Put in $1000:
$100 for SPY
$300 for VWO
$300 for META
$100 for PYPL
$100 for STOR
$113.79 for TSM (2.18 comes from dividend distributions and cash interest)
Emerging market stocks like TSMC, Tencent and Alibaba are particularly weak because of the geopolitical tensions between China, the United States, and Taiwan. Chinese ADRs are also facing delisting risk due to auditing requirements of the US SEC. They are not fundamental issues of the underlying companies, so I decided to add more into them to take advantage of the short-term weakness.
Meta has some headwinds in growth due to both macro ads environment and competitions from TikTok. However, TikTok can only compete on time spent, but not on the social network that Meta has through the family of apps. I believe Meta's business model is still sound. Zuck is playing hard balls with employees, which may affect morale in the short-term, but given the company has some issues to resolve, that is the right thing to do to make the fleet leaner and more efficient. At around 2022 P/E = 16, the stock is too cheap with high potential to restart double-digit growth for the years ahead.
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Brief portfolio holdings comments
The plus (+) sign after the following stock symbols represent new shares are purchased since the last update.
SPY (+)
Warren Buffett recommends most people to buy S&P 500 index fund. 90% of his estate is handled this way as well, so I just followed his advice to buy some SPY most of the time when I put money into this fund. I don't aim for the 90% allocation, though.
VWO (+)
Emerging market ETF. It has Taiwan Semiconductor, Alibaba, Tencent, and other companies I like. Its portfolio is over 30% in Chinese companies, so it's a low long-tail risk vehicle to invest in China.
STOR (+)
Store Capital Corporation is a single tenant triple-net lease REIT. One of its unique characteristics is its emphasis on tenants' unit-level operating profits and financial statements. The management has a long tenure with a very conservative underwriting standard that focuses on replacement cost of the properties. Its tenants are diversified and internet resistant. It has very transparent reporting in its financial reports. This REIT has a narrow economic moat.
Warren Buffet invests 10% of the company in 2017, so it's approved by Buffet. He invested again in 2020 to keep the 10% position, which was diluted with the equity offerings the company had done for the past several years. It shows that Buffet likes the company a lot.
2022 expected AFFO is $2.22, P/AFFO ~ 13, dividend yield 5.3%, with an expected growth of 5-7% annually, pretty attractive.
ADC
Agree Realty is one of the lowest leverage triple-net lease REITs with a debt to EBITDA ratio of 4.9x. Its tenants are mostly investment grade (67%) retailers and restaurants. At the worst time of 2021, it collected 95% of the rents, which shows the quality of its assets.
One special thing about Agree Realty is its 14% portfolio in ground leases, which has low default risk, low cash flow, with short-term inflation risk, but long-term stable return. It diversifies the risk portfolio of the company.
Its acquisition and disposition ratio is 4.2% in 2021. The ratio is kept low for the past, which again, shows the quality of the assets, so that it does not have sell much non-performing assets.
TSM (+)
Taiwan Semiconductor is a global leader in chip manufacturing. It has passed Intel and is getting farther and farther ahead of Intel. It has a wide economic moat as a popular company in Taiwan beloved by common people. It's a national treasure.
With all technological gadgets today requiring chips to operate, including military weapons, its business is neverending. Supply problems are just small hiccups which do not hurt the fundamentals of the company.
2022 P/E is less than 15. It has a dividend yield of 2.2%, and growing 10-20% every year, not bad at all.
SQ
Paypal is the leading payment company online, and Square (or Block) is the physical point-of-sale leader with a market share of 22%. Its Cash app is doing great in fintech with a bright future. CEO Jack Dorsey's big bets on bitcoin ensures Block a distinct leader in the fintech world.
META (+)
Global Monthly Active User (MAU) above 2.8 billion. Facebook is the biggest social network in the world. There will always be people buying Facebook/Whatsapp/Instagram.
The economic moat is weakened by Tiktok, but Tiktok is not really a social network that connects users who are familiar with each other, but another variant of youtube, so Facebook is still the top dog in social networking, although user time spent is definitely hurt.
Given Facebook's investment in VR; optional values in Facebook dating, and Facebook shops; Facebook Pay and Messenger have good monetization potential; Instagram has a unique position for people to express themselves; the improvement in Ads Infra to compensate for the loss in Apple App Tracking Transparency, I believe Facebook will come back. Long term annual growth of 15-20% should not be a problem.
BRK.B
Berkshire Hathaway in the current form was found by my idols, Warren Buffett and Charlie Munger. I will try to buy more if it's not very expensive.
AMZN
The biggest e-commerce company outside China. Amazon is the top company in the cloud business. The prime memberships are sticky because of the great value. Its IoT devices, while not complete, are all very popular. Amazon also owns the largest ebook market including the ebook hardware reader: Kindle. Its advertising business is growing rapidly as well. It also has a huge potential in the medical drugs market.
Basically, Amazon has potential in a lot of daily life goods and services which do not require high-end technology. It challenges incumbents with high profit margins. Amazon is definitely a killing machine. The only drawback is that the stock is quite expensive today. Annual growth around 15-20%.
PYPL (+)
Analysts expect Paypal 2023 EPS to be $4.72, and will grow more than 20% annually for a few years. 2023 P/E ~ 18 is quite attractive. Paypal's economic moat did not change recently. It has a few short-term catalysts: amazon partnership, BNPL, continuous growth of users in Venmo, shopping super app. The stock price is depressed now only because the market worries about its short-term growth.
MCHI
Almost like a China technology ETF composed of the blue chips like Tencent, Alibaba, Baidu, JD. It also has some other blue chips which I like like China Construction Bank, Ping An Insurance. To avoid the long-tail risk of China, I will invest in VWO instead of MCHI in the future.
OPK
A free stock came from opening this stock account. Not sure what it does.
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