My Portfolio Performance Q1 2021
Summary
- The first quarter of 2021 was outstanding since many portfolio positions jumped significantly.
- The portfolio gained 62.94%, which is a record increase since the inception in 2013.
- GameStop, Lenovo, Turtle Beach, Ford, and Ferrexpo lead the rise as undervalued stocks were discovered again and a short squeeze happened in GameStop.
1. Positions as of 3/31/2021
My portfolio is divided into two sections: 1) long-term holdings and 2) special situations.
1) Long-term Holdings:
| Company | Ticker | First Purchase | Holding Period in Months | Performance in Q1 '21 (Including Dividends and Costs) (%) | Total Return (%) |
| Bank of China | OTCPK:BACHF | Jan 15 | 75 | + 18.5 | - 1.9 |
| BB Biotech | OTC:BBAGF | Mar 20 | 13 | + 14.5 | + 58.1 |
| BMW pref. | OTCPK:BMWYY | Oct 15 | 66 | + 22.9 | + 40.1 |
| BP plc | BP | Mar 14 | 85 | + 21.5 | - 1.9 |
| Ferrexpo | OTCPK:FEEXF | Oct 19 | 18 | + 40.5 | +178.9 |
| Ford | F | Oct 18 | 30 | + 48.9 | + 51.9 |
| Freenet | OTCPK:FRTAF | Feb 21 | 2 | + 17.9 | + 16.5 |
| Gazprom ADR | OTCPK:OGZPY | Mar 17 | 49 | + 10.2 | + 55.8 |
| Lenovo | OTCPK:LNVGY | Jun 14 | 82 | + 60.8 | + 65.5 |
| Lukoil | OTC:LUKOY | Jul 18 | 33 | + 22.5 | + 13.9 |
| LyondellBasell | LYB | Aug 19 | 20 | + 19.6 | + 39.3 |
| Renault | OTCPK:RNSDF | Jul 18 | 33 | + 4.5 | - 30.1 |
| Société Générale | OTCPK:SCGLF | Oct 18 | 30 | + 30.4 | - 1.8 |
| TAKKT | OTC:TAUKF | Feb 20 | 14 | + 19.3 | + 0.7 |
Lenovo had a stunning quarter not only because of their Christmas Holiday results, but also because working from home stays a long-term trend and the manufacturer of computers, notebooks, and servers expects a growing demand for its products.
Ferrexpo also reported strong results and announced a special dividend of around $0.40 per share, which increases the yield to over 25%. At current iron ore prices, Ferrexpo is printing money.
TAKKT showed strong cash flows and intends to pay dividends for two years (2019 and 2020) after having cancelled its regular dividend during the pandemic.
2) Special Situations (New Positions Both Added in Q1 2021):
2a) Change Healthcare (CHNG): bought for $22.14. Upside as a result of the potential merger with UnitedHealth Group (UNH) for $25.75 = 16.3%.
2b) Shaw Communications (SJR): bought for 33.5 CAD. Upside as a result of the potential merger with Rogers Communications (RCI) for 40.5 CAD = 20.8%.
2. Performance Q1 2021
The portfolio gained 62.94% in the first quarter of 2021, which is a record increase since the inception of the portfolio in January 2013.
January: +35.54 %
February: + 7.36 %
March: +11.98 %
| Portfolio value as of 01/01/2013 | As of 12/31/2020 | As of 03/31/2021 | Performance Q1 2021 | Total performance since inception | Annual return |
| 100.00 | 199.19 | 324.56 | + 62.94 % | +224.56 % | +15.3% |
During the quarter, I sold New World Development (OTCPK:NDVLY), Daimler (DDAIF), Foot Locker (FL), Itochu (OTCPK:ITOCF), Turtle Beach (HEAR), and GameStop (GME). Here is how they performed:
| Stock | First purchase | Holding period in months | Performance in Q1 2021 | Total return |
| NDVLY | Sep 18 | 28 | + 2.37 % | - 9.41 % |
| DDAIF | Sep 13 | 90 | + 27.17 % | + 47.67 % |
| FL | Aug 19 | 19 | + 45.92 % | + 47.75 % |
| ITOCF | Dec 15 | 61 | + 6.20 % | + 84.14 % |
| HEAR | Jan 21 | 1 | + 61.49 % | + 61.49 % |
| GME | Apr 17 | 45 | +204.30 % | +214.77 % |
The short squeeze in GameStop was an exciting event, and I sold too early, of course. However, after I have been down more than 80% last year with the GameStop position, I was glad to sell it with a decent profit.
3. Summary and Outlook
All in all, the value of my portfolio increased significantly. It was the best quarter in the 8 years of portfolio history. Looking back at my report from December 31 (The 10 Most Promising Stocks from my portfolio), the top 3 promising stocks showed a stunning performance and didn't disappoint me. Apart from GameStop whose valuation is far from normal and which I sold, Lenovo and Ferrexpo will continue to outperform probably in the next years.
The focus of my holdings will be undervalued and "unloved" stocks with strong cash flows and healthy balance sheets. While I'm holding many large cap stocks, I will probably shift some positions of my portfolio to small to mid-size cap stocks, which belong to the solid middle-class sector if I have the chance to buy them for a fair price. For example, the German company Sixt is profiting from its investments in the USA and the Hertz insolvency, and has shown strong returns over the past decades. However, the stock has risen too far in my opinion and has exceeded its fair value. Hornbach Baumarkt (OTC:HBAUF) is another excellent German middle-class company which profited strongly from the demand during the pandemic. Although there are many of these high-quality companies, I do not want to overpay for them and current valuations seem to be high. SIXT and Hornbach Baumarkt are on my watchlist, and in case of a sharp drop, I will probably add them to my portfolio.
According to the fundamentals, the holdings of my portfolio are undervalued and offer good returns in the near future. For example, the commodity sector represents 37% of my portfolio and despite sharply increased prices for oil, gas and iron ore, many stocks (BP (BP), Gazprom (OTCPK:OGZPY) and Lukoil (OTC:LUKOY)) are still below their highs from 2019. Ferrexpo, the iron ore company, is still undervalued with a P/E ratio of 4.5 and has no net debt. These stocks also have above-average dividend yields. Other examples for low P/E ratios and high dividend yields are BB Biotech, Freenet, LyondellBasell and Lenovo.
| company | DPS 2021 in € (e) | yield on cost in % in 2021 |
| Bank of China | 0.026 | 6.42 % |
| BB Biotech | 3.224 | 6.37 % |
| BMW pref. | 1.900 | 3.49 % |
| BP plc | 0.177 | 4.00 % |
| Ferrexpo | 0.800 | 46.72 % |
| Freenet | 1.650 | 9.49 % |
| Gazprom | 0.150 | 7.80 % |
| Lenovo | 0.036 | 4.27 % |
| Lukoil | 4.000 | 5.92 % |
| LyondellBasell | 3.510 | 5.20 % |
| Shaw Commun. | 0.800 | 3.53 % |
| Société Générale | 0.550 | 2.53 % |
| TAKKT | 1.100 | 8.72 % |
Change Healthcare, Ford and Renault currently do not pay dividends. The average yield on cost for my portfolio is 7.15%. The dividends guarantee a permanent income stream which increases the flexibility for transactions.
With enough cash left, I will try to take advantage of interesting opportunities in the future stock market. Merger arbitrages are one of those possible opportunities like the two positions which are already in my portfolio (Change Healthcare and Shaw Communications). Not all mergers will be finalized which could lead to downside risks, but I think that these kinds of investments will stabilize the portfolio, especially in times of high valuations. I will concentrate on all-cash transactions as visibility for possible returns is much higher than for all-stock or stock and cash transactions. I closely watch the Aerojet Rocketdyne Holdings (AJRD) deal with Lockheed Martin Corp. (LMT) with its current spread of 8%.
Furthermore, the comfortable cash position enables me to hold on positions for a long time and during downturns as long as I am convinced of the business. The GameStop story showed me that value investing is not dead at all, and in combination with patience, it can pay off in the long run.
Stay safe and a lot of success in the stock market!
This article was written by
Analyst’s Disclosure: I am/we are long BACHF, BMWYY, CHNG, BP, FEEXF, FRTAF, OGZPY, LNVGY, LUKOY, LYB, RNSDF, SJR, SCGLF, TAUKF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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