Q2/2019 Results & Strategy Update

Q2 is over and not much has changed. The very same problems in world economy are still in place. Markets are close to all time high valuations but there’s increasing discussion about recession or worse. I’ve successfully eliminated effectively all debt within the portfolio and the question remains: should I keep building cash reservers or look for investment opportunities? There are some interesting possibilities such as Wärtsilä corporation (dropped today on earnings but long term energy mega trend story is still there) or EPR properties (new REIT position with monthly and relatively high dividend). On the speculative growth side there’s the Second Sight Medical Products which I’ve been looking at as a speculative brain-machine-interfacing position.

Q2 results didn’t contain any major surprises. Dividend income was 3047 EUR before taxes which can be compared to 1824 EUR year before. Solid growth mostly fuelled by additional investments.

Recent Buy: Hexagon Composites & Nexgen Energy

Yet another tiny maintenance purchase. Today I bought additional 100 Nexgen Energy shares for 2,17 CAD per share and 10 Hexagon Composites shares for 41,20 NOK per share. Nothing new here as hydrogen and uranium sectors are currently the most interesting plays I know. I’ll continue to make these small purchases monthly and will consider additional bigger purchases case by case. I’m also considering additional positions within these sectors as fuel cell manufacturer(s) would fit in nicely and uranium sector in general is really difficult one to pick winners in.

Q1/2019 Results

First quarter is now over and it can perhaps be best described as unexpectedly quick rebound from previous quarter. Main dividend portfolio value increased over 15% in value during the quarter. Received dividends totalled 1442,40 USD including one time extra dividend from BHP Billiton. Main problems are still in place as the trade war tensions between US and China have not been resolved and the brexit resolution was once again pushed forward. Main portfolio is currently in maintenance mode in order to deleverage while waiting for better opportunities and some kind of resolutions for the main problems in global economy. One extra ingredient in this are the local elections which might end up changing the local tax environment from quite bad to extremely bad. This remains to be seen.

Recent Buy: Hexagon Composites

I was originally thinking about initiating a position on Powercell Sweden to complement the primary hydrogen position in NEL ASA. I decided to skip on it for the time being and initiate a position on Hexagon Composites instead. I’m still looking into fuel cell manufacturers but let’s see if I’ll ever pull the trigger. For now I will most likely focus on building a minor position on Hexagon. This initial position consists of mere 70 shares bought for 30,85 NOK per share.

Recent Buy: Nexgen Energy

Small addition to the speculative growth portfolio. This uranium play also complements the existing UEX position. I’ll keep these positions small so I bought just the initial 200 shares of Nexgen Energy for 2,07 CAD per share. Uranium is one of the sectors I’m focusing in the secondary portfolio as it’s providing one possible solution for the climate change actions but it’s also very interesting just because of the cyclical nature of it – when the cycle turns, it really turns.

Recent Buy: NEL ASA & Short Term Strategy Change

I’m repeating myself but I bought additional 200 NEL shares for 4,958 NOK per share. I’m nibbling away on a slow pace for now as I’m also considering alternative hydrogen stocks to spread the risk a little bit. Having said that, I’ll most likely postpone purchases in the main dividend portfolio to see how the most significant risks for global economy will play out. Those would be mainly the trade deal deadline between China and US but also the deadline for brexit deal. Meanwhile I’ll mainly deleverage and wait for possible market corrections.

Recent Buy: NEL ASA

Small maintenance purchase once again. Today I bought additional 130 shares of NEL ASA for 5,115 NOK per share. Slowly nibbling along towards the target position size of ten thousand shares. Then again I’ve been thinking about spreading the hydrogen play across multiple companies such as Hydrogenics, Powercell Sweden, Ballard Power Systems. Those four would cover the speculative growth aspect and could be accompanied by Air Products and Chemicals in the primary dividend portfolio.

Recent Buy: NEL ASA

Plans are made to be executed and this one is the monthly maintenance purchase for the secondary growth portfolio. I bought 100 shares of NEL ASA for 5,28 NOK per share. Tiny purchase but I’m hoping to get some below 5 NOK. Let’s see if that happens as the sector seems to be steaming ahead nicely.

Recent Swap: Diageo for Sampo Plc and Apple Hospitality REIT

Busy day today. Apple Inc. posted a revenue cut yesterday and dropped post market and today. I was tempted to add on it but decided to execute a swap with remaining Diageo shares. I sold all the remaining 30 shares for 138,53 USD per share. In retrospect I should have sold all of the shares back when I sold the first 20 shares but that’s not a big deal. I still consider the the valuation to be a bit stretched and yield is on the low side though growing. I deployed some of the money back to Sampo Plc and Apple Hospitality REIT  – both equipped with seemingly much better valuations and yields. I bought additional 100 shares of Apple Hospitality REIT for 14,19 USD per share and 30 shares of Sampo Plc for 38,36 EUR per share.

Now that I’ve exited the whole Diageo position it’s time to check to results. I bought to original 50 shares for 5497,98 USD and sold the shares for the total of 7048,17 USD. Realized capital gains were therefore 1550,19 USD before taxes and commissions. Total dividends received came in at 435,01 USD before taxes. This is a result I’m very pleased with. I still like the company and it’s very likely that I’ll buy back these shares if the price comes down to 110 USD per share range.

Q4/2018 & FY2018 Results

Another year has passed and it’s time to take a look at the results. Sentiment really changed towards the end of the year and we saw quite dramatic volatility. The problems however are the same old ones: Trump presidency & trade war tensions, weak EU & brexit and possibly slowing global economy. There’s no doubt that we have been closer to the end of the cycle than to the start of it. Who knows when the real turn will happen – it could be happening already or it might still be years away. Looking back at the results, it’s clear that I got what I wanted and managed to follow the strategy I’ve set to myself.

  • Fourth quarter dividend income was 1 514,51 EUR (992,23 EUR during Q4/2017)
  • Dividend income for whole year was 5 373,07 EUR (4 450,93 EUR during FY2017)
  • Primary portfolio performance was -0,36% during the whole year
  • Debt ratio was maintained at or close to the planned 10% of the portfolio market value

What will happen in 2019 then? I don’t personally expect big changes going forward. We are likely to see even extreme volatility on index level but I don’t see strong reasons for changing the existing strategy. I will continue to buy and will aim to make at least one purchase per month for the main portfolio. For the secondary portfolio I’ll probably make one small purchase per month or one per quarter at the minimum. ETF portfolio will get a small buy each month and will be funded from the primary portfolio dividends.

I’ll keep an eye on few things: high yield companies with reasonable debt loads (as we might see mainly sideways movement for the next couple of years), quality companies with significant cash positions (which might be thrown overboard when the overall market tanks and which are in great position to deploy cash during a downturn) and advanced technologies such as brain-machine-interfacing, fuel cells & hydrogen economy. High yielding candidate could be e.g. Apple Hospitality REIT or Nordea Bank. Quality companies with significant cash positions would be the likes of Apple Inc. or Berkshire Hathaway. Advanced technologies will be much more difficult to cover. NEL is obvious candidate and it might be accompanied by PowerCell Sweden. Brain-machine-interfacing will require extensive analysis if I intend to find a suitable for addition for the secondary portfolio.