investing Strategy For 2021

My goal remains the same, which is to retire, but my timeframes have changed significantly. Therefore my new goal is to invest in things that will:

  • Give me dividends within the next 1-2 years, every year. This basically means that I need investments that give me dividends now, which have a history of paying dividends, so I can be sure that they will produce dividends in 1-2 years.
  • Gives me security of income for decades to come. This means that I’ll need access to a pot of money that can get me through bad times, with possibly a Plan C in case that goes awry. This also means that I’ll need my dividend producing stocks to grow the dividend return at a rate higher than inflation to be comfortable, or come up with an alternative strategy such as buying growth stocks that may not pay dividends, but can be sold at a later date to cover the failings of my dividend growth stocks – not my preference. I will also need a significant amount of diversification such that the loss of a few stocks from my portfolio will not make my lifestyle untenable, or have a Plan D that makes my lifestyle less expensive while I save / work for enough money to replenish my position.

As I’ve written a lot today, I think I might write up the rest of my Investing Strategy for 2021 another day. In the next article of this subject I will cover my costs, how I plan to diversify and cover my risks, and my investing strategy for the coming year prior to the preparation for my retirement, which will involved divesting my holdings in companies and investing in dividend paying stocks (unless those companies start of pay reliable dividends backed by a policy in the Company Constitution).


My Portfolio On The 3rd Of September 2020

I’ve been on a bit of a spending spree recently. This has been mainly as a result of restructuring my finances so my tax return is simpler. Having uninvested money gives me an itchy buy-button finger (even though there are likely better opportunities around the corner), but also because there have been a couple of buying opportunities pop up.

Prior to the article reporting my portfolio on the 28th of August, I had never represented my shareholdings as a pie chart. The main reason I did this was because as someone who writes about shares, I wanted to be open about what I hold so readers can take this into consideration when they read my articles. I figured that this might help readers identify my personal biases and also indicate the level of conviction I have behind my writing.

I wanted to indicate a level of conviction, without being too open, so a pie chart showing what percentage each stock represents of my entire (listed) portfolio seemed like a good way to go. Oddly I found this to be a useful tool to use for myself, which is something that I didn’t expect.

Putting my portfolio in the form of a pie chart helped me view my risk from another perspective. I hadn’t realised that ATM + M7T represented 50% of my portfolio. I hadn’t realised that FPH was nearly a quarter and I had no concept of what percentage of my portfolio paid dividends (not that this matters to me, much).

So after last week’s spending spree, I have updated my pie chart with my portfolio as it stands today:

As you can see, despite buying more ATM shares, the overall exposure to ATM is reduced as a percentage of my total holding. The portfolio is highly geared towards growth via ATM, FPH and M7T.

I am now comfortable that my exposure to property is fairly represented in my portfolio via SUM, and that the only really risky stock is FPH (as it’s perpetually over valued and therefore a Greater Fool purchase) – a risk that I have accepted because the business itself is not risky, only the share price (that said, there is a post-Covid risk that usage of machines sold will drop off and consumables sales will diminish), However, as I previously mentioned in the last article depicting my portfolio, I view FPH as a bond proxy and am willing to accept the share price dropping if the company is doing well and continues to do so.

I am also happy with my greater allocation of SCL, which I believe are currently priced nicely as a 2 year minimum term purchase. I’m looking forward to the next results announcement after Covid related logistical / sales issues are resolved.

The only stock I would have liked a little more of (for balance) would be EBO, however it is my view that they are a little over priced at the moment.

Following discovering the utility of depicting my portfolio as a pie chart, I urge others to do the same as it helps to ensure that you have the right balance and exposure to different stocks / industries.

Hmm… On the subject of balance, perhaps my next article will be about diversification vs. diworsification, but for now it’s back to bed for me with a warm Lemsip drink.


My Portfolio On The 28th Of August 2020

I thought I’d just share my current portfolio of NZX and ASX listed shares as it stands (which excludes my private holdings from angel investing). This might be of interest to anyone who follows my analysis, to see how I’ve invested – not that I’m recommending that anyone matches what I have now (because I would have had different buy in prices compared to today’s prices, and people will have different personal strategies to me).

I hold M7T as I believe that they are a great long term growth story with plenty of steam left.

I hold SUM for property exposure.

I hold SCL because I think they’re cheap for the growth I expect, and want to slowly edge towards dividend income stocks as I get closer to my retirement goals (which I hope to achieve with my angel investments; listed stocks are just a Plan B).

I hold FPH because I like the growth story (14% pa) and they’re a solid company. I also view them as a bond proxy. Despite being ridiculously overpriced, the fact they are so steady and as part of my Plan B means that the longer term investment makes the price not so bad.

I hold ATM because of the growth story, though I have some concerns with recent developments (which I will be addressing over the next few days).

I hold EBO because I believe they have a steady growth story, I like the price I bought at, the industry, the moat, and the business. They are also part of my dividend income plan.

You can read about each stock and my analysis of each by clicking on the NZX or ASX pages in the menu, then selecting the stock you want to read about.