Panic Journal (4) – Consolidation
The last few days were almost “High Frequency Trading” for me with more transactions in 10 days than the 2 years before. Here is the overview (also in the comments) after my “Panic Journal 1” Post including a short assessment. I have also listed the stocks that I bought before the panic as part of my “German” basket, but which I should have clearly bought later.
Overall, I added
10 11 (!!) new positions, sold 3 positions and ended up with a cash position of 14,4% (this is also an effect of the ~-22% lower portfolio value YTD).
I was clearly too early in many case, but what I have learned over the last 20 years or so is the following: In a tanking market you always look stupid in the short term as a buyer and smart as a seller. In the long term, you look smart when you have bought at cheap valuations and you look stupid if you sold at cheap valuations.
This week I need to slow down a little more and think if everything that I did really makes sense ;-). I will try to limit daily transactions to 0.5% of the portfolio in any direction.
My overall assessment at the moment is that some sectors (Travel, events) will be hit much longer than I initially thought. I do think that “The Hammer and the Dance” scenario is a very likely one.
Here is the the transaction list:
- I sold the full Fitbit position (Special situation, but I feel I need more cash)
- sold the full Draegerwerke Pref position (a little too early. Short term upside as medtech, but not very well run firm)
- sold the Metro Bank position (bad risk management from my side, should have sold earlier)
- bought 3% position in Sixt pref. shares. Sixt is a stock I owned before starting the blog and I was following the company since then, regretting not to have invested again. Sixt will most likely be hit by decline in business and private travel. However as in previous crisis, I think the company will come out stronger, especially in the emerging “Mobility as a Service” business. A lot of start-up competitors will not survive this. The time in between for Sixt will be brutal but my assumption is that they will survive and come out stronger.
- Bought a 1.75% position in Mutui Online. Again a company I had been following for some time. As I mentioned in the comments, Mutui is a great company in an already difficult market (b2b bank & insurance services, insurance comparison) in hard hit Italy. But the company is very profitable and run by great entrepreneurs. My hope is there too, that they also will not only survive but come out stronger.
- Added 1% of the portfolio to TGS Nopec. TGS has been hit double, by the Virus and the unprecedented slide in oil price. On the other hand, most of the competitors are already gone and I assume that TGS again will not only survive but come out stronger. What the oil price is doing is clearly something else, but I have given up trying to figure out what is happening there.
- Bought a 0.4% position in Sol Spa. This is a company I had wirtten about in the past with an OK industrial gases business and a strongly growing health care business, whose main business is delivering oxygen to hospitals or other care facilities. This business will clearly benefit from the crisis. However I am not 100% sure if I really want to directly benefit from this, so this position is on watch.
- Bought a 1% stake in Brenntag. Brenntag is a mostly rail based logistics company, transporting and managing the logistics of chemical supplies. The company was on my list for a long time and has a relatively recession proof business model and nicely qualifies for my “boring company” bucket. Leverage is at an acceptable level. Yes, the crisis will hurt, but Brenntag will most likely survive and the stock looks cheap enough to make it a long term attractive investment.
- Increase my position in Admiral by 1%. Admiral is now my biggest position with around 8,5% of the portfolio. As mentioned before, the business model is as bullet proof as it gets and this is one of my long term holdings. In relative terms, the stock has become more expensive, but I plan to stick with them for some time.
- I bought a 1% position in Amadeus IT, the Spanisch travel software/tech infrastructure company. I looked at them some time ago. Of course they will be hit by the crisis, but within the sector they are the strongest player. Competitor Sabre for instance has been totally annihilated. They do have debt and they do have negative working capital, therefore I will not aggressively increase this position at this point in time. if they run in trouble, I guess they will receive help from the Spanish Government as one of the leading Spanish Tech companies.
- Bought a 1% position in Disney. Disney was always on my list for a stock to own for the long run and to allow me at some point in time to explain my little one how stocks work. However, with my current understanding of the crisis and the fact that almost 50% of the operating profit comes from parks and hotels, I am not so sure about them anymore. I won’t increase this position for the time being.
- Bought a 0.5% position in Richemont, the luxury jewelry and watch company. LVMH would have been the other choice, but I had looked at Richemont in the past and find their business slightly easier to understand. What I like about the high end luxury sector is my assumption, that other than for instance Restaurants, demand does not simply disappear but that it will be caught up to a certain extent. If you plan to buy a watch for 100k and the stores are closed, you might buy it when the stores are open. If China rebounds early, then the luxury stocks will also benefit more quickly than others in my opinion.
- EDIT: In the hectic I actually forgot my new 1% position in Washtec. Washtec is a company that I follow also for a long time and that has a relatively crisis proof business model (builds and services car washing facilities). At the current prices, this should be a long term attractive stock.
- As part of the German basket, I bought a 0.5% position in SHS Viveon. This is my summary that i posted in Part Nr. 1 of my All German stocks series:
SHS Viveon is a 16 mn EUR market cap Software company providing tools and services for Corporates to assess credit worthiness of customers. The company had troubles in past but seems to have made some progress. The stock price reflects already a lot of the turn around though.
- Another 0,5% position for the German basket is JDC AG. This is my summary from part 15 of the series:
JDC is a 89 mn market cap financial services company which is part (insurance) broker and part “Fintech”. A few month ago, Great West LifcCo, a subsidiary of Canadian Power Financial bought a 28% stake which was sold by management. The fintech part has a lot of traction (topline +30% yoy) but is not yet profitable.The stock used to be very volatile in the past as we can see in the chart:Although there are some things that I don’t like at first sight, it is still a very interesting stock to “watch” and analyze more deeply.
- The final stock I added as a 0.5% position is Mediqon. I haven’t written about this comapny yet, but in essence it is a “mini version” of Constellation software, trying to build a portfolio of small Software companies under one roof.