BfGf – Transactions for April

Warren Buffett, chairman of Berkshire Hathaway Inc., speaks during an event marking Business Wire's expansion into Canada in Toronto, Ontario, Canada, on Wednesday, Feb. 6, 2008. Buffett said a credit crunch isn't under way and he forecast that the dollar's value is likely to decline. Photographer: Norm Betts/Bloomberg News

 

After looking at the wild swings in my portfolio in the previous year, I realise that I need some stability in my portfolio.  Hence, for these few months, I am steering my allocations toward more stable, large cap companies.

 

Here are the stocks I bought last month:

Berkshire Hathaway (BRK.B)

 

I have avoided BRK.B for years because I have labelled it as a boring, trudging elephant.  However, after experiencing ‘exciting’ rides in my small cap stocks, I start to appreciate slow and boring.  I bought more shares at $144.67.  And will be looking to add more to it such that it becomes a larger part of my portfolio.

With the multitude of businesses under Berkshire’s portfolio, I believe that investing in BRK.B is akin to investing in an Index fund, but … even better.

  1. You don’t need to pay annual fees.
  2. Warren Buffet + Charlie Munger.

I previously avoided BRK.B for fear of succession risk.  But as I learn more about Buffet’s and Munger’s thinking and philosophy, it starts to dawn on me that they are the kind of far-sighted individuals who will build their company for the LONG RUN.

We may not truly know what will happen after these 2 sages are gone, but through their writings, I believe that the businesses under Berkshire Hathaway will continue compounding on for a long period of time.

Hence, as long as the PB ratio is around 1.4 or below, I will continue adding on to BRK.B when my cash flow is more than sufficient.

 

 

goog

Alphabet (GOOG)

 

Analysts are lamenting over GOOG’s slow adaptation to mobile advertising.  But they fail to realise that GOOG is still one of the main gateways to the internet, and is the most dominant search engine that everyone uses.  The moat is also huge…. and growing every day ( Google maps, google drive, google docs, google classrooms, etc…)  And although their Other Bets segment is still churning out losses, GOOG just needs to strike home with one product and we may see a start-up grow into a business that contributes to the overall revenue.  (Think – Amazon Web Services.)

“It doesn’t matter how many times you fail.  You only have to be right once and then everyone can tell you that you are an overnight success.” – Mark Cuban.

I’ve added on to GOOG at $715.35.  Will continue making it a core part of my portfolio along with BRK.B

 

Apple-iPhone-Glowing

Apple (AAPL)

 

I bought more Apple shares after it released somewhat disappointing results in their latest quarter.  However, even with the weaker results, I find this company extremely undervalued.  I bought more at the price of $93.48, right after Carl Icahn, a notorious activist investor, announced that he was dumping all his Apple shares.  I felt that he was did so because Tim Cook ignored his requests to raise dividends or buy back shares at a faster rate. The reason he gave was that he had no faith in Apple’s growth story in China.

Whatever it is, I find the valuation of Apple very compelling now.  At an all time low PE of 10, (and with lots of cash and marketable securities), I am scratching my head over why AAPL is being overlooked by the market.  It also has a pretty respectable dividend yield of 2.4%.

Although iPhone growth may be slowing down, the company is still generating tonnes of cash and it still has other products that are growing at its infancy.  ( Apple Pay, Apple Watch are still in their early stages of market adoption.)

Getting Apple shares right now means buying a world class company at a cheap price, with a chance of some growth in the future.

 

Food with Integrity

Chipotle (CMG)

 

I continue picking up more Chipotle shares.  I am betting that this company will pull through its recent norovirus crisis and win back their customers.  Bought more at the price of $418.25. Chipotle is now about 6-7% of my portfolio.  I plan to bring that figure up to 10% by the end of this year.

The company reported losses in the recent quarter as their marketing campaigns to bring diners back did not work out as well.  But nothing comes easy in business.  I am confident that their capable management will win their customers hearts back sooner or later with another clever marketing campaign.

 

Final Words

 

No groundbreaking new stocks this month.  Just adding on to the same old few stocks.  This will be the theme going forward this year as I start appreciating stronger, larger, and more stable companies.  I don’t really have the stomach for any more small caps at the moment!

 

What about you dear reader?  What have you been buying lately? 

 

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11 Comments

  1. B

    Hi Jerry

    Brk B is in my watchlist as part of going global and having that exposure. Like you said, the philosophy has been so well defined that succession risk is probably just a fallacy.

    Reply
    1. Jerry (Post author)

      I’ve decided not to get too fancy with stock picking and just stick to steady stalwarts like BRK.B. I would classify it as a very very low risk investment.

      Reply
  2. Yohan

    Apple Pay faces strong competition from many quarters in the mobile payment space. Samsung Pay, Alipay are just of the many players in this wrestling ring. Do you think Apple Pay will sustain?

    Reply
    1. Jerry (Post author)

      Well the Apple Pay comes with the Apple phone… and majority are using either Apple phones or Samsung phones. I think there should be enough space for Apple and Samsung. It doesn’t seem like a winner takes all arena. Just like how MasterCard and Visa have been ‘sharing’ the credit card space for so long… and yet 85% of the world is still using cash.

      Reply
  3. Max Tay

    Thank you for sharing. Really some interesting perspective on some of the stocks. 🙂

    Reply
    1. Jerry (Post author)

      Hi Max,

      Just recording my thesis here to see how it plays out in the future 🙂

      Reply
  4. An9elfire

    Hello, may I check with u how do u buy us stocks in Singapore? What is the cheapest way? The dividends paid out to us from the us stocks, how do they come in? Thanks.

    Reply
    1. Jerry (Post author)

      Hi There,

      I use a stand chart brokerage. The rates are the cheapest in SG. Dividends just enter my standchart foreign currency account immediately. But there’s a catch, standchart acts as an appointed representative to hold your stocks. This is different from SGX stocks which are held in your CDP account directly. You might want to talk to a standchart representative that can explain it to you better.

      Reply
      1. Max

        I totally concur with cheapest being stand chart brokerage. Basically we don’t have any voting rights to it because SCB holds the shares directly not us.

        Reply
  5. My Sweet Retirement

    Hi Jerry, you seem to like US stocks quite a lot. Personally I feel the US stock market is still quite expensive as most dividend yielding stocks are at levels of only 2 or 3 percent.

    However, those stocks like Google, Chipotle that you get are great stocks with their own moats.

    Reply
    1. Jerry (Post author)

      I like US stocks because of the quality of the companies you can get. I can’t find any high quality, scalable companies in Singapore. Yes most of the stocks in US are still quite expensive. But I think BRK, Apple and Chipotle are now fair-cheap.

      Reply

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