After a busy month where I could not find the time to write a post about my portfolio performance, I decided to combine the August and September performance in one post. It still surprises me how the market is moving and how my portfolio moves through these turbulent times. With a fourth quarter ahead of use where Brexit negotiations will need to be finalized, the US elections will take place and the second wave of the corona virus may hit in the fall and winter, I am very curious what the portfolio will look like three months from now. Let’s hope for the best!
My overall performance for the month of August was 6.07% compared to 5.83% for the benchmark MSCI World Index. In September this was -0.47% compared to -1.20%. Of the first nine months of 2020, three saw a negative return for my portfolio, meaning this was a kind of special month. Still, the portfolio has a cumulative return this year of 25.93% compared to the benchmark MSCI World Index of -2.05%.
My asset allocation has changed over the past two months:
- Gold and Silver prices decreased
- I sold some of my Silver holdings
- I invested more in individual stocks
- I added a Consumer Staples ETF ($WCOS) to the portfolio
As a result, my Gold allocation went from 36% to 29.4%, and my Silver allocation halved to 1.2%. My ETF holding is around 4.8% of the portfolio, which I envision to build out to around 20%.
Right now I chose to only allocate towards a Consumer Staples ETF, because I expect some turbulent market times and a possible longer recession as a result of the corona virus. In my opinion, consumer staples are most likely to outperform other sectors in such a market environment. In September this was proven correct, as this ETF increased by 0.55% compared to the drop of -1.20% in the MSCI World Index (of course only the long term counts in the end). I also think this was a good way to diversify the portfolio a little more, where I hope to decrease the Gold exposure to 25%, even though I am still bullish on Gold.
My individual stock allocation changed quite a lot in August and September:
- I sold my position in JC Decaux ($DEC.PA) because I saw the odds of a second wave of the corona virus increasing. JC Decaux has a pricing system based on (foot) traffic in cities, which is very vulnerable for this second wave. I will keep an eye on them though for when a (or the) vaccine becomes available and the turnaround can begin
- I opened a position in the Bell Food Group ($BELL.SW), one of the largest food companies of Switzerland. It mainly operates in the meat and convenience meal industries. I noticed them in an article about investors in Mosa Meat, which I think is truly the future of meat. When taking a first look at the company I thought they were quite fairly valued, with its investment in Mosa Meat as a nice long-term bonus. Right now, Bell only takes up around 2.5% of the stock portfolio and 1.6% of the total portfolio, so there is room to increase this position
- I decreased my position in Flow Traders ($FLOW.AS), even though I still see some volatile market conditions ahead. I just thought my exposure to this stock had become too large, especially after a further increase following their Q2 earnings announcement, so it was more of a portfolio rebalancing to other stocks:
- I added to my positions in Ahold Delhaize ($AD.AS), HelloFresh ($HFG.DE), Ebara ($EAR.F), Veolia ($VIE.PA), Signify ($LIGHT.AS), Boskalis ($BOKA.AS) and Publicis ($PUB.PA)
Last week I shared a post with my analysis of HelloFresh, which is just an example of how I plan to analyze the other stocks in the portfolio as well. I also added a post on my core value investment theme. This month I want to add at least one other investment theme to the blog!
Special Feature: Suez and Veolia, a Love Story?
The waste management industry is an interesting industry to say the least. The market is mostly dominated by its three largest players: Waste Management ($WM), Veolia Environnement, and Suez. Interestingly, the latter two are both French-based companies.
Several weeks ago, something interesting happened. Engie ($ENGI.PA), one of Europe’s largest energy companies, decided to sell its 32% stake in Suez. Veolia made an offer for 29.9% of this stake, planning to ultimately take over the entire company. Suez shares went from around €12 before this bid, to over €15 right now. Veolia shares have fared a little less well, and declined to €18.50 today from around €20 one month ago.
Initially, the bid was rejected by Suez stating that it was hostile, also Engie thought the bid was not good enough. Additionally, a lot of antitrust issues have to be resolved to make this deal work. However, Veolia came with an increased offer today.
I will be watching closely to see how this deal will turn out for both parties. One thing is certain: when the deal is closed, there will be one behemoth of a waste management company. Another certainty is that Veolia needs some additional financing, as the €3.4 billion offer is quite large compared to its €10.2 Billion market capitalization.
There will be a lot of content coming your way on this website. October will be a very interesting month with more stock analyses, a new hot take I am working on, and the first Stock Contest: the S&P 500 Major League. The end of this contest will inevitably be tied in to the launch of a second portfolio: the Hall of Fame portfolio.