Put in $1000. Then purchased:
$200 for SPY
$200 for VWO
$400 for OWL
$251.38 for AMZN ($51.38 from dividends and interests)
Gave up hope in TSM given Buffett sold it (news). While the company is solid, it has some political risk. Buffett's sale is a signal that I might have underestimated the risk. By the principle of this portfolio, I am not selling the existing stake.
AMZN was still cheap, so I bought a bit more.
Added a new stock Blue Owl Capital (OWL). It's a real estate asset management company, similar to Blackstone. A majority of the company's assets are funded by permanent capital, so it does not have withdrawal risk and the fees revenue is stable. Given it acquired STORE Capital (STOR) recently at a decent price, the management is very good. It now has 3.5% dividend yield and trading at around forward P/E of 20 ($0.7 EPS), which is fair assuming it can grow about 10-15% annually.
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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.
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 to sell many non-performing assets.
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.
PLTR
Palantir is a big data analytics company that mainly services democratic governments in the West, especially America, the strongest in the world, for the sake of global peace and prosperity. I think it's a very bold statement that is not easily found in innovative tech companies in Silicon Valley. It also services large scale manufacturers, medical and financial institutions.
Palantir builds solutions for customers, so the service it sells often needs some long lead-time, which creates a natural barrier of entry. Once Palantir gets into the business process of a customer, it's sticky. Its support of the US military makes it stand out among other Silicon Valley high tech companies, which eliminates a lot of competition.
One saying is that Palantir and Google are two sides of a coin in terms of handling customer data. Google gathers a lot of user data but the usage is very restrictive, and it focuses a lot on privacy. Palantir, on the other hand, only processes data gathered by clients, to help clients "process users".
It is going to earn about $1.98 billion in revenue. Assuming a long-term profitability of 20%, that is about $400 million in earnings. With a market cap of about $17 billion, a P/E of 42.5 is definitely expensive. However, despite the lumpy growth nature of the business, the company should have no problem maintaining a 30% annual growth in revenue for quite a lot of years as expected by the management, mainly due to the needs of the government in big data. That makes the company a great company trading at a fair price at this point.
OWL (+)
It's a real estate asset management company, similar to Blackstone. A majority of the company's assets are funded by permanent capital, so it does not have withdrawal risk and the fees revenue is stable. Given it acquired STORE Capital (STOR) recently at a decent price, the management is very good.
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.
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.
