Mar 2023 - One portfolio to rule them all
March has been another great month for my investments with many super interesting insights and new developments. Despite going through a banking crisis, markets are doing well. I will go through all that I found interesting this month - hopefully, it makes for good reading.
I have also changed how I display my portfolio, now sorting each stock by sector (the same ones used in my Watch List). I have merged my portfolios into a single structure aligned with my goals. You may be wondering about a thing or two regarding this new structure - it will all be explained by the end. Otherwise, you can have a look at the interactive chart on the front page (desktop only) or the static version down below.
Overview
Unlabeled on the chart:
In Consumer: Starbucks (1.3%)
In Industrials/Manufacturing: 3M (0.7%)
In Technology: Adobe (0.7%) and Alphabet (1.3%)
Moves
On March 2nd I sold my entire position in Danske Invest Denmark Index marking a loss of 12.35%.
Performance
My portfolio increased by 4.86% in the month of March, outperforming global markets up approximately 3% in the same time period.
Dividend overview
| Name (Ticker) | Received | Amount (USD) |
| Microsoft (MSFT) | Mar 13th | $103.13 |
| 3M (MMM) | Mar 14th | $15.20 |
| Realty Income (O) | Feb 16th | $14.28 |
| Total | Mar 2023 | $132.61 |
I received a total of $132.61 in dividends before taxes for March 2023 which falls right in line with the same month last year at $132.32.
Commentary & Review
Tesla Investor Day
March started out in an exciting way right away: On March 1st Tesla (TSLA) held its much anticipated Investor Day, which I stayed up watching until pretty late into the night. For a long-term investor and follower of Tesla like me, it was incredibly interesting. Musk unveiled part 3 of his Master Plan, which described how we may turn the world’s energy needs entirely sustainable within too long. Unlike previous Master Plans, this one works at a much larger scale and goes far beyond Tesla as a company on its own. It was not only inspiring but also uplifting, as it felt believable and well-thought-out. An important component of this plan is stationary battery storage, which now finally seems to be in full focus for the company in terms of scaling up production. Tesla also teased their next-generation vehicle platform, for a more affordable model, promising modular, parallel, and serial assembly cutting costs of production upwards of 50% compared to Model 3/Y production. Assembly will likely take place in Gigafactory Mexico in Monterrey, which was also unveiled. But most importantly, the event showcased a dozen of Tesla top executives, who up until now, have not been in the spotlight. They came off as both capable and intelligent - and their talks each built quite a lot of confidence for me that Tesla is now operates far beyond only the (unstable) genius of Elon Musk. Unsurprisingly, Wall Street analysts did not share the same sentiment as me and other enthusiasts - They expected hard numbers and solid statistics, which resulted in the stock taking a dip the following day. Perhaps the event should have been called something else - like Engineering Day or What we are working on, but it was indeed an incredible showcase of talent and further solidified my belief that Tesla is uniquely structured for success and will one day be the single most valuable company in the world.
Letting go of my index fund
As I alluded to last month, I have made my exit from Danske Invest Denmark Index (DKIDKIX). This was done on the basis provided - The dividend was revealed to be much less attractive than what I originally had imagined. I have added to this position every single month with no pause for nearly 3 years by now and yet accounting for dividends I am out more or less entirely flat. But many great companies do make up a significant part of this fund including Novo Nordisk (NOVO-B) at 7.4% and Ørsted (ORSTED) at 7.1% - both of which are already on my Watch List. The sale will likely fund my (re-)entry into these two stocks, with another likely contender being Elkem (ELK). This move allows me to broaden the geographic exposure from Denmark only to all of Northern Europe, while at the same time allowing me to pick companies that live up to my criteria for quality. Novo Nordisk’s ability to innovate has made me regret selling the stock, which once made up a large part of my portfolio. Ørsted is a global leader in sustainable (mostly wind) energy and Elkem is a manufacturer of materials used in carbon and silicone products for battery technology and more.
The AI Midas touch of Microsoft
In other news - I made good on my promise and switched to Bing. Something I never thought I would say. But with the integration of GPT4 in Bing, from Microsoft (MSFT)’s investment in OpenAI, it has become massively useful. If you have come away impressed by the publicly available ChatGPT, Bing is even better. With live access to the internet, this tool is much more powerful and has already helped me become more efficient in different ways. Microsoft is moving fast with this technology and taking advantage of the opportunity. This month they announced its integration into Office in the form of Copilot, which builds Powerpoint slides for you in an instant, based on a single sentence, transforms your meeting notes into a well-written proposal in Word, or suggests what to do with your spreadsheet data in Excel. Alphabet (GOOGL) opened for a limited public preview of its counterpart to Bing called Bard - which seems to have, once again, greatly disappointed. I am not saying yet that I worry about the future of Google, but I do hope for them that they have more to come. There is no doubt Microsoft has put them under pressure, but do I hope it triggers some new wave of (much-needed) innovation within the organization. When I outlined Five things to consider about Alphabet before investing, back in July, the world had not yet experienced these profound new systems by OpenAI and others like Midjourney and Stable Diffusion. I do believe it would have changed my own perspective quite a bit, knowing this back then. I will hold onto my shares of Google as well, as I do expect serious retaliation - but if I am left disappointed, I will not keep my shares in the company long-term.
The banking crisis and a whole lot of Nothing
A few more things I want to share before I end this month’s journal. In general, it has been another good month, despite all the panic related to Silicon Valley Bank and Credit Suisse. A few words on that: As of late last year I myself, own shares of a bank. I always associated banks with outsized risk to the general economy, but I ended up purchasing a few shares in Bank of Nova Scotia (BNS) regardless. However, this was for good reason. The Canadian banking industry is uniquely consolidated and reliable: Only a handful of banks operate in Canada at all and none of them are remotely at risk of a liquidity crisis. Throughout the turmoil in March, BNS barely moved an inch, while many banks in America and Europe took a massive hit. It was interesting to see and also speaks to how many companies out there (not just banks) may be struggling more than they let off in this tough macroeconomic market.
A company that does seem to do really well, however, despite the odds, is Nothing - a private company, I was given the chance to invest in, back in April last year. The company is slowly building both credibility and acclaim in the consumer tech scene, led by respected figure in the industry, Carl Pei. This month, the company released its first-ever second-generation product which from initial reviews seems to have been a massive improvement over the first generation in every way. I am really pleased with how this company is doing and if able I would gladly support them further in their mission. Any kind of return for an investment like this is still far out in the future, but I cannot deny just how great it feels to be part of.
Wrapping up - And an explanation of my new portfolio structure
A few final thoughts. Ford (F) gave us some insight into just how much of a struggle it is to ramp production of electric vehicles. Due to a restructuring of their business units’ reporting, we now know that the company loses nearly $22.000 each time they deliver an EV. Meanwhile, Tesla keeps high margins and makes an average profit of over $10.000 per vehicle delivered. Outside of Chinese vehicle makers, I consider Ford to be one of the most ambitious automakers when it comes to the transition to EVs - so this is saying something. Many assumed that when Tesla reduced their prices at the beginning of the year, it did so because of rising competition. I think the opposite: They have full pricing control and are now mostly just taking advantage of raw materials coming down from their pandemic highs. But a holding of my own: Amazon (AMZN) is also showing signs of struggling. Their retail venture Amazon Go is being scaled down and stores are being closed. This was a letdown for me, as the technology powering these stores, known as Just Walk Out, was a big part of why I invested in this company. I hope Amazon is simply shifting its strategy from using it in purpose-specific branded stores to licensing to technology to other retailers. They own Whole Foods which does already have some stores utilizing the tech, but I would love to see it integrated into places like Starbucks and 7-Eleven.
Speaking of Amazon as an investment more as a consumer-focused company than a technology one - that is what it is to me. I understand that e-commerce must entail a great deal of overlap with technology - particularly for the company that developed the world’s leading cloud platform - but remains the reason why I invested in Amazon in the first place: It is a company in the consumer category, merely one born of the digital age. That is why I have sorted it into the Consumer Sector in my portfolio overview and why other holdings of mine such as TSMC (TSM) are in the Industrials/Manufacturing sector, and why Tesla is in the Energy/Utilities one. It is, for this reason, that I bought them and for the long-term diversified exposure that this might bring - not necessarily how they are traditionally categorized. In truth, Tesla could very well fit into Consumer Cyclicals, Energy, and Information Technology, going by traditional standards. I have taken the liberty of simplifying sectors into just 7 different ones, and all these make up a key part of my new investment framework which I am working on both for my own benefit and to one day share here.
Watch List
New: The only change to my Watch List month is for Sea (SE) which has moved from Under consideration to Watching, as they turned a profitable last quarter. It remains to be seen if this is sustainable.
My Watch List sorts stock by sector and notes are included for each one, describing my interest and reservations. The status indicates the likelihood of a position being added to my portfolio. ‘Watching’ means I just keep an eye on them, whereas ‘Top Pick’ means they are very likely to find their way into my portfolio at one point - ‘Under consideration' means somewhere in between, with notes offering some elaborating thoughts. Please note my Watch List is based on my own research and goals and is in no way a recommendation of what to buy.
| Sector | Name (Ticker) | Status | Notes |
|---|---|---|---|
| Healthcare | Novo Nordisk (NOVO-B) | Top Pick | Strong innovator, previously owned, familiar |
| ARK Genomic Revolution ETF (ARKG) | Under consideration | Considering as an alternative for CRSP | |
| Merck & Co (MRK) | Watching | Casual interest, limited familiarity | |
| Medtronic (MDT) | Watching | Casual interest, limited familiarity, attractive dividend | |
| Industrials/Manufacturing | A.P. Møller - Mærsk (MAERSK-B) | Watching | Lacks ambition in electrification efforts |
| Elkem (ELK) | Top Pick | Too expensive, great positioning | |
| Otis (OTIS) | Under consideration | Potential dividend growth play, familiar | |
| Norsk Hydro (NHY) | Watching | Casual interest, limited familiarity, attractive dividend | |
| Lockheed Martin (LMT) | Watching | Ethical concerns, too expensive | |
| Corning (CLW) | Watching | Weakening moat, rising competition, familiar | |
| Consumer | McDonalds (MCD) | Watching | Strong brand, limited optionality |
| LVMH Moët Hennessy Louis Vuitton (MOH) | Under consideration | Strong leadership, performance, too expensive | |
| Costco (COST) | Top Pick | Incredible moat, leadership, too expensive | |
| Coca-Cola (KO) | Under consideration | Strong brand, stable giant, too concentrated, familiar | |
| PepsiCo (PEP) | Under consideration | Strong brand, well diversified, familiar | |
| Hasbro (HAS) | Watching | Strong product line, shaky mangement | |
| Energy/Utilities | Ørsted (ORSTED) | Top Pick | Strong positioning, leadership, familiar |
| Waste Management (WM) | Under consideration | Stable giant, limited familiarity | |
| NextEra energy (NEE) | Watching | Strong position, too concentrated, too expensive | |
| Enphase Energy (ENPH) | Watching | Rising star, limited familiarity, too expensive | |
| Technology | Embracer (EMBRAC-B) | Under consideration | Incredible acquisitions, not profitable, familiar |
| Sea (SE) | Watching | Core business weakening, innovator, just turned profitable | |
| Activision Blizzard (ATVI) | Top Pick | High conviction that MS acquisition offer will go through | |
| Palantir (PLTR) | Watching | Amazing tech, highly dilutive, unprofitable, opaque | |
| Meta (META) | Watching | Strong leadership and userbase, undergoing big change | |
| Apple (AAPL) | Watching | Strong brand, loyal userbase, risk of disruption | |
| Mercado Libre (MELI) | Watching | Great execution, growing market, too expensive | |
| Squarespace (SQSP) | Watching | Familiar, too concentrated, too expensive | |
| Shopify (SHOP) | Watching | Innovator, well positioned, unprofitable | |
| Xiaomi (1810) | Watching | Fast innovator, China risk, previously owned | |
| Nvidia (NVDA) | Watching | Strong brand and leadership, too expensive, previously owned | |
| Finance | Coinbase (COIN) | Under consideration | Strong brand and leadership, unprofitable, previously owned |
| BlackRock (BLK) | Under consideration | Strong execution, exposed to the economy, attractive dividend | |
| Whitehorse Finance (WHF) | Watching | Attractive dividend, strong execution, high risk | |
| Sofi Technologies (SOFI) | Watching | Strong leadership, innovator, unprofitable | |
| JP Morgan Chase (JP) | Watching | Stable giant, overlapping industry with holding | |
| Manulife Financial (MFC) | Watching | Stable giant, attractive dividend, limited familiarity | |
| Real Estate | VICI Properties (VICI) | Top Pick | Strong leadership and execution, attractive dividend, too concentrated |
| Digital Realty (DLR) | Watching | Good positioning, attractive dividend, limited familiarity |
Disclaimer: I am not a financial advisor, the opinions expressed in this article are entirely my own – always invest at your own risk.
