Changing Investment Approach

Before 2012, my investing approach is to buy low PE stocks and my portfolio was  concentrated in less than 10 stocks. However, in 2011, I suffer large lossess from S-chips. 

From 2012-2020, I change my investing approach to be more risk-averse. I diversified my portfolio to more stocks. I started buying stocks more for their dividends. I bought bank stocks. 

However, in recent years, I found that my portfolio returns have dampened. I am caught by a few times with large price declines in stocks with high dividend yield. This does not seem to be the direction I should be going.

In 3Q 2021, I started to change my investment approach to the following:

1) Buy growth/quality companies 

-- Buy when their prices are at recent low. 

-- Their business will be growing for the next 5 years, 10 years or longer

-- I will hold them for 5yrs, 10 yrs or longer to benefit from the compounding of their earnings

-- I will hold meaningful position ranging from 7% - 20%

-- As a result, my portfolio will be more concentrated

2) Special Situation

-- These will comprise smaller proportion of my portfolio, maybe up to 20% at most. It depends on whether I can find these stocks

-- The stocks will be kept till the price has run up (i.e. has turned around) or the event has sort-of completed.

-- Such stocks can be companies that suffer from temporarily from external shocks e.g. Covid-19 and may recover in the future. 

3) Stocks to avoid

-- Stocks with low P/B but nothing much else going for it. These are mostly property developer stocks. I find that I don't really make money on such stocks.

-- Stocks with high dividends but nothing much else going for it

It may take 2-3 years to transform my portfolio to the above strategy. My portfolio currently have 

-- small % that are dividend stocks. I will likely keep them, if I do not need the cash to buy other stocks

-- small % of 'Other' stocks. They are not really growth/quality companies, maybe just business growing at 6-7%. I will keep them for now, since I do not need cash to buy other stocks. 

Selling and buying

Selling Shimao and Sinopharm

Sold my position in Shimao (a small stake) due to the following reasons:

a) Price has dropped a lot, causing me to lose confidence. 

b) It could face higher costs of financing, due to Evantgrande and other property developers' issues in making coupon payments

c) China pilot property tax may lower demand for property

d) It is a non-core position. Selling it reduce my concentration in China/HK stocks and reduce the number of stocks I have.

e) Helps to raise cash to buy Intel

Sold my position in Sinopharm (a small stake) due to the following reasons:

a) Price is falling, causing me to lose confidence. 

b) Reduce my concentration in China/HK stocks and reduce the number of stocks I have.

c) Helps to raise cash to buy Intel

Start to buy Intel

Starting to buy Intel, as

a) Reviews suggested that Alderlake is slightly better or at least not worse off compared to Zen 3. This increase my confidence in Intel turnaround

b) Intel CEO has a clear plan to turn around Intel. The key issue is execution. 

Will restrict the position to 3-5%, as it is uncertain if Intel can execute its plan on time. 

Bought Asos (4% position)

Buying Asos during Sep-Oct, as

a) The stock price is relatively low

b) Nick Sleep connection

c) The company has a target to almost double its $4bn revenue to $7bn in next 5 years.

Will not be adding to the position due to the following risks

a) its current CEO has left

b) its earnings will be affected by rising logistical cost in the next few quarters

c) rising competition from similar competitors e.g. Boohoo 

Bought Micron (7% position)

Buying Micron in Oct-Nov, as

a) Its in portfolio of famous investors

b) RAM demand is growing due to digitalisation, EV etc. 

c) Industry is close to oligopoly, which may be more disciplined on its supply and hence reduce the impact of the boom-bust cycle

Will not be adding further, unless price drops.