Monday, June 30, 2014

Financial Review - June, 2014

June was an excellent month for my investments.

Net worth moved higher as gains in my Hong Kong and emerging market equities equities and rental income were enough to overcome living expenses, a small decline in Au/NZ equities and marginally unfavourable FX movements. Expenses were high.

Here are the details:

1. my Hong Kong equity portfolio appreciated meaningfully. There were no Hong Kong transactions this month, but I received a number of dividends (all in cash);

2. my AU/NZ equities declined very slightly. I added shares in National Australia Bank, PGG Wrightson and Gemworth Mortgage this month; equity ETFs were up (India, Vietnam, Hong Kong and China) in line with the local markets. There were no new purchases;

4. my commodities were higher. Silver is my only position;

5. the properties are at full occupancy and all tenants are paying on time. I managed  to roll over a break lease with zero vacancy. The tenant who was paying a reduced rental while building renovation works were being done is now paying the full rental. There were only minor repairs this month;

6. currency movements were slightly adverse with a small fall in the AUD. The NZD was flat. I purchased more AUD this month;

7. my position in bonds remains small;

8. expenses were high. I purchased a few cases of en primeur wine;

9. there were no transfers to Mrs Traineeinvestor this month.

My cash position declined slightly. I currently hold 46.1 months of expenses in HKD cash or equivalents. It was one of those months when holding any cash feels like a lost opportunity (I know, I know - I have to hold enough cash to cover living expenses for a few years).

For May, my net worth rose by 2.22%. The year to date increase is 3.66%.

Gemworth Mortgage purchased

I have added Gemworth Mortgage (ASX:GMA) to the portfolio. GMA is recently listed provider of mortgage insurance to the Australian residential property market. Given their conservative practices (e.g. the will only provide insurance on low doc loans up to 80% LTV) and the increasing demand from foreign investors for Australian property, I am reasonably optimistic that the company will at least meet its prospectus forecasts. The prospect of a 25 cps annual dividend in FY2015 with (probably) full franking credits (7.5% yield) makes this a very appealing addition to the portfolio. I can also see it being of interest to Australia's self-managed super schemes.

I paid AUD3.29 per share.

Edit: I purchased additional AUD to make the purchase.

Thursday, June 19, 2014

PGG Wrightson purchased

This morning I added shares in PGG Wrightson (NZX: PGW) to the portfolio. PGW is one of New Zealand's leading suppliers of products to the rural economy. Given the increasing demand for agricultural and dairy products, the company should have reasonably secure long term prospects. The negative is the gearing ration which, at around 50% debt to equity (slightly unclear due to a recent acquisition of some real estate) is a bit higher than I am genuinely comfortable with. The trailing yield is 7.3%.

I paid NZD0.41 per share.

Tenant rollover

Due to extenuating personal circumstances, I allowed a tenant to break a lease early. I was very pleased to find a new tenant for the same rental within less than a week of putting the property on the market. As a result, I am only out of pocket the cost of cleaning the unit and a half share of the stamp duty on the new lease (which I could have deducted from the tenant's deposit but decided not to).

Makes me wonder whether all the claims of falling rental levels are all that reliable or whether I am under renting the unit?

Tuesday, June 03, 2014

Top twenty individual equities

I have spent some time over the last few days reviewing my twenty largest investments in individual equities. The list is set out below showing the percentage of our household's total net worth is invested in each of them. All but one of the top twenty has show positive returns (with a handful having more than doubled when dividends are taken into account). Only one is at or slightly below break even (Sinolink). Most have increased their dividends over the last few years.

At the moment, I cannot think of a reason to sell any of them (which I hope is not a case over overvaluing what I own) and am tempted to add to a few (CKI, Fairwood, Ping An and NWS in particular).

As far as watching the basket with the biggest assets are concerned, this basket looks very good to me. In some respects, I am fortunate in that almost all of my loss making investments involve much smaller amounts of money and I will be commencing my review of those later this week.

1 China Gas 384 2.84%
2 HWL 13 2.59%
3 CNOOC 883 1.62%
4 Sinopec 386 1.61%
5 Henderson 12 1.25%
6 CCB 939 1.10%
7 NWS 659 1.03%
8 GDI  270 1.02%
9 Sinolink 1168 1.01%
10 K Wah 173 0.95%
11 Swire 19 0.89%
12 Ping An 2318 0.86%
13 COSCO 1199 0.80%
14 Fairwood 52 0.79%
15 Dynam Japan 6889 0.75%
16 Beijing Airport 694 0.74%
17 Westpac WBC 0.71%
18 Hua Han 587 0.67%
19 Hang Seng 11 0.67%
20 CKI 1038 0.66%
    TOTAL 22.57%