vendredi 13 mars 2020

Portfolio review, friday the 13th, march 2020

I'm writing this piece of art close to midnight.

Yes. It's close to midnight and something evil's lurking in the dark...

That something evil is of course Coronavirus. The biggest threat to humanity since the meteorite that hit the earth 65 million years ago and killed all the dinosaurs.

That new threat makes people crazy. For instance, everybody is now completely mad when they see a toilet paper roll. People can kill for that. Yes my friends. These people probably expect that they'll have to hide in their basement for months and don't want to have to wipe their asses with their clothes or against the corner of a wall.

And after all that, some of you will still believe that we have an immortal soul because we are special.

So, what about the Penetrator Portfolio, since that post is supposed to bring something about it?

Well, first, all the major indexes (Dow Jones, S&P and TSX/S&P) are down 17-19% since the beginning of 2020.

The Penetrator portfolio is down 9%. Isn't it great to have such a negative performance?

A few statistics about the Penetrator portfolio:

Number of stocks held: 23
Number of canadian stocks held: 5
Number of american stocks held: 18
Average ROE: 53
Average forward PE; 20,5
Average Beta: 0,83
Average estimated growth: 16%
Cash on hand: 0,9% of the portfolio

Note: the forward PE and the estimated growth are pre-crisis. Probably that this huge madness will have a significant impact on earnings and the actual growth will drop. This would mean that the current PE ratio of my portfolio would be lower than the reality (instead of a PE of 20,5, it could be something like 23-24). Well, I don't know, so I'm keeping the latest numbers available.

One thing is sure for me, many stocks are cheap. For instance, Ulta Beauty is currently sold for 14 times the earnings. OK, the growth may not be what it used to be, but fuck, that's still a good  company with very predictable cash flows.

A low beta portfolio is very useful in times like these. A little less useful on a bull market though.

12 commentaires:

  1. Congratulations! Wow a 53% ROE... I do not even know how that is possible... at least in Canadian markets.

    I just came back from work and am boiling my dinner potatoes.

    My portfolio is down 49.36% YTD. Here are my portfolio stats from Morningstar:

    Number of stocks held: 27
    Number of Canadian stocks held: 27
    Number of American stocks held: 0
    Average ROE: 18
    Average forward PE: 13.57
    Average Beta: 1.10
    Average estimated growth: 14%
    Cash on hand: 0.07% of the portfolio

    None of the numbers are good.

    Time for me to eat... so have a good evening everyone!

    1. Ugh... MTY down almost another 30% today... Maybe my whimsical suggestion of negative stock prices might come true by the end of the month afterall. By the end of today, my portfolio will likely drop by more in just one day than I will be able to save from January to September... with almost every other day being like this, it seems almost pointless to go to work.

      How long do you guys think the downturn might last? I was a kid in 2008 so I do not have experience with anything like this. Should I start hoarding cash until the q1 and maybe q2 results will be out in the summer or should I be nibbling away with each paycheque. China has had COVID since November so it's been 5+ months and they still aren't back to normal. It just came to Canada this month... so by the same metrics we will be stuck in a downward spiral maybe until fall.

      As of noon 16. March, 2020:

      Ticker_ _ _Weight_ _ _Unrealized Return_ _ _Account
      EQB _ _ _12.24%_ _ _-0.12%_ _ _Non-Reg
      HCG _ _ _11.71%_ _ _+10.90%_ _ _TFSA
      CSU _ _ _9.19%_ _ _+122.46%_ _ _TFSA/Non-Reg
      DOL _ _ _6.25%_ _ _-4.05%_ _ _Non-Reg
      ENGH _ _ _6.16%_ _ _+24.36%_ _ _Non-Reg
      CCL.B_ _ _5.23%_ _ _-15.10%_ _ _Non-Reg
      ATD.B_ _ _5.06%_ _ _-16.72%_ _ _Non-Reg
      ECN _ _ _4.93%_ _ _-5.67%_ _ _Non-Reg
      CTZ _ _ _4.71%_ _ _-32.95%_ _ _Non-Reg
      MTY _ _ _4.51%_ _ _-52.18%_ _ _Non-Reg/TFSA
      NFI _ _ _4.49%_ _ _-32.99%_ _ _TFSA
      LAS.A_ _ _3.83%_ _ _-47.44%_ _ _Non-Reg
      LNR _ _ _3.75%_ _ _-45.08%_ _ _TFSA
      GIB.A_ _ _3.19%_ _ _+32.00%_ _ _RRSP
      CNR _ _ _2.90%_ _ _+0.30%_ _ _TFSA
      WPK _ _ _2.89%_ _ _-16.22%_ _ _TFSA/Non-Reg
      SJ _ _ _2.49%_ _ _-33.14%_ _ _TFSA
      BAM.A_ _ _1.95%_ _ _63.66%_ _ _TFSA
      RCH _ _ _1.23%_ _ _+3.44%_ _ _TFSA
      BHC _ _ _0.79%_ _ _-73.94%_ _ _RRSP
      CMG _ _ _0.74%_ _ _-54.37%_ _ _RRSP
      ALA _ _ _0.73%_ _ _-58.22%_ _ _TFSA
      RBF1018_ _ _0.40%_ _ _-16.07%_ _ _RRSP
      CEU _ _ _0.34%_ _ _-82.00%_ _ _TFSA
      BDI _ _ _0.18%_ _ _-81.78%_ _ _TFSA
      BBU.UN_ _ _0.02%_ _ _+41.12%_ _ _TFSA
      CPH _ _ _0.01%_ _ _-96.10%_ _ _TFSA

      cash_ _ _0.08%_ _ _0.00%_ _ _Non-Reg

      I am a full time student. I also have a few casual jobs working with sick and contaminated people in a hospital at low pay (same as the bottom rank cleaning staff), which might be cut because of Alberta government austerity cuts in coming months. I can save just about 1% of my portfolio per month if I maintain my potato diet. I only invest in Canadian stocks. My target return is 1% per month or just under 13% per year. I have no debts but might have a few upcoming larger expenses worth about 2-3 months of savings by this summer (maybe more if I have to send some money to my family abroad). I would like to build a steady-eddy skeleton of good stocks which I can hold for long period of time and then gradually start adding more expensive, higher growth stocks to complement the long-term performance. I prefer companies which do not pay dividends and can compound their earnings by reinvesting most of their cash flow.

    3. STEPS:
      I was wondering if you might have any feedback on the following steps. In my non-registered account, I have been gradually averaging down into existing positions to keep them at 5-6% of my portfolio and plan to continue doing this with every other paycheque I get. I am also considering selling LASSONDE and WINPAK to buy more shares of MTY or ALIMENTATION COUCHE-TARD once the market will seem to settle. Lassonde and WinPak were supposed to be resilient non-cyclical companies which were supposed to act as a stabilizing hedge, but this did not come to fruition. In my TFSA account, I have reached the 2020 contribution limit and cannot make any moves unless I sell existing holdings. The bottom 4 holdings will not yield even the transaction cost for selling them so I am stuck holding them. Other than that, if the turmoil will continue, I was planning to sell ALTAGAS utility and RICHELIEU HARDWARE screw retailer and use the proceeds to purchase more beat-up stocks once the market will settle, hoping for a quicker rebound. The candidate stocks for purchase include LINAMAR (trading at very low multiples with potential for significantly accretive buybacks), HOME CAPITAL GROUP (trading below book value with aggresive accretive buybacks), and MTY FOOD GROUP (trading at historically low multiples with potential for further market consolidation by Fairfax or other similar company). Given the carnage in the ALA price (with essentially half loss) and the transaction costs, I am not sure if it is worth it at the moment especially since I cannot harvest the capital losses in TFSA. In RRSP, I have not put any money since about 2015 when I was buying VRX and CXR. I am in a low-income bracket and might need my money eventually to buy property or maybe relocate abroad so I do not want to lock-up new money in the RRSP. Eventually, I would like to get rid of both CMG and BHC (since neither have shown any growth - CMG because of management and BHC because of crippling debt) in favour of GIB. I hold the RBF1018 mutual fund to put the CMG dividends into since I can do so without paying 9.95 per transaction. Eventually I was thinking of selling all RRSP holdings and just buying an SP500 ETF or a single diversified, non-dividend paying US stock and forget about it until I get a higher paying job in the future.

      I am tempted to just sit and do nothing or just slowly nibble in the non-registered account and rebuild at least a small cash reserve. I have been working 4-6 evenings/nights a week now to try to maximize my earnings but this is not sustainable and my school work is beggining to suffer because of it. I am also owed a few thousand dollars from previous consulting jobs that I did for the local government which are outstanding since November and January which they refuse to tell me when they will finally honour.

      Thanks for your time and let me know what you are doing/thinking and what you might do if you were in a similar situation to mine.

  2. Pretty impressive Penetrator…Howard Marks would be proud of you.

    For myself I’m down 12.54 percent on the year so far.

    I’ve never seen a market fall by so much so fast…fear abounds everywhere and there is a run on toilet paper in the GTA as well…Maybe they should start a new Futures contract…Toilet Paper Futures…Funny thing about human nature…its not what people say that matters its what they actually do…

    1. Madness all around North America for toilet paper.

  3. As of midnight on Friday March 13th my portfolio is down 14.3% in 2020. Not as resilient as Penetrator or Gavin, but still better than the indexes. In my case most of my outperformance is because I had quite a bit of cash on hand. I have been putting that into the market, but most of it went in too soon!

    I still have one more bullet to fire... Current cash on hand is a little more than 5% of my portfolio. I have been too hasty with my buys so far in this episode, but it is hard to be patient!

    1. I was about 15% cash in the beginning of february. Couldn't resist to deploy almost all of it between the end of february and the 10 first days of march. It helped me with my performance, just like you.

    2. Yep, I deployed too soon too. Give me a correction and I'm going to bite a little. I was 20% cash and now I'm a little less than 10%. If I use the rest of this cash I'll use my shitty line of credit at 8% interest if prices keep falling.

  4. Im down (3.3%). I am lucky to have owned both DPZ and CLX as two large positions as well as JNJ. Healthcare, CPG and tech make up my 18 stock concentrated portfolio.