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It's been a long while since the last update. The stock markets had been very volatile, so the best approach was to sit on the sideline and observe what would happen while looking at the possibility of long-term impairment in each investee company. I had stay put. I increased my positions at about 20% market correction, using approximately 80% of my warchest too early. I have been staying put until now.
By looking at 1Q20 figures across SG Portfolio and TW Portfolio, the overall returns were horrible at approximately -20% and -10% respectively. As for now, SG portfolio and TW portfolio have improved significantly, at low single digit (closer to breakeven) negative and high single digit positive respectively. What a rocky ride!
TW portfolio:
Thanks to my growing conservatisim in recent years, I'd increased positions in less cyclical industries or those companies with downside protected by assets. It has worked out better as the largest positions (excluding E-Sun Financial) are Yongyu Plastic (the end markets are daily neccisities), Taifei (protected by landbank/ development projects), Longyen (death services unrelated to economic cycles/ unrecognized future sales revenues). The stock of prices for these companies was not immune to market volatilities but I am very comfortable holding them and took advantage of adding small positions at lower prices. Other investments (in the environment recyling) also provided comfort during the period. More speculative positions are Luhai and others in hospitality sectors. Despite termed as speculative, the holding period can be as long as the core positions as long as the price/value remains attractive. The downturn provided some of these companies a chance to prove themselves in highly competitve industries where some of the weaker ones are to be forced out of the market, leading to more favorable market dynamics in the mid-to-long term.
SG portfolio:
On the backdrop of strong performance in SREIT sector in 2019, I did not expect my SG portfolio to outperform again in 2020. SREITs were hammered hard, with select few small positions losing 40-50% during this period. The circuit breaker did create a psychological roadblock to retail REITs and indistrial REITs. Nevertheless, the 1Q20 figures have shown various impacts from the pandemic and operating challenges. On the postive side, some REITs have been oversold as the worse case did not materialize. Then, the price of these REITs have seen a significnat upward correction. I expect the DPUs for most of my investments to be reduced in 2020 but most of these counters are strong and theoretically will resume its normal course of DPUs in one or two years. I will selectively add the DPUs received to increase my exposure but will remain cautious to invest more out of the warchest. It is time to accumulate warchest for the rainy days again.