Housekeeping
Like always, it goes without saying that what I write in these posts is not financial advice. Also, the opinions here are solely my own and they don’t represent the views of any company I might be affiliated with at the time of writing.
This disclaimer is especially important with today’s article. My goal when I write is to make investing a bit more understandable, as well as to provide insights that will help readers in their own investing journey. My writing also has a very selfish objective: to help me better formulate and organize my thoughts. Doing this in public is often daunting, but I’ve found it incredibly useful. Please remember this when you read the lines below.
I’d also like to highlight that my portfolio is a continuous work in progress. I learn something new every day, and one of my core beliefs is that one must always be prepared and open to change when the facts change. Do not take my holdings as investment recommendations. Let’s get to it.
My Equities Portfolio
Peculiarities
The first thing I would highlight is my approach to asset allocation. Equities do not represent 100% of my investable net worth. Currently it stands at 68%, including cash, and I have a target of increasing the allocation to 80-90% of my net worth. I discussed my rationale for equities as a superior asset class and my strategy in my previous post. However, equities are and will remain the cornerstone of the allocation.
The second aspect I want to highlight is the allocation towards ETFs. As an individual investor, I think it’s extremely important to remain humble and recognize the fact that the majority of active investors underperform the indices. Nowadays, it’s extremely easy to invest in an ETF and track the performance of your preferred index, so going down the stock-picking path can be very costly in the long-term.
However, I invest into individual stocks because:
💡 I do think there’s a sensible, simple investment approach that can outperform the average performance of the market; and
☀️ I enjoy the process of finding, researching, and choosing companies.
I’ve said it before, but unless you enjoy the process there’s no point in wasting your time. Do what works best for you and gets you excited to get out of bed in the morning.
My objective with ETFs is to maintain an allocation that allows me to hedge against my shortcomings. I target a 25% allocation to broad equity ETFs, and I plan to gradually increase this allocation as a I age via consistent DCA. I’ve chosen the following ETFs:
🌎 iShares Core MSCI World UCITS ETF;
💰 iShares Edge MSCI World Quality Factor UCITS ETF.
I chose these over an S&P500 ETF because most of the individual companies I analyze (and end up investing in) are in the US, and I prefer to balance this with a broader worldwide exposure with the ETFs.
Top Holdings
I've written that I favour concentration in my holdings. That is, I limit my portfolio to 20-25 individual stocks, and I have no issue with letting large positions grow even larger as the stock increases in value. The top 5 holdings represent almost 40% of the portfolio. I don’t know if the current top 5 will remain in the top 5 forever, but I am quite happy with these businesses👇🏽
Constellation Software (TSE:CSU) - Best-in-class serial vertical software market acquirer. Their approach and culture is unparalleled, and their operating in a market that will continue to grow over the next decade. The current market drop and fall in valuations finds them in a great position to invest. 10.8% of the portfolio.
Berkshire Hathaway (NYSE:BRK.B) - The ultimate financial fortress composed of some of the highest quality businesses in the US, driven by a unique culture of partnership and the legacy of the best capital allocator in the history of capitalism. 9.4% of the portfolio.
Alibaba (NYSE:BABA) - Chinese technology behemoth, leader in e-commerce and cloud computing. Currently held down by geopolitical and macro concerns. 7.4% of the portfolio.
Meta Platforms (NASDAQ:META) - Social media leader, both in terms of users and advertising technology. The core business remains strong, contrary to popular belief, and their current investments will <most likely> generate substantial rewards in the future, even if the Metaverse concept doesn’t fully catch on. 5.9% of the portfolio.
Nintendo (OTCMKTS:NTDOY) - One of the world’s most valuable intellectual properties, switching to a more robust business model underpinned by software and subscriptions. Incredibly robust financial position.