My Portfolio April Update - 7 Buys

Bjorn Zonneveld profile picture
Bjorn Zonneveld
1.14K Followers

Summary

  • This month I added capital to 7 of my holdings.
  • Dividends were up $19.17 YoY.
  • My forward dividend yield at the end of April was approximately $927.
Het water geven kan en dollarbloem

pepifoto/iStock via Getty Images

April was another month of painful stock returns, with the last day of the month being particularly painful. The reason for this is the hawkish stance of the Fed, which could be bad news for the overall stock market. Negative sentiment isn't necessarily a bad thing though, as it also brings along new opportunities. However, all new investment opportunities should be scrutinized, in order to separate the wheat from the chaff. In total, I had 7 transactions this month, which is around my average over the past few months.

For the people that have not read my previous articles: I am a 24-year-old investor from the Netherlands who is trying to start early so that I will have the option to retire early or at least earlier (the current retirement age is 67 in NL and is trending upwards). If you are interested in previous updates on my portfolio, you can find them here:

April Update

April was a month of negative returns, the 3rd this year. There are a few reasons for this as the war in Ukraine, disrupted supply chains, the never-ending money supply during the pandemic and new lockdowns in China have all contributed to the current situation in which the government has to tighten the money supply, while the economy is still recovering from all the lockdowns. Even though the US Government printed a lot of money during the past year, the USD has appreciated a lot against many other currencies including the Japanese Yen, Euro, and the British Pound. This can be attributed to multiple things but the main reasons are the inflated prices of oil (many oil purchases are made in USD) and the hawkish stance of the Fed (investors can get a better risk-free return in the US). This could limit the upside for foreign investors such as myself when investing in the US stock market. Nevertheless, I will remain invested and will continue to add to my holdings, but given the strong USD, I will most likely add more to my European stocks in the coming months.

Chart
Data by YCharts

In the coming months, I will continue to watch and evaluate stocks that I hold in my portfolio. The current economic environment is very volatile, and I expect that opportunistic asset management to lead to more alpha. I will also compare some of my holdings against one another to see if it is a good idea to own both or to liquidate one. Do note that this strategy isn't for everyone but given that the Netherlands does not have a capital gains tax, I have more flexibility than other investors.

People that regularly read my updates also know that I am participating in an investment competition in my student association. We remain in the first place but lately, our returns have suffered a bit and our YTD risk-adjusted return is down to approximately 9% (from approximately 15% last month), while the second-placed team is currently at 7%. We continue to look for macro plays with relatively low volatility as low volatility stocks tend to outperform higher volatility stocks. This phenomenon is called the low-beta anomaly and even though it is not perfect, it has done well for us.

Transactions

Rules

Core

Value

Small-cap growth

Buy

  • Strong companies with revenue CAGR of +5% over the last 10 years

  • EPS CAGR of +5% over last 5 years

  • ROE above industry average or above 10 (at least 3 out of 5 years)

  • DGI stock dividend growth

  • ND/EBITDA below sector average or D/E below 1.

  • Buy when undervalued div yield theory + DCF (or what I think fits)

  • Dividend stocks: Chowder rule above 12 for normal, 8 for high yield

  • Sold off, without valid reasons

  • Undervalued compared to the broader industry

  • Margin of safety 25%+

  • MC below $6b

  • Revenue growth of 20%+

  • Undervalued based on FCF/EV revenue or other valuation methods deemed appropriate

  • Growing industry

  • reasonable debt levels

  • Net income positive within 3 years

  • Decent insider ownership

Reconsider

  • 20% overvalued

  • dividend freeze

  • No progress is being made on goals set by management

  • Though environment

  • High insider sell-off

Sell

  • Deteriorating industry

  • Rapid increase in debt (longer period of time)

  • Dividend cut dividend growth stocks (DGRO)

  • Loss of IG rating

  • Overvalued by 40%

  • back at reasonable valuation

  • Lose confidence in the ability of the company

  • Deteriorating fundamentals

  • Management proves itself to be untrustworthy

1st of April

Fresenius (OTCPK:FSNUF), (OTCPK:FSNUY) - Bought 7 shares for €33.14:

In my last update, I mentioned that I was looking to add to my position in Fresenius and this month I also wrote an in-depth article about the company. The main arguments for owning the company are that management is looking for outside financing and potentially breaking up the business, and that the company is still recovering from the impact of Covid. Even though the company hasn't been a great performer over the past few years, I estimate the company to be worth approximately €68.76 based on a DCF and its average multiples (PE, dividend yield) over the past 5 years. Furthermore, the company is one of the few dividend aristocrats in Europe and currently pays a dividend of €0.92.

an overview of Fresenius' PE and Div yield multiple over the past 5 years

Fresenius multiples ((TIKR))

CoreCard (CCRD) - Bought 6.5 shares for $26.98 each:

CoreCard is a stock that I also mentioned in my last update. The company's share price has been almost sliced in half since the beginning of the year. The decline has been even worse since a Bloomberg article came out in March. In the article Bloomberg stated that Apple (AAPL) wanted to reduce its reliance on third parties for future financial products. After reading more into the deal and the company, I don't think that this will have a large impact on the company, for two reasons. First of all, there is no guarantee that Apple will leave CoreCard, as it wasn't talking about current products, and secondly, CoreCard's deal with Apple is through Goldman Sachs (GS), which should alleviate some of the pain.

Chart
Data by YCharts

14th of April

Due to the fact that the USD has been appreciating against the Euro, I decided to add to my European stocks. However, during the month of April, I liquidated one of my other portfolios, which led to a $500 cash influx. I decided to invest this in some of my US Stocks.

Prosus (OTCPK:PROSY) - Bought 4 shares for €48.36 each:

One European stock that I currently view as severely undervalued is Prosus. Prosus is a venture capitalist/private equity company based in South Africa but with a listing in Amsterdam. The company has been heavily impacted by the tech crackdown in China as it owns approximately 30% of Tencent (OTCPK:TCEHY). Furthermore, it had some major stakes in Russian social media companies, which they had to write down. I think this is unjustified as the NAV per share of the holdings of Prosus based on current stock prices of public companies and the reported value of its non-listed shares is €119, while the company trades at approximately €46. This would mean that the company is currently undervalued by €73, or 158%. Nevertheless, the company's structure is very complicated, and investors usually don't like this so I apply a discount of approximately 20%, which would lead to a price target of €95.2.

An overview of Prosus' NAV based on the intrinsic value of its shares

Overview of NAV calculation of Prosus (IEX Kassa!, Author)

DIC Asset (OTCPK:DDCCF) - Bought 17 shares for €14.34 each:

DIC Asset is the next European company in which I increased my stake. The company's share price has been declining lately, while the business is still growing. The company has grown AUM from €5.6 billion in 2018, to €11.5 billion in 2021 (a CAGR of 27%) and it recently acquired a majority stake in VIB Vermögen. Even though I think that the company severely overpaid for VIB, it gives them a larger footprint in the south of Germany (where rents tend to be higher) and gives them more possibilities to develop logistics real estate. Therefore, if management is able to create synergies, the acquisition could still pay off. While you wait for management to pull this off, you will also receive a growing dividend of €0.75 per year.

An overview of the growth of DIC Asset's assets under management growth since 2018

DIC AUM growth (Investor presentation)

The TJX Companies (TJX) - Bought 3.9 shares for $63.71 each:

Personally, I am a big fan of TJ Max and whenever I visit North America, I try to visit at least one store (given that prices are significantly lower than in the TK Maxx in the Netherlands). In my opinion, the current economic environment could be a tailwind for the company. First of all, the elevated levels of inflation lead to lower disposable income and could increase the attractiveness of the company's offering. Secondly, because brand stores had to increase their prices, TJX can also increase its prices, something the company has already done on a selection of products. Additionally, on the last earning's call, CEO Ernie Harmann mentioned that there is more merchandise available, as we move away from the pandemic. At the same time, the company is trading below my estimation of fair value based on a DCF and its 5-year average PE and dividend yield multiples.

An overview of TJX's NTM PE and dividend yield multiple over the past 5 years

TJX NTM multiples ((TIKR))

Morgan Stanley (MS) - Bought 2.9 shares for $86.96 each:

Morgan Stanley is a position that I started last month and although it has been very volatile, I remain confident. The company is one of the best-run banks and achieved a return on tangible common equity of 19.8% during the first quarter of 2022. Revenues dipped slightly during Q1 compared to last year but given the current environment that wasn't really surprising. The company also remains committed to shareholder returns and during Q1 it bought back $2.9 billion in stock and declared a dividend of $0.70 per share. Last but not least, the company is undervalued, and based on its PE and dividend yield multiples, I estimated a price target of $99.57.

An overview of MS' LTM PE and dividend yield over the past 5 years

MS LTM PE and dividend yield past 5 years ((TIKR))

Interactive Brokers Group, Inc. (IBKR) - Received 0.2295 shares

As I mentioned in previous updates, I switched to Interactive Brokers through a referral link. This means that I receive free shares whenever I put money in my account. I have to hold these for a certain time, but I am not planning to add money to this position at the moment.

Company

Shares

Total price

Effects on dividend pre-tax

Fresenius

7

€231.98

€6.44 ($6.78)

CoreCard

6.5

$175.37

$0

Prosus

4

€193.42

€0.56 ($0.59)

TJ Maxx

3.9

$248.47

$4.60

Morgan Stanley

2.9

$252.18

$8.12

DIC Asset

17

€243.78

€12.75 ($13.43)

Interactive Brokers

0.2295

$0

$0.09

Dividends

This month I received a total of $77.75, which was $19.17 more than last year. The main reason for this is the addition of new capital. Do note that dividends paid in Euro are worth a lot less than last year. As an example, the dividend of Ahold in 2021 would be approximately $13.91, over $2 less than last year. Forward dividend yield after tax at the end of April was approximately €880 ($927), up approximately €37 or $13 month on month.

Company

Dividend 2021

Dividend 2022

Difference

Brookfield Asset Management (BAM)

$0.87

$2.38

$1.51

Broadcom (AVGO)

$3.60

$8.20

$4.60

VICI Properties (VICI)

$4.62

$26.38

$21.76

W. P. Carey (WPC)

$18.86

$0

-$18.86

AvalonBay Communities (AVB)

$6.36

$0

-$6.36

NEDAP

€6.75 ($8.21)

$0

-€6.75 ($8.21)

Ahold Delhaize (OTCQX:ADRNY)

€13.20 ($16.06)

€27.56 ($28.96)

€14.36 ($12.9)

Armada Hoffler (AHH)

$0

$11.83

$11.83

Total

$58.58

$77.75

$19.17

An overview of the dividends I received in my portfolio since 2019.

Dividends per month (Author)

Sector Overview

Pie graph showing the allocation per sector of my portfolio

Sector overview (Author)

What can be seen in the pie charts above is that there is an increase in allocation to financials. The only financial that I added to this month was Morgan Stanley. This means that my financial holdings outperformed the other sectors in my portfolio. This doesn't come as a surprise as, in general, an increase in interest rates will lead to better performance. I don't expect this narrative to change in the coming months, so financials could become a larger part of my portfolio over the coming months.

Current Holdings

Qty Held Portfolio %
Enbridge (ENB) 55 6.47%
AbbVie (ABBV) 16 6.21%
VICI Properties 73 5.92%
Reinsurance Group of America (RGA) 18 5.26%
L3harris (LHX) 8 4.95%
Cboe (CBOE) 16 4.77%
Ahold 53 4.25%
Vonovia (OTCPK:VONOY) 39 4.23%
TJ Maxx 25 4.18%
Visa (V) 7 4.04%
Fresenius&CO KGAA 40 3.86%
NETSTREIT (NTST) 65 3.83%
Prudential Financial (PRU) 13 3.76%
DIC Asset AG 95 3.61%
CVS Health (CVS) 13 3.46%
Aroundtown (OTCPK:AANNF) 251 3.44%
Broadcom 2 3.00%
Armada Hoffler 70 2.55%
Morgan Stanley 11 2.42%
Intel Corporation (INTC) 20 2.40%
Associated British Foods (OTCPK:ASBFY) 43 2.35%
Brookfield Asset Management 17 2.30%
Prosus 17 2.26%
Power REIT (PW) 25 1.82%
CoreCard 29 1.76%
Alibaba (BABA) 7 1.71%
Linkfire 1121 1.30%
CareCloud (MTBC) 86 0.92%
StoneCo (STNE) 35 0.90%
The Hut Group (OTCPK:THGHY) 189 0.69%
Interactive Brokers 4 0.57%
Tezos (XTZ-USD) 50 0.35%
Hedera Hashgraph (HBAR-USD) 680 0.27%
Bitcoin (BTC-USD) 0 0.16%
Binance (BNB-USD) 0 0.03%

Going Forward

In the coming months, I will continue to add at least €1000 ($1060) to my portfolio. I will also continue to actively monitor my holdings, and if necessary, make adjustments. For May I am looking at the following stocks:

Ahold

Ahold is a grocery store headquartered in the Netherlands, that generates the majority of its revenue in the US (during FY 21, approximately 60%). Furthermore, grocery stores are generally seen as a defensive investment, due to the fact that people will need groceries, no matter the economic environment. This makes it slightly easier for the company to pass on costs to customers. The company is also trading at a lower multiple than its US peers, while being one of the fastest-growing companies and having one of the strongest balance sheets among its peers. Therefore, I am willing to add to Ahold in the coming month(s).

an overview of Ahold's valuation based on PE, compared to its peers

Valuation Ahold vs Peers ((TIKR))

Visa

In April Visa reported Q2 results, which were above expectations. This can be attributed to a couple of things. First of all, the increase in cross-border spending, as people got back to traveling, and secondly, inflation leads to higher transaction values and thus, more revenue for Visa. As I expect both tailwinds to continue in the near future, I raised my price target to $226.98. This was based on my DCF and the company's 5-year average PE and dividend yield.

An overview of Visa's PE and dividend yield over the past 5 years

Visa PE and Div yield past 5 years ((TIKR))

European real estate

In May I want to assess my European real estate companies and see if I should replace Vonovia, DIC Asset, or Aroundtown with CTPNV. The reason why I want to assess my current stocks is that most of them are mainly focused on Germany, and although it is one of the strongest real estate markets in Europe, the assets are highly correlated. CTPNV is slightly different as its main focus is on logistics properties in Central and Eastern Europe. The real estate market in this region is less developed compared to the real estate market in Western Europe, but their GDP growth rates are also higher. Inflation shouldn't be a large problem for the company as the majority of CTPNV's contracts are adjusted by the highest of the fixed escalator or the local CPI (no cap). Another strength of CTPNV is that its properties range from the Black Sea to the North Sea, which makes them a one-stop shop for European properties.

An overview of CTP's properties pes per country

Overview of properties CTPNV (Germany will be added soon through acquisition) ((CTP))

Prosus/Alibaba

In the coming month, I would also like to take a look at Prosus and Alibaba. Both stocks are down significantly over the past year, driven by the tech crackdown of the CCP. I want to evaluate if holding both makes sense and if not, which of the companies I should keep. Right now, I am leaning towards cutting Alibaba as Prosus has a lot of other businesses and doesn't have the VIE structure. But to be entirely sure I will have to do a deep dive into both companies again and scrutinize my own thesis. I hope to have made this decision by the end of the month.

an overview of the share prices of Alibaba Group and Prosus.

Share price Prosus and Alibaba ((TIKR))

Conclusion

April was another month of volatility and negative returns and given the current macroeconomic situation, this is likely to continue. Although I take this into account, I will continue to add to my portfolio. Nevertheless, with the appreciation of the dollar, European stocks look a lot more attractive.

My dividends this month came in at $77.75 pre-tax and my forward dividend yield is currently approximately €880 ($927), due to new capital put to work.

I hope you enjoyed the update about my progress, and I would love to hear your thoughts on my portfolio and what you would like to see in future updates.

Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.

This article was written by

Bjorn Zonneveld profile picture
1.14K Followers
I mainly focus on stocks that are unknown by the public and REITs. As for me: I am a BBA graduate who is pursuing a Master in Finance (MSF) at Erasmus University (Rotterdam, Netherlands) and work a student job in the real estate industry. My portfolio mainly consist of dividend growth stocks and REITs. Although I do have smaller positions in growth and value (non-dividend) stocks. My largest positions are: Enbridge, Abbvie and VICI.
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Disclosure: I/we have a beneficial long position in the shares of ALL COMPANIES MENTIONED UNDER CURRENT HOLDINGS either through stock ownership, options, or other derivatives. 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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