Penetrator's portfolio performance in 2023

Yes indeed, 2023 is already over: A year full of fun, sadness, despair, hope, shit, travels and many more. A year full of mixed emotions and my lowest contribution to this site since I don't know when. Maybe I should just take a look at the right bar of the menu of my blog to know since when. 

For my portfolio, it's been the best year ever. The portfolio is up 45%.  

The S&P did exaclty half of that: 22,4%. 

When you own a considerable portfolio, that kind of performance makes a huge difference. 

However, during the last days, I reduced some positions because the stock market is at an all-time high and experience has told me that it's always wise to have a lot of cash left when the market is high. 

It may take 2, 6 or 9 months, but the stock market will go down by at least 10% sooner or later and many stocks wil go down even more than that during that period because the same news don't have the same effect on every stock.

And it's always during these periods that it's time to buy stocks. You can go wrong when you buy a specific stock that goes down but you can't go wrong when your favorite stock goes down along with the market. 

So, I'll start 2024 with a cash position of 8.8% of my total portfolio. That's not super high but that's gonna be enough to benefit from what god will offer me. Yes, god, the non-existent creature that lives nowhere. 

Penetrator: Absent but performing. 

Picks for 2024

Of course, this blog has been let down in 2023. But, I'm still there even if many people are probably gone. It's OK, I didn't know them anyway. 

What are your picks for 2024?

Limit of 5 picks per person, please! 

I'll go with 5 stocks I own because I don't see why I should recommend stocks that are not good enough for me:

1- Parker Hannifin (PH)

2- Microsoft (MSFT)

3- Google (GOOG)

4- Constellation Software (CSU.TO)

5- Stella Jones (SJ.TO)

Glamour and anxiety

As a blogger, this year has probably been my laziest year. I feel that inspiration will be back one day or another but, so far, I feel like I don't have anything to say. 

2023 has been a very good year on the investment level. My portfolio's performance has been so far almost 150% superior to the performance of S&P500. But the year isn't over yet and anything could happen. 

This year, I've diversified my portfolio. I used to own a lot of big positions in big tech names (Amazon, Alphabet, Meta, Microsoft..) but I felt that it became too concentrated on a single sector so I bought some other kind of companies like Grainger and Parker Hannifin, both great companies in the industrial sector. And I feel like it's been a good idea because these new stocks did well and made my portfolio more balanced. 

I've reached a very important milestone in november with my portfolio. That level was for me the official "anything could happen now, I'd be safe financially".  And now, I feel like all my earnings related to my job can be spent because saving them doesn't make a big difference. 

To manage to get there, I have to declare that I drive the same car since 2010. Very little glamour but very little financial anxiety too. 

Dollar General (DG)

I've recently become interested by Dollar General. The stock has dropped a lot after mixed results. As it looks, Dollar General shouldn't grow that much this year and investors don't like that. 

The stock went from about 250$ one year ago to about 125$ these days. And the PE ratio is currently about 15 which is low for such a defensive industry (immuned to recessions). 

All the dollar stores are usually sold for a PE of 20-25 and even above (Five Below is much more expensive). That's mostly why I chosed to buy some shares of Dollar General. Of course, buying a lot of shares for a significant portion of a portfolio is rarely a good idea with a new stock, but with 2-3% of my portfolio, I think that it's a rational stake for a very strong and defensive stock.

However, the debt level is a little high. But who cares. We'll all die someday and that kind of information won't matter anymore at this fatal moment. 

  

Tatoos

I've always hated tatoos. They are usually disgusting and they represent the fall of our western civilization. It's a tragedy to me to see so many people with tatoos everywhere I go. How could all these people think that tatoos make them more attractive? Just like how would a fucking ketchup stain on your clothes would make them more beautiful?  

What's more disgusting than someone with tatoos on their hands or on their face? Even small tatoos on the arms or the legs are ugly. It has absolutely no purpose. 

But we've been so exposed to tatoos that we're desensitized. Just like a lot of other things in life: a long exposition to something, as immoral or ugly as it is becomes normality.

It's like all these nonsense stocks with PE ratio over 100. It seems that every decade has it's nonsense stocks that are the new normal. It's been Microsoft or Cisco in the late 1990's. Then, it's been Marijuana stocks about 6-7 years ago. Then, it's been some tech stocks again in the last couple of years (Shopify, The Trade Desk, Sea limited...). 

When something looks strange or ugly, even if we're exposed a lot to it, it still remains strange and ugly. Sadly, our human condition makes us very weak and easy to influence. 

So, I bet that the next "new normal stocks" will convince a lot of us (maybe me included) that their valuation shouldn't be compared to all the other stocks on the stock market. 

9 years of Don't fuck with Donville

Last june, this blog was 9 years old. But before that, I was also a blogger who wrote in french. I wrote about my life and it was sometimes a real circus because I knew how to shock people (other bloggers) and create a kind of myth around who I was. 

I started blogging in 2005, when i was 26 years old. About two or three years later, it was the golden age of blogs in Quebec. There was hundreds of bloggers. Most of them were boring because they were writing very dull stuff about their life, probably thinking that they deserved some attention. Actually, they probably needed attention more than thinking that they deserved it. 

I became a well-known blogger because I wrote a lot about other bloggers, telling how boring they were or exposing without a lot of diplomacy their superficiality. 

I've eventually had some problems with my blog, saying bad things about my job and my boss. Nothing criminal or heavy, but not very nice things. So I changed my blog and started another one. Eventually, most bloggers faded away and maybe around 2013 or 2014, most of them were gone. 

That's probably why I started this blog in 2014: I felt I had said what I had to say about my life and there was no community anymore to get attention from. 

Then, I said to myself, why not writing in english about a topic that excites me and  that could me  reach a new audience. Also, with finance, I wouldn't be tempted to trash talk about some friends, girlfriend, job, etc... In hindsight, I'm totally able to trash talk about anybody on this financial blog but the topic helps me to stay focussed. 

So, I'm a blogger since 18 years. That's a lot. 

A new strategy

It's been 4 months since my last post and it looks like I could never write again on this blog. I don't think this is my last post but I wonder if inspiration will come back one day...?

I've travelled a lot since may (Argentina, Uruguay, Brazil, Japan) and I can't wait to retire and travel as fucking often as I want to. I don't know if I'll be able to do that one day but that's my goal. 

I've decided that, if I wanted to travel as much as I do in the future, I had to reach wealth without too much worries. The best strategy after knowing how to select great stocks is probably to stay away from controversy. 

A new criteria for me is to pick stocks that aren't in the limelight. I don't mean "under the radar" stocks but at least, stocks that are not too exposed in the media. Exposition creates excitation or fear and these two create doubt and I don't like that. Some would say that it also creates occasion and I agree but I prefer a quiet stock than an hype stock. For example, I prefer stocks like Metro or Parker Hannifin. Who gives a shit about these stocks? They're quiet and they do their little thing without bothering governments or people. They probably do obscure stuff once in a while but they don't operate in wild swings sectors.  

You don't get a big boner with these stocks, but you get an easy 10% annual with these and you're not constantly asking yourself if they lost their moat, appeal or credibility. I'd rather go with that and keep my worries for my health and my kids health. 

CSU: a 28 baggers

It was march 2012. 

I bought 50 Constellation Software shares at about 88$ each (a little less than 4500$). Everything looked great for that company: excellent ROE, excellent growth, great dividend (more than 4% back then) and my hero, Jason Donville, was very enthusiastic about the stock.  

In december 2013, I owned 65 shares and the stock was selling for about 225$. It was already a 2.5 baggers after about a year and a half. 

During the following years, I sold some shares. Bought some. And CSU always was a significant position in my portfolio. 

Now, in april 2023, a little more than 11 years after my first buy, the stock is selling for 2584$. That's about 2500$ more than what I initially paid. And that's completely crazy. 

That's my only extraordinary investment. I've made some good ones, some very bad ones. But CSU stayed on my portfolio all this time and I can't see why I should sell it even if returns may not be as good in the future. It will take something very negative about the company for me to sell my shares after such a ride. 

Now, imagine if I had invested 10 000$ instead of 4500$ (which was a very low amount in hindsight). I'd now own more than 100 CSU shares. 

But no. I sold some to buy something else. Like Valeant or Concordia Healthcare. Because, in december 2015, I owned only 30 CSU shares. And Valeant represented 9.5% of my total portfolio. 

YEP. AND I DIDN'T LACK OXYGEN AT BIRTH. 

Buying a Toyota - Another great allegory from me

Sometimes, I have discussions about the stock market with Jason Del Vicario and Leo (formerly behind the website www.besmartrich.com). 

Sometimes, Vicario gets emotional (excited about a stock or disdainful about another stock) and I don't understand that because I've lost most of my emotions about these things (stocks). Of course, I don't understand why some people buy mining stocks or gas stocks. But I don't care about that. If they're my friends, I try to warn them about the risks related to these stocks but if they want to keep them and they're excited about owning some shitty stocks, that's their problem. I'll focus on my own problems and let them live with theirs. 

For instance, Vicario likes some specific gambling stock and probably thinks that I'm crazy for not buying it one or two years ago. I don't like that fucking industry full of crooks and money laundering. I've had my share of problems with Valeant which was in a "clean industry". I don't need to go where it stinks. 

Truth is, we never know when a stock is truly good or truly bad. All we know is that some industries are better than others. For instance, softwares are definitely better than natural resources (much better margins, much better ROE, much less impacted by the economy and they usually have a moat which isn't there for natural resources). 

The trick is to know that and fish in the right pond. Even then, we'll get bad fishes, but at least, risk is lower. It's like buying a Toyota instead of buying a Jeep. If you've done your due diligence, you'll know that you'll probably have many problems with a Jeep while you'll be able to keep your Toyota for 15 years without almost any problems. 

There's no fucking easy recipe or screaming buy. I repeat it and I'm more and more convinced about that as time passes. Buy I try to buy as many Toyotas as I can. 

I needed to write this

I am non-binary.

RCH has rarely been this cheap

 

Most investors are looking for the new big thing. Few are looking at Metro (MRU.TO), Canadian National (CNR.TO) or Richelieu Hardware (RCH.TO). 

Nobody will get rich in two years with these stocks, but nobody will lose everything or see a new company coming out of the blue and stealing a lot of consumers. 

Not so long ago, I would have said that these companies weren't aggressive enough for me. But now, after seeing some problems related to a whole sector (banking, techno), I think that it's very wise to own some good players from other industries, like MRU, CNR and RCH. 

And among them, Richelieu has rarely been this cheap. The current PE is about 15 (that graph says it's 12.4 but I think it's more about 15). Anyway, that's a cheap price to pay for a company with a very small debt, a dominant position and a very good track record.  

Growth has been disappointing in the recent years, but I believe in the strenght of this company. It could easily buy another company or be bought by a bigger company. And meanwhile, you'll get about 2% of your investment as a dividend. 

Of course, I wouldn't put 10% of my portfolio on Richelieu. But, to me, it's an obvious 2-3% with one of the best players in the renovation sector. 

Bad reasons to be satisfied with Meta

Meta/Facebook did pretty good on the market recently. How come?

First, Tik Tok has been banned by a lot of enterprises/governments. Everybody already knew that this chinese company could be a threat, just like all other chinese companies (but I guess that some people will soon say that a new chinese company is "different" and deserves our attention). 

Anyway, about Tik Tok, all of a sudden, a lot of people woke up. Like 5 years later. I don't know what happened but it was positive for Meta/Facebook.

Then, Facebook announced that tens of thousands of employees would be fired. Which would reduce the spendings of the company.

So, as much as you may love Meta, do you really consider it positive that your not-growing-anymore-stock is doing well because a competitor has problems or because it sacked thousands of people?

Margin interest rate

I just saw that the interest rate on my margin was 8%! 

Who wants to borrow money and invest with a margin with such high interest? 

Given the fact that the market has an average annual performance of 9-10%, it makes absolutely no sense to use margin at this time. 

I've decided to reimburse entirely my margin. You should do the same. 

It's time to invest only the money you own. Otherwise, your chances to get poorer are high. 

MTY Food Group (MTY)

 I've been a shareholder of MTY in the past. Sold my shares. Bought back some shares. Sold them again.

I'm not a shareholder anymore. But things look good with the company except for the fact that they carry a heavy debt that represent a high percentage of the value of the company. 

Given the high interest rates, I'd stay away from a company with a large debt. But MTY has steady revenues and a wide offer for consumers. They own so much brands that it's virtually impossible that all of them go bad. They have a very solid business model. 

What are your thoughts on MTY? 

I don't believe

I don't believe in god. I don't believe in Bill Ackman. I don't believe in Justin Trudeau. I don't believe in U2. I don't believe in seller's honesty. I don't believe in the good nature of human beings. I don't believe in the intelligence of human beings. I don't believe in kinoa. I don't believe in the aphrodisiac nature of parts of dead animals. I don't believe in the hidden joy of anal penetration. 

I don't believe in the concept of a "screaming buy".

Which leads me to the fact that I don't believe in excitation about stocks anymore. There's no such thing as a hidden gem or a boner stock. 

When someone's too excited about a stock, I look elsewhere because I'm not looking for excitation. I just want to get rich as quick as possible, leave my job and travel the world in a small boat made of trunks.  

Back with Grainger (GWW)

In 2011, I bought Grainger (GWW), a great stock that went down with the market during the summer. I did what I rarely managed to do: spot and buy a great company that went down a lot with the market for no reason. A few months later, Grainger was up like 25% and I sold it. I don't exactly remember why. I think that growth didn't look as good for the future. Or maybe I found some shitty penny stock to replace it (it was my "penny stock" period). 

Recently, I took another look at the stock and I realized that it went from about 200$ in february 2012 (when I sold it) to about 600$ these days. 

I could have tripled my money over these last 11 years but no, I tried to find something else more exciting.

What's crazy is that Grainger is still not that expensive even if it's track record has been great. The only thing that's changed is the debt level which is higher than before, but not so worrying. Of course, interest rates are way higher than before now. So, that's a bit of a concern but everything else looks great in my opinion.

Anyway, It's another of those cases of companies that looked good 10 years ago and that should never have been sold. Like Mastercard. Like O'Reilly. Like some of the shares of Constellation Software that I sold many years ago. 

I came back to all of them and I paid more than what I initially paid.  

When it's a very good company, don't sell it except if things look very bad. By very bad, I mean something illegal or some serious shit. Not a momentary stop of growth. 

When something's rotten...

When Valeant changed it's name to Bausch Health company and changed it's CEO, some people thought that this company would have a rebirth. 

But what these superficial people forgot is that a rebirth may be possible, but only for a company that's not been managed for years by a crook, that doesn't carry a very high debt, that didn't overpaid by far for many products and that didn't raised the price of some of it's products by so much that it lost all respect by millions of people all around the world. 

Change the CEO and change the name and all that shit remains.

I remember writing on some forum (probably Seeking Alpha) that this company was going nowhere even if the new CEO seemed to clean the place.

Then, a random guy told me that I lacked judgment by thinking that Bausch Health was now a totally different company. 

Actually, I don't know how things are going at this company. It's surely cleaner than it was because of all the exposure of the recent years. But I prefer to buy a house that's been well kept than a house where all the drains were broken and there was shit everywhere in the basement. Even with the best plumber, there will remain stains and smell of shit in the basement. 

Bausch Health stock price:

January 5h 2023: 9,72$

January 2022: 31$

January 2021: 34$

January 2020: 35$

January 2019: 32$

Picks for 2023

I'm a little late since it's already 2023. But what are your top 5 picks for 2023? 

Please, submit only stocks that you own. Because if you believe in some stocks, why the fuck wouldn't you own them? I want believers, no gamblers. 

Also, please submit your picks before january 10th. If you're stupid enough to submit some picks on may 16th or some random late date, I will write a specific post to bully you.  

Here are my picks:

1- Constellation Software (CSU.TO)

2- Mastercard (MA)

3- Keysight Technologies (KEYS)

4- O'Reilly (ORLY)

5- United Health (UNH)